November 2023

What's new in exploration

Will $100+ oil kill exploration…again?
William (Bill) Head / Contributing Editor

Want to explore? Market forces often oppose that effort. When oil was $15, there was less incentive to explore, due to cost and production efficiency-controlled budgets. Independents found some funds for exploration. OilCo funding was based on replenishing reserves.  

When oil went to $120, no one wanted to spend on exploration, because quick cash was in completions and step-out drilling. Horizontal fracing took rank exploration back 30 years. Five years of “normal” production flowed in eight months for quick cash, but it left behind 92% still to recover. We argue that another 15% would have been produced if left to conventional vertical methods. Exploration hit another wall with “Y’ALL STOP IT,” from water-based, earthquake-inducing production. 

Recent news in World Oil shows that exploration is progressing—in spite of oil prices—but not any faster than major acquisitions. An elephant eats 500 lbs. of greenery per day, but dinosaurs eat other dinosaurs. Independents, as always, are focused on new reserves for the sake of newness, rather than looking to fill an empty barn. World politics will always drive supply, especially now that every country is instantly on-screen to spin national motives. 

Service has to respond to these things to survive, by merging resources, improving technological inventions or both. 

Fig. 1. {figure 1} If there was ever a marketing image showing the self-concept of PGS, this is it. Image: PGS.

The TGS and PGS (Fig. 1) merger is a big deal. “…the combined company sees significant growth opportunities in…carbon capture and storage (CCS) and offshore wind.” (author/editor: Really?) “The combination will benefit from cost synergies…above $50 million annually… The seismic industry is changing, whereby production seismic is becoming increasingly important, alongside the traditional exploration seismic” (author/editor: Very true). See World Oil for key terms of the merger. 

Computerized log analysis. When Dick Merkel and I transformed an algorithm to correlate well logs into rock properties, we knew that growing digital tech would create more types of interpretations but not lower risk until tool calibration advanced (Merkle, R.H., and W.J. Head, 1977. Computerized log analysis can be used to determine in-situ lithologic characteristics pertinent to secondary recovery (Bulletin of Canadian Petroleum Geology, vol. 25. no. 2, pp 291-304). That need has not changed, but a 100x increase in computation cycles allows faster integrated interpretation—even of your old logs. 

“The redesigned Blocky AVO modeler…allows for the exploration of formation boundary behavior across multiple wells...” Image: unknown.

Why is this still important? Ikon Science takes an old idea and breathes new life into it (see Ham, H. H., 1966. A method of estimating formation pressures from Gulf Coast well logs). Ikon released new geo-prediction software with resistivity-based pore pressure prediction (RokDoc 2023.4). This algorithm is innovative—a resistivity-based, pore pressure prediction method that includes enhanced AVO modeling (Fig. 2) with additional data analysis capabilities. 

In the 1970s, major oil companies handed over their future to service companies in determining technology, location and opportunity. By 1984, they abandoned in-house seismic acquisition, processing and drilling. OilCos may have kept log analyses for confidential SEC data.  

Why? In the short run, we saved a few nickels but forever gave up control of our destiny. As a prime example, PGS started a highly successful GOM oil company, Spinnaker, with only ten geoscientists. What was the advantage? It was not capital but new 3-D data. PGS gave themselves a copy of all their new GOM 3D and created a single five-year map of prospects for the entire GOM. Where to bid was years ahead of others.  

I openly told the majors we were competing, but they only wanted to lease 2-3 GOM license blocks for their exploration team. If I wanted to sell more, I had to go down the hall, literally, and talk to other “teams.” I convinced my alma mater, Marathon, to pick up our worldwide multiclient library. Spinnaker eventually drilled offshore, produced, and made exec management wealthy. Spinnaker sold itself for over $1 Billion. How? All because of interpreting seismic data in their hands. Thank you, Roger.

Fig. 3. Airplane contrails circa 2001, photo from NASA, deleted from web access. Image: NASA.

P.S. on the B.S. Contrary to its claims, NASA, 2004, published data on cloud and contrail influence over global temperatures, confirming the 2023 theory of John Clauser, Quantum Nobel laureate.

Google Scholar shows that Patric Minnis et al. of NASA published many articles on atmospheric particulate influence over planetary temperature. 

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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