Technology from Europe: France

France’s E&P director sees new hope for exploration at home and abroad

Sophie Galey-Leruste is director of Energy and Mineral Resources in the French Ministry of Economy, Finance and Industry. She is the primary governmental officer responsible for upstream oil and gas policy and implementation within France on a day-to-day basis.

Question: Mrs. Galey-Leruste, what kind of year did French upstream operators and equipment/service firms have during 2006?

Answer: In 2006, E&P investment inside France rose 65 % over the 2005 level (€97 million against €59 million). Most of this investment was devoted to field work (20 wells were drilled, against 15 in 2005). Due to a shift in the timetable of the work program on several permits, only two exploration wells were drilled last year. In 2006, the combined, worldwide revenues of French service/supply firms reached a new record of €23 billion (€19 billion in 2005).

Sophie Galey-Leruste

Q: Assuming that high oil and gas prices continue, how much E&P activity in France do you expect for 2007?

A: In 2007, E&P investment in France could rise 100%, with a strong progression of exploration expenditures. Exploration work should include one or two offshore wells, and several wells targeting non-conventional gases. The latter will include coalbed methane and also tight gas sands, which will be explored for the first time in France.

Q: Does your directorate have any plans to open up additional tracts to exploration or development?

A: There are no licensing rounds in France, but French exploration acreage is nevertheless broadly open. Applications may be made at any time, on any area that is not already covered by an exploration permit or a production concession. The absence of licensing rounds does not prevent companies from applying for mining acreage in France. Ten applications were registered in 2005 and 15 were made during 2006.

Q: Does the French government encourage E&P activity?

A: The government has been promoting French mining acreage for several years now, through participation in international conferences and conventions. Officials are trying to facilitate, as much as possible, access to the data bank, which is the key point for any new E&P company. With oil prices at high levels, a lot of new companies recently applied for exploration permits in France. Beyond access to data, based on our experience and expertise, our directorate has been directly involved in all the preliminary contacts with companies, helping applicants to fulfill their exploration permit applications, for example.

Q: Where does some of the best prospectivity still remain within France? Is there hope for offshore activity along the coastline?

A: In 2007, we expect to see one well drilled offshore in the Bay of Biscaye. There are certainly still prospective areas in France, both offshore and onshore. Offshore zones are already largely covered by mining acreage or applications, off the coasts of continental France and in French overseas possessions.

In onshore areas, the two main basins (Aquitaine and Paris) continue to attract companies, but one cannot exclude the possibility that applications could be filed in the Rhine Graben (in Alsace, which, like the two main basins, is also a mature area), or in the underexplored basins lying to the southeast of France.

It should be emphasized that some companies arrive with new ideas regarding the oil and gas potential (for example, unconventional resources), or try to complement the seismic data by using other exploration tools (surface geochemistry, as an example).

And, lastly, operators intending to work in France seek to acquire mining acreage not only for exploration, but also for development projects. There are, already in France, several examples of companies undertaking (or wishing to undertake) new development work on oil accumulations that either have already been exploited and abandoned, or were deemed to be uneconomic at the time that they were discovered. The use of state-of-the-art technology can give new life to these old fields.

Q: Can you describe some major field projects, either in France or other regions, in which French firms (either oil companies or service/supply firms) are involved, that also serve as good examples of their technical offerings/expertise?

A: Thanks to some of our industrial leaders (Technip and CGGVeritas, for example), French firms are involved in many major field projects around the world. As the world’s largest subsea production system, Dalia (Total is a 40% partner) in December 2006 became the third field in Block 17 offshore Angola to come onstream. Discovered in September 1997, this vast field lies 135 km off the coast, in water depths ranging from 1,200 to 1,500 m. Cost-effective production of its viscous, sour oil reserves has proved to be a tremendous technological challenge. Many different French service/supply firms were involved. Accordingly, French R&D products were used to solve numerous technical problems met during different phases of development.

Offshore examples include Technip performing topsides floatover installations on the East Area and Amenam II projects in Nigeria, the P52 project in Brazil, and Kikeh field in Malaysia.

In geophysics, the merger of CGG with Veritas has created a strong global, pure-play seismic company, offering a broad range of seismic services and geophysical equipment (through Sercel) to the industry across all markets (world’s leading seismic fleet, leading multi-client services, etc.)

Q: What are the some of the more significant upstream technical trends at present?

A: The current R&D focuses on four main topics. First, we need to have better evaluation of formations, so that we can discover new fields and to increase the exploration success rate. The current knowledge of sedimentary basins, in particular mature basins (thus largely explored) and, particularly of sedimentary, structural and geochemical dynamics, still remains very insufficient to guarantee high success rates globally. Thus, the development of models for qualitative and quantitative characterization of hydrocarbons, and the development of basin modeling software, including uncertainties, should allow better estimates of the residual potential of mature basins and frontier zones (e.g. Arctic, offshore beyond 3,000 m, foothills). In addition, further developments are needed in seismic imaging.

Second, the recovery rate in all current and upcoming fields in production has to be increased. The improvement of EOR technologies is a major challenge to be tackled for optimization of field production. Progress is necessary in the delineation of reservoirs and fluids, in dynamic simulation, in field monitoring (e.g. 4D seismic) and in quantification of uncertainties in all data (geophysics, production, etc.) for optimization of production schemes and associated technologies.

Third, R&D must also focus on innovative technologies for the production of “difficult” reserves (e.g. ultra-deep offshore, high H₂S or CO₂ content, heavy oil, etc.).

Finally, recent decades have witnessed a large rise in CO₂ emissions. The concentration of CO₂ in the atmosphere is thought to be responsible for the global warming trend already observed. Among the measures likely to reduce anthropic CO₂ emissions, capture and geological storage hold promise for the future. The service/supply firms have a new opportunity to generate extra revenue.

All of this requires substantial, ongoing R&D efforts.