Nothing is more difficult than the art of maneuvering for advantageous positions.
Sun-Tzu
Chinese general & military strategist (~400 BC)
As we approach the end of 2009, what can we say about the shape and health of global exploration?
Firstly, I believe that we can observe that innovation, the exercise of “Know How”, the smart application of technology, are all alive and kicking in the world of exploration and there have been some noticeable successes, for example:
> in the Balmer Basin of Rajasthan
> in the Lower Tertiary of the Deep Water Gulf of Mexico
> in the Albertine Basin of Uganda
> in the sub-salt of the Santos Basin, Brasil
> in Deep Water Angola
> in the Jurassic of the southern end of the West Siberia Basin
> chasing unconventional gas onshore in the USA
> along the West Africa Transform Margin, especially Ghana.
Secondly, we should admit that this list slides off the keyboard too easily and disguises the fact that exploration is getting harder and harder compared with the ‘easy days’ of the second half of the 1990’s when the advent of regional marine 3D allowed us to explore young-ish Tertiary deep water clastics with comparative ease.
Consider for example what was involved in the recent Tiber discovery in the Lower Tertiary of the Deep Water Gulf of Mexico:
• to begin with, there was the imagination; the imagination to perceive that there would be a thick pile of slope and basin floor fans fully 400kms from the Lower Willcox shelf edge
• then there was the “Know How”; the “Know How” to figure out after the first handful of discoveries where the porosity and permeability ‘sweet-spot’ might be
• and then there’s the technology; the technology to drill the small matter of 35,000 feet or so.
A fantastic achievement, don’t you think!
Thirdly, an interesting sub-plot is the relative failure of the Majors as a whole to participate at the tough frontiers of exploration and their possible replacement at the ‘cutting edge’ by the likes of Petrobras & BG, Cairn Energy, Tullow Oil, Anadarko Petroleum, and a host of small companies in the USA.
This is a topic worth its own article but what we I want to consider in this article is where some of the tough frontiers lie.
We at Finding Petroleum plan a series of our Forums – up to a day long if we can get enough good speakers; and beginning with two this autumn – and a two day Conference in January.
We will consider the Sub-salt plays of the South Atlantic; Onshore Rifts – in particular West Siberia and Uganda; we’ll devote a whole Forum to Iraq; we’ll hear about the West Africa Transform Margin, especially Ghana; and opportunities on the North Atlantic Margins; around the Falkland Isles; and in East Africa.
And we’ll major on the technologies and ideas that can lead to exploration success.
At our Forum on 20th October, we began with talks on Sub-salt. The first presentation took us on a tour of the South Atlantic Pre-Salt and was given by Neil McMahon of Bernstein Research.
The second was by Tom Ziegler of PGS and took us into the realm of sub-salt seismic technology, visiting inter alia the Gulf of Mexico, the Southern North Sea, Brasil. Videos of these talks can be viewed in full at www.findingpetroleum.com/open
The questions these talks provoked in my mind are:
Is there such a thing as leadership in sub-salt imaging technology? Does it sit with the Majors, for example Exxon and BP who clearly have big in-house efforts, or is it available to all? If the technology leadership sits elsewhere, were Petrobras and BG just lucky in the Santos Basin?
The answer seems to be that Petrobras have demonstrated clear leadership, with real skill and “Know How”, in their work on the Santos Basin Pre-Salt, with careful application of depth imaging conditioned by the fact that they had excellent velocity models derived from their unique wells data base.
From these two presentations and the discussions (also available on the videos), I feel I can support my contention that exploration is becoming harder offshore where either extreme depths or sub-salt or both represent the new frontier.
Or perhaps we might think that exploration has always been hard – it’s just that there was a period when the availability of big regional 3D surveys made offshore exploration for young-ish deep water clastics easy!
The next two presentations concerned themselves with onshore rift systems which are indeed harder to explore successfully……
The first is the grand-daddy of them all, the West Siberia Basin where the Soviets managed to discover in access of 400 billion barrels oil equivalent using a massive number of geologists, some 2D seismic and above all, the drill bit.
