Exploration

While many of you may have grown children, and others still have kids in diapers (bless your hearts!), most of us probably have kids in the generation known as Generation Y or the Millennials. And if you can imagine your kids working for you, you get a sense of the challenges that face managers as they start to hire this generation.

Case in point – my daughter interned for us when she was 16. While we all thought she did a great job, there was one task that she simply refused to perform. One of my coworkers asked her to mail a couple of copies of a magazine to a contributor. She sat on it for days and days. I couldn’t understand how something so menial and quick would be so daunting for her. Turns out she had no idea of the mechanics of mailing a package. She didn’t know where the envelopes and labels were. She’d never used a typewriter before. She didn’t know where the package should be placed so it would get mailed.

Ask her to redesign our web page, on the other hand, and she’d be all over it.

This generation brings a different skillset to the workplace than previous generations, and the more managers understand their particular needs and strengths, the easier the transition will be. A recently published report from PBP Executive Reports outlines “The Nine Ways to Get the Most from the Internet Generation.” Subtitled “Managing Millennials” (a bit of a mouthful), the report discusses the pros and cons of working with this tech-savvy but easily distracted group.

While I would caution that such a huge group of people – some 40 million are already employed in the US, and another 40 million are on the way – can’t really be categorized by a few traits, it is true that they have been raised differently than their forerunners and therefore bring a different set of expectations to the workplace.

“To understand any generation, it’s best to start with how they were raised,” the report states. “And the upbringing of Millennials plays a big part in their work ethic.” Many of these people have been raised by parents who were very involved in their upbringing, who often told them they were special, and who went to bat for them when their grades slipped or they didn’t make the team. While this make for an exceptionally confident group of employees, it also makes them overly sensitive to criticism.

On the other hand, many of these kids have been “latchkey” kids, meaning Mom and Dad weren’t home with they got home from school. This makes them independent and able to work on their own. They also tend to be well-educated and eager to continue their education even after entering the workforce.

Overall, the pros of hiring Millennials include the fact that they’re self-starters, they’re independent but also team-oriented, they’re multi-taskers, they’re good with technology, and they’re full of creative genius. Cons include the fact that they can be pampered, self-indulgent, entitled, narcissistic, and rebellious.

So how does one handle this large and somewhat disorderly group? A few key pointers:

• They need structure, but they also need flexibility, the whole “work/life balance” thing.
• They need a strong relationship with their supervisors, who should be approachable, help develop confidence, and be available for questions about work performance.
• They need constant training and challenges to keep from getting bored.
• They need encouragement.
• They like to work in teams.
• They are very technology-savvy.
• They will thrive in an organization that plays to their strengths.

The complete report is available for US $59 at www.pbpExecutiveReports.com.

When did life get to be so hectic? This month alone I will be out of the office almost as much as I’ll be in it, attending conferences, mostly. March seems to be a popular month for these things. It’s all I can do to make my deadlines while still attending important industry events.

It wasn’t always like this. Back in the late 1990s I worked from home because my husband got transferred from Houston to Bartlesville, Okla. For three years I telecommuted, enjoying a slower pace and way fewer interruptions than I encounter now.

In fact, sometimes I got a little bored. And when I get bored I sometimes come up with diabolical ideas. For instance, I was putting together an envelope to send to my boss, Don Lyle, comprised of expense reports, faxes, etc. I tossed in a photo of my cat because Don was always inquiring after my pets (which were usually seated on my computer keyboard at the time). Then a thought struck me. The picture showed the cat lying behind my screen. What if cats could be taught to use computers?

The end result is printed below. I’ve changed some of the names since the original used a real company with real employees.

HOUSTON, JULY 21, 1997 – Company X introduced today a new suite of software products that enable personnel-strapped oil companies to do more with less.

The new HereKittyKitty version 2.1 is so user-friendly that even those who have never used a computer before can now perform highly technical 3-D seismic analysis and interpretation.

In development since 1991, the new product is an open and flexible software integration platform designed for the new computer user. Simple graphics and leading-edge voice-activated, voice-recognition software encourage an interactive, almost playful environment.

Studies indicate that the industry will soon be faced with a shortage of qualified geoscientists. Statistics provided by the Colorado School of Mines indicate that graduate and undergraduate enrollment in petroleum education has plummeted more than 80% in the past 15 years.

“With Company X’s commitment to helping the petroleum industry make the most of its assets – both its reserves and its personnel – we feel that a simplified approach to seismic interpretation software is a good starting point,” said John Smith, vice president of product development for Company X.

