September 2015

What's new in exploration

So, what to do now?
William (Bill) Head / Contributing Editor

 “As the world burns” on the price of oil, remember this point: Basic fire (overly rapid oxidation) is efficient as a conversion of matter to energy. Hydrocarbons will remain the chief source of fire for all of our machines, CO2 by-products included, for a long time to come. The “bad” coal debate is a distraction from the “bad” oil crusade. You may not be able to focus on exploration, when the governments of this planet spend time on wind and Iran. Is the sky falling all around you? Well, maybe not near you, but at least that is the fear, at the moment, in exploration circles. 

On July 30, Shell announced a layoff of 6,500 people. Shell has about 94,000 people worldwide, including 32,000 in North America (2014 Annual Report). Even my math says that 93% of Shell’s people are still employed. The firm’s capital investment for 2016 is planned at about $35 billion, down from an expected $42 billion. Of course, exploration takes a big hit here, as the company stated that it was going to slow down that activity. At least Shell is not stopping exploration. Slow is better than stopping—$35 billion is not zero. 

Most of the industry has given up on exploration, as once defined by the Seven Sisters oil companies of the 1950s. I note, too, that many of them are gone. Relying on early reserves success, combined with a lack of creative exploration, can result in being sold. Life is no coincidence. Shell gets credit for its persistent billion-dollar attempts to go to the Arctic, when other Northern companies have stated publically that the costs are too high. Shell continues to extend value in its existing properties by keeping a large part of its $1.2-billion annual research budget focused on solving identified opportunities. Value exists in buying other people’s reserves, too, as in the BG Group purchase. 

It may bother some people that big money (investors) controls science.  Well, in some form or other, it always has. So where is the money flow in mid-2015?  Buying production, and flipping it. That means seismic in new areas is greatly diminished for two reasons; one, there aren’t many new areas left, and two, production folks already have seismic, or do not use it. 

What’s new in exploration? New, active and emerging areas are the Arctic, including offshore Greenland; way offshore eastern South America, searching post Patagonia rocks; offshore Africa, about anywhere from 45° on the continent to 320°; and deeper water off the shelf of Mexico to Central America. See a pattern?  Offshore still has some new places to look, while New York state and France lock out onshore shale-oil fracing. Seismic companies see that land work is depressed, while a few ships are still active. 

I think a twist to “new” emerging exploration will be this—if operators cannot invest in new data, then service companies should continue to invest in exploration for their own benefit, however that is defined. This process started, when the folks who held the large capital decided to outsource about every company function and rid themselves of their own crews, boats, rigs, labs and computers. They unintentionally outsourced most of the IP and almost all of the science and engineering talent. They left the managers and golfers, and most of the money.

Production-sharing agreements from seismic library assets are a very common practice onshore the U.S. Still others are justified in acquiring exploration acreage; they use their own data, and available senior talent, to find oil and gas for themselves. We did this at PGS with Spinnaker and flipped it. Who really owns the risk? This significant paradigm shift has been underway, seen clearly in the onshore U.S., exemplified by the Permian basin. New E&P companies are being announced routinely. Similar trends are now emerging in Colombia, Mexico and Argentina, with small-risk contracts.

So, what to do in your exploration program? While I believe that new data are always better than old data, we will have to do what we have always done—reprocess. reinterpret. Most seismic is older than five years, yet there have been incredible improvements toward signal processing since then. Cheap cycles allow attributes and mega-databases to be reworked.  Significant amounts of information require a comprehensive, layered, GUI-GIS database simple enough that a mortal geologist can use it daily. If you need a costly IT person to load and manipulate your data, you probably are using the wrong (older) platform.

I’ve see my email light up over the last several months with new and improved methods from GeoKinetics, ION, NUTECH and Global. While all field data truly have physical limits, reprocessing of that data usually results in an improved understanding of some part of the subsurface. Never before have we had this ability to easily, in real time, do “what-if” calibration of logs and 3D, then compare them to rock physics, fluids and seismic attributes.  

At RPSEA, E&P progress is being made with development of the VSP fiber-optic tool, which is tubing-deployed, for recording microseismic emitters, placed with frac ceramic, to monitor live frac progress. Cool!  RPSEA now has the ear of BSEE while continuing to look for JIP support for its seismic air gun substitution project, along with measuring marine mammal interactions. 

Also, at SEAM/RPSEA, this group continues to amaze. The pore pressure project is going to issue an RFP for seismic processing on a serious mega-cycle level.  Volunteer input from the industry, and its leadership, is taking this science to another level.  A good summary is available here: .

Last but not least, consider attending SPE’s annual meeting in Houston, Sept. 27-30. There will be good papers, quality exhibitors in your field, and essential networking. wo-box_blue.gif

About the Authors
William (Bill) Head
Contributing Editor
William (Bill) Head is a technologist with over 40 years of experience in U.S. and international exploration.
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