In the modern era, this Basin is being extended to the far south in the Uvat area which is just coming into production and to the far north in Yamal whence will come the gas for us all to cook our Christmas turkeys in about 10 years time!
I heard that at one time the Soviet Ministry that undertook exploration had more geologists than the Defence Ministry had military experts; they were very successful…….three West Siberian oil fields are listed among the world’s twenty biggest: Samotlor – 6th biggest in the world, Priobskoye and Fedorovsko-Surgutskoye.
The scale of the West Siberia Basin is in contrast to the many Tertiary basins of South East Asia that have been well documented by Harry Doust and his colleagues from Shell.
Here, typical field sizes are relatively small – averaging less than 100 million barrels oil equivalent – and these basins have established the reputation that exploration of onshore rifts is relatively arduous, requiring many wells…..there always being “just one more well and we’ll find the big field”!
This reputation began to be undone with Cairn’s exploration of the Balmer Basin in Rajasthan….although there is a slide in Cairn’s most recent presentations showing the exploration history of the Balmer Basin – the slide is titled “The impact of Drill till you Drop”!
However, reflecting on recent events in the Albertine Basin, I’d say we have seen this reputation broken…..but as a Non-Executive Director at Tullow Oil perhaps I am biased!
The first presentation was from Chris Einchcomb, recently of BP and TNK-BP and now Executive Vice-President of the Russian contractor Integra, and he talked about West Siberia.
The second presentation was by Paul Burden of Tullow Oil and took us into the last few years’ exploration efforts in the Albertine Basin of Uganda.
Again, both presentations and subsequent discussions can be viewed here.
The questions these talks provoked in my mind are:
Am I right to think that the most effective and efficient exploration programme would be to begin with gravity and magnetics, Full Tensor Gravity if you can, and then follow up with a more focussed 2D seismic programme, followed by an even more focussed 3D programme?
Peter Hutchison of Scotforth reminded us that onshore additional early help may come from satellite data which reveals where vegetation and soil mineralogy have been impacted by leaking hydrocarbons – visit www.scotforth.com to see some examples.
My observation is that we were fooled, over the period 1995-2005, into believing that exploration is 'easy' because offshore we could use vast quantities of cheap 3D seismic as a blanket-coverage ‘crutch’, provided we had the regional geology broadly right. The reality is that exploration is 'tough' and we are confronted with this as soon as we are onshore. Therefore, beginning with satellite data and then following it up with FTG (Full Tensor Gravity) and then 2D seismic and then 3D seismic, focussing in after each step, makes sense.
I’d hoped that this Oct 20th Forum would also be discussing the Arctic but, aside from the fact that a big chunk of West Siberia is inside the Arctic Circle, we had no presentations that focused specifically on the Arctic.
This wasn’t for the want of trying!
It may well be that the Arctic is the last great frontier, almost completely unexplored, that we are ‘creeping up on’ via Alaska, and West Siberia, and Sakhalin, and perhaps Greenland….but nobody seems to want to talk about it!
I suspect this is because, despite the hype, there is very little known, the economics might not work at current oil prices and besides that there is a suspicion that it might be ‘gassy’, the politics seem messy etc etc.
Thus real exploration seems like it might be several years away.
In contrast, Iraq – and in particular Kurdistan - seems very much part of the here and now, with some recent discoveries being touted as pretty large, at least in terms of oil-in-place.
Of course, the fantastic mountain range that is receiving so much attention at the moment was first explored pretty well 100 years ago. Occasionally, we – or at least I being an uncouth geophysicist– can be misled into assuming that because our predecessors did not have modern technologies such as 3D seismic then they were somehow dumb as well.
However, I think they worked out in their time that whilst there may well be oil-in-place all over this mountain range – the critical question is whether the reservoir rocks actually offer commercial flow rates.
After some effort, they managed to find a place where they did – and that’s in the vast oil field that is Kirkuk.
The question their ambitious successors face is – is there anywhere else?