To test the new release, Company X undertook an industry-funded study using house cats. Within two weeks the animals were performing seismic analysis and plotting drilling locations using the new program.

“He usually naps all day,” said one proud owner of her cat, Larson. “But now we’re planning to enroll him in college to get a degree in geophysics.”

Other cats in the study were soon building cross-section maps, analyzing geobodies, and performing prestack depth migratio. One star pupil even mastered reverse time migration.

“We chose cats because we felt they would be natural data manipulators due to their innate ability to handle a mouse,” Smith said. “With the overabundance of cats in our society, we think we’ve solved the personnel shortage for some years to come.”

Added Joe Blow, CEO of SuperMajor Inc., “Based on this study, we either need to redefine software, redefine cats, or redefine geophysicists.”

(I’d like to thank Larson for his years of inspiration. He died March 5.)

For the 39^th consecutive year, E&P is pleased to announce the winners of our Meritorious Awards for Engineering Innovation. This year we had 56 entries in 10 categories.

These awards represent the pinnacle of achievement for companies introducing new technology to the oil and gas industry. Unlike other industry awards, there is no cost to enter, and each category is judged by industry experts who have no conflict of interest with any of the entries. A special shout-out goes to these hard-working men and women who volunteer their time to help with this process.

And the winners are:

Drillbits: Quantec Force PDC bit, Hughes Christensen

Drilling Tools: Secure Drilling System, Weatherford

Formation Evaluation: OPTV Imaging System, Superior Well Services
Completions: Renaissance WDCL Damaged  Control Line System, Weatherford

Exploration Technology: PGS hyperBeam, PGS

Production Technology: SureFlo-298EX, Baker Hughes

Intelligent Systems and components: ResFlow Inflow Control Device, Schlumberger

Stimulation: PSET Method using FracStar Array, MicroSeismic Inc.

IOR: DeepLook EM, Schlumberger

Remediation: Gamma FRac System, Superior Well Systems

Congratulations to all! To find out more about these winning technologies, look for the special section in our May issue. Most of the awards will be presented at the Offshore Technology Conference in Houston May 3.

The opening date for the 2011 awards is April 1, 2010. The process is fairly simple. Go to epmag.com and click on the MEA logo about halfway down the page on the left-hand side. You will be directed to a landing site where you can either create a personal entry page or, if you’ve done so in the past, access your entry site. Those creating new pages will be screened before being given a password.

Once you’re on your personal entry site, you will enter the name, category, and website of each entry. You then provide a 500-word abstract and a 500-word case study. You are also allowed to upload up to three supporting files, which can be documents, pdfs, diagrams, pictures, or videos.

I would encourage everyone to enter early and often! We want to be sure we’re awarding the best of the best.

If you have any questions about this process, please contact me at rduey@hartenergy.com.

Recently I’ve been conducting video interviews (yeah, I know – a face for print journalism) with industry folks and asking them about their outlook for 2010 and beyond. Most of them are, to use a hopelessly overused cliché, “cautiously optimistic.”

But true optimism can be found in other places – namely, where they plan to spend their money.

A recent Barclays Capital survey indicates that the 2010 global E&P expenditure is expected to increase 11%, to US $439 billion. The results come from the responses of 387 oil and gas companies around the world.

To put this in perspective, the same survey last year saw a 15% decline. Considering the timing of the survey, that’s not surprising – these companies would have been coming out of a bleak 2008 facing an even bleaker 2009. But for that trend to reverse itself in one year seems indicative that optimism rules yet again.

Some of the highlights of the survey:

• US E&P capital expenditure is expected to rise by 12% to $70 billion, up $8 billion from the previous year. This is led primarily be independents and their continuing investment in shale plays.
• Canadian E&P capex is expected to increase 23%, up from $19 billion to $23 billion. Part of this is attributed to the strengthening Canadian dollar. Excluding currency issues, the rise is expected to be similar to the US.
• Capital budgets outside North America are expected to rise by 10% to $337 billion. National oil companies will drive this growth, while the six supermajors will increase international E&P spend by only 1%.

Companies are basing their estimates on an average crude oil price of about $70.16 per barrel compared to a $58/bbl estimate a year ago. The gas price estimate is actually down from a year ago but up from the June 2009 survey, at $5.21 versus $4.68.

Finally, good news for companies that furnish exploration data to the oil companies: About 45% of the respondents anticipate spending more of their capex on exploration.

Cautious or not, this seems to be a good time to be optimistic.

