The Middle East, especially Iraq
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Tuesday, November 17, 2009, London, The Geological Society
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 be seen by clicking on the link at the top of this page.
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?
Agenda
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9:00
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Arrivals and Registrations
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9:30
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David Bamford - Director - Finding Petroleum
Introduction
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.
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10:15
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Neil McMahon - Senior Analyst - Bernstein Research
How does Iraq fit into the Global Oil Industry - and is there hope for the international oil companies?
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.
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10:45
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Andrew Grosse - Exploration and Technical Director - Sterling Energy
Kurdistan Exploration
Sterling Energy
Stirling Energy is an upstream oil and gas company listed on the AIM market in London. The Company has production in the United States and a wide portfolio of exploration interests mostly in West Africa.
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11:30
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David Bamford - Director - Finding Petroleum
100 years of Exploration in Kurdistan!
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.
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12:15
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John Drake - Risk Analyst - AKE
Security in Iraq
AKE
Founded by Andrew Kain in 1991, AKE is a client -focused risk mitigation company, providing a variety of fully integrated services. AKE distinguishes itself from other security service companies by taking a proactive intelligence led approach to assessing, monitoring, training for, and protecting against, risk. AKE assist clients in reducing their exposure to danger across a broad spectrum of risks.
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12:45
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Tony Atherton - General Manager - Talisman Energy
Exploration in Kurdistan - a Talisman perspective
Talisman Energy
Established as an independent company in 1992, Talisman has grown production from 50,000 boe/d in 1992 to 452,000 boe/d in 2007. The Company's three core areas are North America, the North Sea and Southeast Asia.
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