Our 6th Finding Petroleum Forum – remember these are Forums where we examine issues of business, exploration and technology - focussed on the Middle East, in particular Iraq. All presentations can again be seen by clicking on www.findingpetroleum.com/open .
In constructing the agenda for the day, I had a couple of straightforward questions in mind:
Firstly, a business question - what should we think about the field development and re-development deals that are on the table in the current series of licence rounds, run by the responsible Ministry in Baghdad? In particular, what scale of production might they bring forward and are they valuable to the international oil companies, whether western or Chinese, that are pursuing them?
Secondly, an exploration question - what should we think about the potential for exploration in Kurdistan? Is it one of the great hydrocarbon provinces of the future or was it simply one of the great hydrocarbon provinces of the past?
Hopefully, our speakers – and the audience’s questions – went some way towards answering these questions!
To set the scene for us, we began with Neil McMahon of Bernstein Research who addressed the broad question “How does Iraq fit into the Global Oil Industry - and is there hope for the international oil companies?”
Our next presentation addressed the very important question of whether it’s possible for international oil companies to work safely in Iraq. John Drake of AKE helped us understand “Security in Iraq”.
We then spent the rest of the morning hearing about Kurdistan.
I began by showing a movie of some geologists from the Iraqi Petroleum Company out in the field, in Kurdistan, back in the days of silent movies!
Surprising as it might be to modern geoscientists, yes, the IPC folk did actually get out in the field, in fact they spent most of their time there, they hit rocks with hammers, they plane-tabled, they drew cross sections, and yes, they knew a seep when they saw one and sampled it.
They didn’t spend their life looking at computer screens!
And wells were drilled.
Unfortunately, some analysts and brokers - and some companies – have exaggerated the significance of this fantastic fold belt, which is undoubtedly soaked in petroleum, talking as though it is one of the great unexplored frontier hydrocarbon provinces. It is not!
In reality the first well was drilled at Chia Surkh, just inside modern Iran, not so long after Queen Victoria died, in 1901/2 in fact. After that, the geologists of the Iraq Petroleum Company got to know the rocks quite well: they mapped the reservoir horizons from wells and outcrop, understood the palaeogeography and what we might call today the Gross Depositional Environments. They figured out that the reservoirs were quite poor in some places and also that the hydrocarbon phase varied along and across the fold belt. They realised that there might be a “sweet spot” – in which the 30bn+ barrel Kirkuk oil field was discovered.
The history of this pre-existing, IPC, data base is a tale in itself but suffice it to say that it is almost certainly not available to every company currently operating in Kurdistan.
One modern day lesson learned about the exploration of fold belts – and of course something that should be available to anybody exploring today that was not available to IPC geologists – is that excellent seismic is need to both define prospects and to get individual wells into exactly the right place to test a prospect and to reliably predict what will be encountered en route to the target. And that getting such excellent seismic requires real “Know How” and patience and money!
It was with this for context that we heard two presentations from current operators focussed on exploration opportunities in Kurdistan, The first was from Andrew Grosse of Sterling Energy and the second was by Tony Atherton of Talisman Energy.
As always, we await the evidence of the drill bit but, putting my small, ill-fitting geophysical ‘hat’ on, I’d say that Talisman clearly understood the regional context and in particular the need for top quality seismic data.
So what are we to make of Iraq as a whole, and how does Kurdistan exploration fit in to it?
In my humble opinion:
We can say Yes, it’s possible to work in Iraq and there are some massive fields waiting to be developed or re-developed. Indeed, you can look at the last 30 or 40 years as having simply interrupted the normal pattern of development in a major hydrocarbon province, namely that the biggest fields get developed first. So once Rumaila, West Qurna and perhaps Kirkuk are ‘in motion’, doesn’t this mean that smaller discoveries in the south of Iraq and exploration in Kurdistan will simply take their place in a conventional ‘queue’ – and wait for a long time??? Doesn’t this mean that shareholders in the Majors and bigger Independents are the ones that are going to be pleased, in the end; those in AIM-sized companies are going to be intensely disappointed.
Author:
David Bamford
30 October 2009 17:15