We recently had a “post-mortem” meeting following last week’s North American Prospect Expo. I didn’t spend a lot of time in our booth, but those that did all echoed the same comments from visitors – “I didn’t know Hart did all of this!”

Hart does a lot. If you’re reading my blog (thanks, by the way!) you’re probably familiar with E&P Magazine, our upstream technology-focused publication. Hopefully you’ve also noticed that we keep our website updated with news, analysis, new technology launches, blogs, activity highlights, upcoming events, webcasts, videos, and a host of other offerings.

Here’s what you might not know:

• We have three “sister” publications – Oil and Gas Investor, aimed at the financial end of the business; Pipeline & Gas Technology, covering the midstream; and Fuel, looking at public policy, finance and investment, refining, transportation, sustainability, and technology.
• We have several newsletters that run the gamut from upstream to natural gas processing to downstream issues.
• We produce “play books” on hot plays, typically shale plays. These books are among the most comprehensive when it comes to everything you might want to know about a specific play. They are available at our Hart Store, https://store.hartenergy.com/.
• We produce maps of areas of interest.
• We produce directories listing major players by region. We’ll soon have a directory listing oil and service companies in the Marcellus Shale.
• We produce special supplements on specific regional and technology topics as well as field development supplements focusing on major fields coming onstream.
• We put on numerous conferences throughout the year, including our Developing Unconventional Gas (DUG) series. Last year we had a DUG East conference in Pittsburgh for the first time which was one of our largest ever, and this year we will have our inaugural Developing Unconventional Oil (DUO) conference in Denver.
• Our downstream consulting group publishes special reports on areas of interest relevant to that segment.
• We publish show dailies for several of the large trade shows, including the Society of Exploration Geophysicists.

Want to know more? Check out www.hartenergy.com. It will link you to all of these sites, and more.

This company has grown from a small regional magazine to what it is now. We’ll try to keep you up to date with the changes!

In a timely move, Shell International Exploration & Production B.V. and Delft University of Technology have started a joint research project called “The Recovery Factor.” The goal is to develop solutions and innovative technologies to increase recovery. Staff from Shell and Delft, including eight new Ph.D. students, will work on the project, initially scheduled to run for six years.

With more companies looking to squeeze remaining hydrocarbons out of existing fields, and with the industry-wide recovery factor hovering at about 35%, the program hopes to discover better ways to nudge that factor up. An increase of just 1% would result in 88 Bbbl, enough to replace three years of world production.

The project’s aims are to combine new technology with traditional methods. Key components include the application of measurement and control techniques, or Smart Fields, technology, and the injection of chemicals to make oil more easily producible.

The two organizations have developed a strong position in Smart Fields technology over the past few years, and The Recovery Factory hopes to bring this to the next level by using fundamental understanding of subsurface processes to achieve smart enhanced oil recovery. This might be accomplished through “sniffing sensors” to detect chemical components in wells and advanced computer models to control and optimize the process of hydrocarbon extraction. Combining measurements from several data sources such as fiber-optic sensors, permanent seismic sensors, and satellite sensors that remotely measure minute deformations of the Earth’s surface are other promising techniques.

The next step would be to combine these different pieces of information into a mathematical model instead of using only one or two of the individual methods. This will provide better insight into the recovery process and allow for improvement.

Shell will bring the expertise of its Hydrocarbon Recovery Technologies team to the program, and three different faculties from Delft – the Department of Geotechnology, the Delft Centre for Systems and Control, and the Delft Institute of Applied Mathematics – will contribute and participate.

Despite the fact that the industry is beginning to feel confident again in stable commodity prices, the geological challenges of finding new reserves still remain. Programs like this will be crucial to help produce more of the oil we’ve already found.

You’d think these folks would know better.

First was Climategate, a series of e-mails questioning the science behind climate change claims. Then came the admission from the Intergovernmental Panel on Climate Change (IPCC), a UN-appointed panel, that their postulation that glaciers in the Himalayas would be melted by 2035 was based on a brief interview with a scientist who later said his statement was speculation.

Now the IPCC is back in the news for similar false statements. But first let’s review: two years ago the IPCC issued a report that claimed to have incorporated the latest and most detailed scientific research. Among those claims was the aforementioned glacier disaster and, as the London Times reveals, a statement that global warming would wipe out 40% of the Amazon rainforest. It is now revealed that this information came from an unsubstantiated claim by “green campaigners who had little scientific expertise.”

