Exploration

Pursuant to last week’s blog, companies continue to have pleasant surprises in some of Africa’s newer plays.

Take Tullow Oil, for instance. The British independent confirmed Sept. 13 that its Owo-1 sidetrack, drilled in its Deepwater Tano license offshore Ghana, had “significantly extended” its light oil discovery in that well. “Results of drilling, wireline logs, and samples of reservoir fluids confirm that Owo is a major new oil field,” the company’s website reported.

The original well encountered 174 ft (53 m) of net pay, and the sidetrack, located about 2,000 ft or 600 m east of the discovery well, found an additional 52 ft (16 m) of net oil pay in the lower part of the same channel system. Pressure data indicate that the reservoirs are in communication, and there is also a condensate play beneath the oil play.

The well is in water depths of about 4,685 ft (1,428 m).

Currently plans for the well are to suspend it for future appraisal and development, and the Sedco-702 will move to the Onyina-1 exploration well, targeting a large Campanian prospect between the Tweneboa and Jubilee fields. P-90 reserves for the area are 250 MMboe, with P-10 reserves estimated at 1.4 Bboe.

According to AFP News, the find comes just three months before the Jubilee field, one of the largest finds in West Africa in the past 10 years, comes onstream. The news agency also notes that Ghana’s recent oil discoveries have created a border dispute with neighboring Ivory Coast.

Citifmonline.com reports that Head of Corporate Affairs at Tullow Oil Ghana, Tony Aubeng, claimed the find is “a major new oil field” and is “very significant in terms of the opportunities for commercial production additional to the Jubilee field.”

All it takes are a few huge discoveries to make the industry take a new look at what it considered an established province.

Such is the case with Africa. Nigeria and Angola have long been the heavy hitters in West Africa, with Algeria, Libya, and Egypt taking the lead in North Africa. But in a talk at the Houston Geological Society International Explorationists Dinner, Duncan Macgregor with Neftex Petroleum Consultants and Surestream Petroleum said that, with the exception of the eastern Mediterranean portions of Libya and Egypt, these plays are beginning to peak out.

But this is no reason to write the continent off. Macgregor said that new discoveries in Ghana, Israel, and Uganda are challenging established geological paradigms in trap styles and reservoirs, even though most of them are extensions or analogs of the main source rock systems.

This effort has primarily been led by independents such as Tullow, Kosmos, Hardman, Heritage, and Noble, which are taking on significant frontier exploration risks to make these discoveries.

Macgregor outlined several key learnings:

· High stratigraphic trapping potential in turbidite systems on slopes and bypass zones;

· Exploration moving farther out onto basin floors;

· A large contribution from non-marine systems and a low contribution from shallow marine systems;

· A highly dynamic petroleum system in the Albertine Basin of Uganda that makes conventionally high-risk trap styles effective; and

· Source rocks that underwent greater burial and maturation than is apparent from present-day burial depths.

He said that the next petroleum province will likely be along the trend of one of the major source rock systems and that an element that the industry doesn’t fully understand is causing companies to be overly leery of the risk involved in this province. The challenges to gaining this understanding, he said, include reconstructing the paleogeography of Africa to high-grade basins and regions for 3-D and direct hydrocarbon indicator (DHI) risk reduction, developing techniques for exploring traps below the DHI floor, identifying further sweet spots, identifying regions of maximum trap preservation potential, and reconstructing the burial history of onshore basins containing developments of major source rocks.

Finally, he said, the industry needs to acknowledge the fact that Africa’s petroleum geology has offered up surprises and will continue to challenge established geological paradigms. “Success may, however, come to those who best integrate the regional geology to reduce their exposure to risk but still make allowance for Africa’s petroleum geology to surprise them, positively or otherwise,” he said.

In the 1930s in movies featuring Mickey Rooney and Judy Garland, the solution to any problem was to put on a show.

In today’s oil patch, the solution might be a golf tournament or a sporting clay event. The show might have evolved, but the goal is the same – to raise money and lift spirits.

That’s the mission of Oilfield Helping Hands (OHH), a non-profit organization that raises money through a variety of events and distributes it to families in financial need. Founded in late 2003, the organization has assisted 100 families and distributed more than US $928,000 in financial aid.

