First oil

“Where oil is first found, in the final analysis, is in the minds of men.” —Wallace E. Pratt (1885–1981), Humble Oil’s first geologist, who helped discover the giant Mexia field in East Texas, and introduced geophysical tools to delineate salt domes.

When Col. Edwin Drake drilled the world’s first commercial well in 1859 on the bank of Oil Creek in Pennsylvania, all he had to go on was a hunch, based on tar seeps in the creek and oil shows that were encountered in wells being drilled for salt brine. Ever since Col. Drake visualized, in his mind, a potential oil reservoir below the surface, it has been an extraordinary journey for successive teams of explorers to first imagine oil and gas reservoirs in their minds, and then, physically discover the fields through drilling. What a thrill it must have been to discover Spindletop in East Texas, Ghawar in Saudi Arabia, Prudhoe Bay in Alaska, Perdido in the Gulf of Mexico and Lula in pre-salt Brazil.

Less imagination, more probability. An E&P team today has numerous geophysical and geological tools in its toolbox to reduce the need to play a hunch or use imagination, and increase the confidence interval for their wildcat wells.

Now, statistical analyses are entering the arenas of well planning and drilling optimization. At the Summer North American Prospect Expo, Drilling Info Inc. showcased its recent acquisition of Transform, a company dedicated to analytical interpretation and modeling for identifying drilling “sweetspots,” optimizing well spacing and monitoring fracing effectiveness. This issue of World Oil carries an article from Aker Solutions on how it is applying geophysical uncertainty to field development concept selection.

Back to playing a hunch when the paradigm changes. Statistical analysis is fine for an E&P process that has been honed to become tried-and-true. When there is a paradigm change, however, the explorers are back to visualizing the play in their minds and placing their bets on a hunch. The current shale revolution owes its steady standardization to what George Mitchell dreamed up for extracting hydrocarbons, from tight sandstones or shale, through horizontal drilling and multi-stage fracturing. It took years for Mitchell and his team to “crack the code” for the Barnett shale play. Successive independent operators have had to perform a similar process to crack the code for the Marcellus, Eagle Ford and Bakken. Once the code is cracked, it is possible to apply integrated technologies and use statistical analyses to make the process more efficient.

Still drilling dry holes. Despite all the G&G technological progress and improvements in statistical analyses, the E&P business remains a risky venture that is full of uncertainties. The yet-to-be discovered hydrocarbon reserves are either in frontier areas that are hard to reach in remote corners of the world, or in mature fields of complex geology.

Take the example of Cobalt International, an upcoming player in the deepwater Gulf of Mexico and West Africa. Cobalt prides itself on applying the latest seismic technologies to achieve wildcat successes. In December 2012, Cobalt announced a significant oil discovery at its North Platte prospect on Garden Banks Block 959 in the deepwater Gulf of Mexico. The discovery well encountered several hundred feet of net oil pay. The company is also conducting successful appraisal drilling at its Cameia field offshore Angola, and the Shenandoah field in the Gulf of Mexico, in partnership with Anadarko.

Despite these successes, Cobalt came up empty in August 2013 on its Ardennes #1 exploratory well in Green Canyon Block 896.

So it goes. Will Cobalt and others operators continue to play their hunch on new exploration plays? Most probably. With technology advances and integration of statistical analysis, will they improve on proven processes? Most definitely.