This is fairly alarming. Countries around the world are considering climate change legislation based on reports like these, but without scientific evidence, let alone peer review, it all boils down to a rather serious knee jerk. And we could all pay the price.

The 2007 report states that even a slight change in rainfall could result in rainforests being replaced by savannah. Apparently the source was the World Wildlife Federation (WWF). According to the Times, the report was authored by two “green activists” who based their claims on a study published in Nature. The Nature article actually blamed human activity, not global warming, on destruction to the rainforest.

“This weekend, WWF said it was launching an internal inquiry into the study,” the Times reports.

In addition to the rainforest and glacier debacles, the IPCC report also stated that climate change may increase the frequency and severity of natural disasters like hurricanes and floods. Other research indicates that hurricane activity is actually likely to decrease, although the severity may increase.

In all, the only scientific fact that everyone seems able to agree on is that greenhouse gases have the capability to increase global temperatures. But when a renowned organization like the United Nations can’t get it right beyond that, one wonders how many more dubious claims may prove to be unwarranted.

Nobody can predict the future. But when more than 100 senior executives at independent oil and gas exploration and service companies show unbridled optimism for 2010, it’s worth taking note.

Grant Thornton released its annual survey of upstream US energy companies, titled “The state of the industry – Trends, plans, and policies,” to media representatives Jan. 27. While respondents weren’t 100% in agreement in a rebounding industry, they were certainly much more hopeful than they were a year ago.

Reed Wood, Grant Thornton LLP’s partner-in-charge of the firm’s energy practice, said, “[Optimism] was convincingly evident in their outlooks for prices, capital expenditures, and employment.”

While only a third of the respondents expect an overall increase in employment for the industry as a whole in 2010, half indicate that their companies would increase employment levels. The numbers for 2011 are even more promising, with 74% saying that they expect industry employment to increase and 56% expecting their own companies’ employment to increase.

With regard to the economy, two-thirds believe that conditions will improve enough for the US economy sometime during 2010 for most business leaders to consider the current recession to be over.

Wood feels the survey responses confirm other dialog with industry leaders that “the upstream industry experienced increased cash flow during the second half of 2009 and more favorable interest in their domestic capital-intensive projects requiring highly trained and experienced personnel. Continued stabilization and improvement of the key drivers should result in 2010 as a strong beginning of hopefully another extended recovery for the industry and the US pursuit of less dependence on foreign resources.”

Other highlights:

• Uncertain natural gas and crude oil prices repeat for a second year as the top concerns in the industry today;
• Respondents still believe that incentives for increased US drilling are the number one way for US consumers to reduce energy prices;
• While most respondents view alternative fuels as a long-term solution, respondents indicated that clean coal is the most likely to be effective in the short term;
• The area of most opportunity is successful exploitation of existing prospects, followed by mergers and acquisitions and then operating efficiencies; and
• While 35% of respondents believe the US is a global leaders in the industry, 80% believe the US is lagging by its dependence on foreign sources of energy.

Bruce Vincent, Swift Energy CEO and chairman of the Independent Petroleum Association of America (IPAA), briefed reporters on the survey as well as some of his organization’s ongoing concerns about the current administration. He agreed that the main message from the survey was one of optimism, and job growth expectations are one of the more meaningful takeaways. Optimism has spread to lending firms, which are more likely to lend money and finance projects. This in turn leads to more aggressive E&P plans, and he feels companies are well-positioned going into 2010.

“IPAA focuses on the ability of our industry to provide good job growth in a tough economy,” he said. “These are not hard jobs to create, and job growth leads to energy security.”

His primary concerns going forward relate to the energy policy in the US. Shortly after Barack Obama was elected, IPAA officials met with his administration and felt that the group understood the role of energy, and particularly natural gas, to the US economy. However, Obama’s first budget proposal put every industry tax incentive on the table to be removed. While this would add significant money to the Treasury, it also would have the unintended consequence of killing job creation and making many wells, including most of the stripper wells that account for 20% of current US production, uneconomic.

“I’m sure this is not what they were thinking of when they came up with the idea,” he said.

Regulatory issues are another threat. Access to public lands has long been a concern for IPAA, and Vincent noted that the amount of money the Department of the Interior (DOI) took in from leasing in 2009 was only 10% of the amount it had garnered the previous year. The EPA’s endangerment finding, studying the effects of global warming on species, could affect not just the oil and gas industry but almost every industry in the country. The Senate, meanwhile, is considering a bill that would change the way leases are offered – instead of industry earmarking the areas it wants open for leasing, a group within the DOI would make that decision for them.

