First oil

“Genius is 1% inspiration and 99% perspiration” — Thomas Alva Edison, American inventor.

Thomas Edison would have known all about failures and eventual success. To develop a long-burning light bulb, the prolific inventor tested over 2,000 different materials in 1879 before settling on a carbon filament that remained lit for 40 hours.

The National Geographic magazine’s September 2013 issue includes an intriguing article entitled, “Failure is an option”, by Hannah Bloch. While the article discusses failed attempts to reach the North Pole and unsuccessful efforts to climb Mount Everest, the lessons apply just as well to oil and gas exploration. The article quotes Peter Athans, who successfully climbed Everest seven times. “I learned how not to climb the first four times I tried to summit Everest,” Athans explained. “Failure gives you a chance to refine your approach. You’re taking risks more intelligently.”

The major risk in geographical exploration is not being able to return alive. In the case of Apollo 13, which suffered an oxygen tank explosion in space on the journey to the Moon, the safe return of the crew was, in itself, a success. In oil and gas exploration, risks do not always involve the loss of life, but involve financial losses, damage to reputation, and the opportunity cost.

Lately, frontier oil and gas exploration is undertaken, primarily, by small independent operators. North America’s shale plays were discovered through the pioneering work of Mitchell Energy (Barnett), Range Resources (Marcellus), Petrohawk Energy (Eagle Ford) and Continental Resources (Bakken). In all of these plays, it is not simply a matter of drilling horizontally through a shale section and fracing away. Detailed geological evaluation is necessary to assess the total organic content, calculate the thermal maturity of the shale, and discern the existing network of fractures to “crack the code” of each play.

While offshore exploration is a more expensive undertaking, often it is still the minnows that take the lead in frontier areas. UK operator Tullow and U.S.-based Kosmos Energy and Anadarko combined their resources to discover the giant Jubilee field, offshore Ghana. Tullow is now progressing with a “very material” discovery in the Barents Sea, offshore Norway. And the company has scored six consecutive discoveries onshore Kenya.

However, Tullow and partner Shell have failed to discover commercial hydrocarbons offshore French Guiana.  “It is our No. 6 horse, in the back of the race, today, but having said that, it’s a vast acreage position,” explained Angus McCoss, Tullow’s exploration director, in a Bloomberg report. “What we do now is take the next year to look at all the data from the campaign and then decide the best way forward.”

Scottish explorer Cairn Energy achieved success in developing a string of discoveries in India’s Rajasthan desert. However, the company is struggling with failure in its offshore Greenland campaign. But the company is gamely pressing on, saying, “Cairn is confident that all the elements for success are in place and will ultimately support the views of the USGS that the region is home to one of the top-10 yet-to-find hydrocarbon resources in the world.”

My own case concerning failure and success is instructive. As part of the coursework for an engineering degree, students are tasked with designing and building a project in their senior year. The project assigned to me was building an analog amplifier (this was in 1970). I fiddled around one afternoon in the electrical engineering lab and managed to connect the right set of electronic components to make the amplifier work on the first try. If, on the other hand, had I struggled over the course of a few weeks and pored over the theory of amplification and conducted various practical experiments, I probably would have gained a better understanding of the design process. Then, who knows, I might have gained the motivation to become a super engineer, instead of a mild-mannered editor.