Exploration Hotspots: Sub-salt, Onshore Rifts and the Arctic

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Tuesday, October 20, 2009, London, The Geological Society

Exploration: who’s winning and where?

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:


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; access the videos with the link just above these words!

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 on the videos.

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 http://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.

Agenda

9:00 Arrivals and Registrations
9:30

David Bamford - Director - Finding Petroleum

Introduction to Onshore Rifts

David Bamford is well known around the oil & gas industry both as an explorer and a geophysicist. He holds a Physics degree from the University of Bristol and a Ph.D in Geological Sciences from the University of Birmingham.

Since 2004, he has been a non-executive director at Tullow Oil plc, being recruited for this position especially for his exploration knowledge. He serves on the Nominations and Remuneration Committees, and was chairman of the latter, and Senior Independent Director, for 3 years prior to his retire from the board at the end of April 2014.

He was on the board of Premier Oil from May 2014 to May 2016.

He retired from BP plc in 2003, his last four positions being Chief Geophysicist (1990-1995), Business Unit Leader (General Manager) for first West Africa and then Norway (1995-1999), and finally Head of Exploration until 2003.

He has served on the boards of Paras Ltd, a small exploration and IS/IT consulting company in which he held 22% equity, until its sale to RPS Energy in 2008 and Welltec a/s, a Danish well engineering company, as the nominee of the private equity investor Riverside.

From 2012 to 201 he was on the board of ASX-quoted Australia Oriental Energy as a non-executive director.

He was a founder of Richmond Energy Partners, a small oil & gas research house, and several media companies that focus on the oil & gas sector, and has served as an advisor to Alliance Bernstein, Opus Executive, the Parkmead Group plc, and Kimmeridge Energy LLP. Since retiring from BP, he has undertaken asset and company valuation projects for investment banks, hedge funds and small oil companies.

Finding Petroleum
Finding Petroleum was established to help the oil and gas industry network, and stay up to date on the latest technological developments. It does this via hosting regular events and with an online social network of nearly 10,000 members.
10:00

Neil McMahon - Senior Analyst - Bernstein Research

A tour around the South Atlantic Sub-salt
Dr. McMahon joined Sanford C. Bernstein in 2002 as a senior research analyst covering the Global Integrated Oil Industry and the Refining Industry. He is currently top ranked in both the Institutional Investor All American Research Team and European investor surveys for energy research. Previously, he was a management consultant with McKinsey & Co, based in both Houston and London, where he had been since 1999. At McKinsey he mainly advised Petroleum and Electric Power and Natural Gas clients, and undertook proprietary research within their industry practices. Prior to McKinsey, Dr. McMahon worked in the oil industry as a Geoscientist with BP and British Gas before moving into management consulting with Arthur D. Little, where he became a Manager in their Global Energy Practice.

Dr. McMahon received an honours degree from The University of Edinburgh in Geology and Geophysics, where he later undertook further research to complete a BP sponsored Ph.D. Dr. McMahon has also published a number of technical and management oriented papers in leading oil and gas industry journals, and is on the advisory board of Durham University's Centre for Research into Earth Energy Systems (CeREES) and the Durham Energy Institute.

Bernstein Research
Sanford C. Bernstein is widely recognized as Wall Street's premier sell-side research firm. Their research is sought out by leading investment managers around the world, and they are annually ranked at the very top of acknowledged arbiters. In independent surveys of major institutional clients, Bernstein's research is ranked #1 for overall quality, industry knowledge, most trusted, best detailed financial analysis, major company studies, most useful valuation frameworks, best original research, and most willing to challenge management. In Institutional Investor's 2008 annual client survey, the leading survey by which analysts in our industry are evaluated, 100% of our U.S. Analysts were recognized as among the best in their respective fields -- more than any other firm on Wall Street.
10:30

Ian Cloke - Technical Director - Tullow Oil

A history of successful exploration in the Lake Albert Rift, Uganda
Tullow Oil
Tullow Oil plc is one of the largest independent oil and gas exploration companies in Europe. The Group has operations in Africa, Europe, South Asia and South America. Tullow is headquartered in London and employs nearly 2000 people world-wide. Current production is ~90,000 barrels of oil equivalent per day (boepd). The company drills tens of exploration, appraisal and development wells annually, included multi-well campaigns in Ghana, Uganda and Kenya, with high exploration success rates.
11:30

Tom Ziegler - Vice President MultiClient Portfolio - PGS

New seismic alternatives for Sub-salt exploration
PGS
PGS is a leading, international, marine geophysical company. Our business is technology driven and we provide a range of products and services including MultiClient data, as well as tailored acquisition, and imaging.

Our large, modern data library comprises ~850 000 sq. km 3D and ~670 000 km of 2D seismic data that targets areas of high prospectivity, where oil companies have potential to access acreage. Around 44% of the 3D data in our library and 60% of the 2D data have been acquired with multisensor GeoStreamer® technology. That proportion is growing.

PGS is the industry's most experienced provider of multisensor broadband data.

Worldwide, PGS operates three larger sales and imaging hubs in Europe and North America, and has local offices in 13 countries. The PGS headquarters is in Oslo, Norway and the PGS share is listed on the Oslo stock exchange (OSE: PGS).

PGS activities are organized into three business areas.
.Sales & Imaging promotes and sells seismic services including tailored acquisition contracts, MultiClient library data, and imaging services .New Ventures designs and markets new MultiClient campaigns and manages strategic projects .Operations & Technology plans, manages and executes all our acquisition projects, and develops new technology solutions
12:00

Chris Einchcomb - Executive Vice President - Integra

Exploration in the Former CIS: Seismic Acquisition Challenges
Integra
Established in March 2004, Integra Group has, through 17 strategic acquisitions, become one of the leading companies in the oilfield services and equipment manufacturing sectors of the Russian market.

Integra Group provides drilling, well workover (WO), integrated project management (IPM), technology services, and formation evaluation services. It also manufactures drilling rigs, drilling tools and cementing equipment.
13:00 Lunch

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