“When you’re marketing a product, you don’t tell the customer what product you’re offering; you ask him what he wants,” he said.

Financial reform measures, particularly those that involve hedging, are also a concern. While certain financial reforms are a must given the 2008 bank and real estate crisis, hedging is a legitimate practice that, Vincent said, provides a price risk management strategy for industries (not just oil and gas) that are affected by price volatility.

Finally, he’s concerned about impacts that pending legislation could have on future market conditions. While the Waxman-Markey bill, passed by the US House of Representatives in June 2009, is supposed to be a climate change bill, Vincent said that coal actually comes out the winner, not oil or natural gas.

“It doesn’t make sense for a member of Congress to decide the winners and losers,” he said.

He agreed with the Grant Thornton that incentives are the best way to reduce America’s reliance on foreign oil. And he disagrees that the thing the oil and gas industry really needs is more regulatory oversight.

“When people in Congress ask me what I want from them, I say, ‘Just leave us alone,’” he said.

We thought Climategate was bad.

News comes from London that the inter-governmental Panel on Climate Change (IPCC), an organization set up by the United Nations, would retract a statement warning that most of the Himalayan glaciers will melt by 2035 due to climate change. The statement was made two years ago when the IPCC issued a report that claimed to have incorporated the latest and most detailed scientific research.

“Glaciers in the Himalayas are receding faster than in any other part of the world and, if the present rate continues, the likelihood of them disappearing by the year 2035 and perhaps sooner is very high if the Earth keeps warming at the current rate,” the authors wrote in the report.

An article in The Economic Times states, “In the last few days, the scientists behind the warning have admitted that it was based on a news story in the New Scientist, a popular science journal, published eight years before the IPCC’s 2007 report.” That report, in turn, was based on a telephone interview with Syed Hasnian, an Indian scientist, who later said the claim was speculative and not based on any formal research.

But wait – it gets better. Another report from the BBC states that the scientists may also have used a 1996 article by VM Kotlyakov that mentions 2350 as the year by which there will be “massive and precipitate melting of glaciers.” J. Graham Cogley, a professor at Ontario Trent University, brought the Kotlyakov report to the news agency’s attention, noting his astonishment that none of the 10 authors of the 2007 report could spot the error.

“I do suggest that the glaciological community might consider advising the IPCC about ways to avoid such egregious errors as the 2035 vs 2350 confusion in the future,” he said.

Meanwhile, another scientist claims that the Earth is entering a mini-Ice Age, according to Fox News. Mojib Latif, a professor at the Leibniz Institute at Kiel University in Germany, thinks the cold snap the United States endured in early January is indicative of cooler temperatures to come based on an analysis of natural cycles in water temperatures in the world’s oceans.

However, this 30-year deep chill will just be a blip in the larger climate cycle, he said. Changes in ocean currents known as the North Atlantic Oscillation are responsible for the cooling effect; ironically, Latif also said that fluctuations in these currents could be responsible for the increase in global temperatures in the last 30 years.

Naturally, some are blaming the cold temperatures on global warming. Mike Serreze, a senior research scientist at the US National Snow and Ice Data Center, agrees that ocean variability contributes to variations in surface temperatures but disagrees with Latif’s conclusions. “This is just the roll of the dice, the natural variability inherent to the system,” he said. “We are indeed starting to see the effects of the rise in greenhouse gases.”

E&P Magazine features tend to be somewhat siloed – exploration, drilling, production, etc. But we all know that the industry today doesn’t fall neatly into disparate categories. Seismic technology is used for production monitoring. Logging and drilling are now done at the same time.

So this year we’ve added a feature that addresses not exploration, drilling, or production challenges per se but rather “operator challenges” – risk management, operating efficiency, extending reservoir life, etc. A wide range of technologies and techniques spanning the entire upstream segment can be brought to bear on these issues.

While we work hard to be the eyes and ears of the industry for our readers, we can’t be everywhere at once, so your help is welcome. If your company has developed a technology or best practices to solve some of these thorny problems, feel free to write about it for us. Science is all about sharing ideas, and this is the perfect forum for some serious idea-sharing.

Upcoming operator solution features include unconventional resource development, improving exploration success, extending reservoir life, production improvement, and asset integrity optimization (for a complete list, see our media kit at http://www.epmag.com/Images/PDFS/HEP_MediaKit_2010.pdf). Contact any of the E&P editors if you have an article you’d like to see included in one of these features. Also, if you are an operator seeking solutions to a particular problem, let us know – we’ll try to find the answer for you!