What’s new in exploration
No one in exploration needs an explanation of government-controlled information and regulation. If you think last month that I was too strong about my “slaves to poverty” opinion over the New Green Deal, the entire world today is getting a micro-lesson on the consequences of collective government power. Millions of lost jobs create instant poverty.
Right now, I feel like I am back in the second grade, with my pre-Jurassic Park teacher tapping me on the head while standing on my left foot, lecturing me on conforming to her idea of class behavior. Yet, I am in the school hallway, in a chaired, one-arm desk with no way to escape. Too much input, confused messages, no time to think. That was not a dream.
Perhaps your elementary experience was better, or now you know one reason why I am the way I am. Listening to all the media input today, you may feel there is no escape, either. Russia, Saudi, over-supply, decreased demand, pandemic to end the world—and your favorite recreation is either closed or has the cooties. Your company, your J.o.b., no toilet paper! Agh!
It will do you little to recall $3 oil moving to $8, then to $20, back to $12 then to …. maybe $100 then to…. today. There remains at least a 50-year window for the importance of oil and gas, and you live in that window. About half of the adult world still does not own a 4-wheeled vehicle, yet want one, and lives in a place where electric cars cannot be recharged.
The top 10 independents in 2018, according to Rigzone, were ConocoPhillips, Anadarko Petroleum (now Oxy), Marathon Oil, Pioneer Natural Resources, Apache, Repsol [really YPF], Hess, EOG, Devon and Hilcorp. Surely by the end of this year, this list will be noticeably different. Services are way down, so exploration is way down. Development is not. Especially offshore, despite the big bucks, because of the long-time window to bring production online.
That brings us to Contango. A short moniker for buying oil and gas low now, and selling in the futures market higher. Go to the boring stat pages of the WSJ or online and see that these guys are betting billions on the future getting better. Your future. Depressed tanker lease/rent is so cheap that floating storage can be profitable, sans an oil spill. More than just big oil is snapping up large tankers that have been excluded from trading to the U.S. by the Jones Act. Prices in September are encouraging.
Light on the horizon? Even with supply of a BBO over market, and enviros claiming more exploration is not needed, the five Arctic nations are working toward a common opening of exploration there. Importantly, serious effort is being studied on how to develop and recover reserves in that harsh water world while protecting the newly exposed environment. Global warming has its rewards, after all. Success often creates political greed. Recent Guyana election behavior to renegotiate oil contracts is a reminder of possible downside.
Why did George Washington not use piped or trucked oil to heat his winter, newly formed revolutionary encampment (Fig. 1) in 1779? After all, the distance from the Pennsylvania Colony–Drake oil discovery well [1859] to Valley Forge is only about 300 mi. Answer: over 10,000 years of government totalitarian control of the entire human population demotivated people to think for themselves or want to look to broad, non-military markets. By 1750, only a handful of independent souls traded worldwide, using ancient sail power, but under control of their kings.
Look at the inventions of specialized tech in the U.S. since 1791 and in Europe after the French Revolution of 1789. Freedom to invent and keep any rewards [e.g. Article 1, Section 8, U.S. Constitution and similar in the Free World], without government penalty for risking resources or failure, incentivized people to explore new ideas. Going forward, we have overcome absolutely every obstacle that mankind has faced.
CO2 research. May I point out that SEG-SEAM corporation is about ready to advance a proposal for an industry-government research partnership for the next level of CO2 investigations, using existing geophysical methods. I do admit to encouraging the birth of this project while at a DOE surrogate. Input from more than 24 interested persons from across the industry, a laborious committee at times, has produced ideas worthy of financial input. The “however” is this is a horrible time to ask industry for money.
Fortunately, DOE CO2 funds are still available, while DOE oil production research money is contracting. SEAM will need at least 20% cost share to get the attention of the agency. Perhaps you could send some nickels and dimes to Shelly Jo Oakley, Director of Operations, SEAM Corp., +1 (918) 497-4696 direct. Shelly can provide a copy of the most recent draft. https://seg.org/News-Resources/Research-and-Data/SEAM.