Richard Saxon, an investment management consultant for Raymond James Financial Services Inc. and a former president of OHH, said the genesis of the organization was an employee who had worked for Baroid for 38 years and suddenly had to be hospitalized. “His friends got together months after he’d gone into the hospital and put together a fund-raiser, a sporting clay event,” Saxon said. “His wife didn’t know anything about it. They raised $23,000, showed up at the hospital, and gave her a check. She was completely blown away.

“It wasn’t the money that did it; it was the fact that they were there for her. That’s the way OHH is today. We are there for the families when they need it the most.”

The group relies mostly on corporate and individual sponsorships for its events, and Saxon said that a successful event can raise more than $100,000. Recently, Hunting Energy provided OHH with a grant that will enable it to help families anywhere in the oil patch, not just the Houston area. This will allow OHH the opportunity to reach out to more families in need throughout the US.

Candidates for grants must have worked or studied to work in the upstream segment of the industry for five years and must been in financial crisis through no fault of their own. Typically this is due to an illness, but one of the upcoming events has been created to address an emergency situation – it is dedicated to the employees and families of employees who were on the Deepwater Horizon when it caught fire. Saxon said that half of the funds raised will go to the families in need and the other half will be put in an education fund for the children of the employees.

Right now, a primary goal of OHH is simply to raise awareness of its existence. “The companies don’t know that we’re there, they don’t know what we do, and they don’t know how to get funding for people in need,” Saxon said. He added, though, that once OHH holds a meeting at a company’s office and tells its story, “that company is all in.”

One company that has recently begun to champion OHH is Black Elk Energy, an independent oil and gas operator based in Houston. CEO John Hoffman said that one of the founding principles of his company is to give back to the community, and Black Elk has been doing that successfully for several years through its support of Louisiana Association of Community Action Partnerships and other charities such as St. Jude’s Children’s Hospital. As the company has seen phenomenal growth in the past few years, more than doubling in size and scope, Hoffman felt Black Elk could be doing more.

“It’s become apparent that there’s a community in pain, and it’s the oilfield community,” Hoffman said. “It’s a small community, but it’s very close to our hearts.”

Hoffman welcomes the opportunity to work with OHH, not just through donations but also “sweat equity” – volunteering to help with events, providing outreach during the fundraising period, and sharing the story of OHH with others in the industry. “We use these types of activities as Black Elk team-building,” he said. “It’s good for everyone to give back to the community. It feels good, it brings our team closer together, it defines us more clearly as a family, and it fosters the kind of culture we want at Black Elk.”

The Deepwater Horizon event will be held Sept. 24-25 at the Bentley Ranch, 3525 Bowser Rd., Fulshear, Texas. Two days later OHH will hold a golf tournament at the Black Horse golf club in Houston. Sponsorship and volunteer opportunities are still available for both events.

For more information, visit www.oilfieldhelpinghands.org.

I’ve heard of people literally “working themselves out of a job.” It happened to my father-in-law, and it’s happened to my husband – sell off all of these assets, and once you’ve sold the last one, we’ll try to find something else for you to do.

I’m starting to feel the same way about parenting. I consider it the most important job anyone can have. But in my case, I feel like the reward for a job well done is to take your kid to some strange city and leave him or her there alone. This goes against the grain of mothering, let me tell you!

So it was with enormous trepidation that we took our daughter Anna off to Boston last week to get her started in her freshman year at Brandeis University. The first couple of days were a frantic round of last-minute dorm shopping; Sunday was move-in day and parent/student orientation. We had plenty of time to tour the campus, get her room keys, get her student ID, get her mailbox key, find the cafeteria, etc., etc. I even got a little bored at one point waiting for it to be time for the next activity to start. Finally the orientation began.

Up until that point I had been quite cheerful. But when the school president asked the crowd to cheer for all of the parents in the room because of our hard work, I teared up. It has been work, sometimes very hard work. But it’s also been the most enjoyable 18 years of my life.

Finally we said our goodbyes. Anna was whisked off by her “orientation leader” and apparently has barely slept since. I’m sure they’re keeping them busy to take their minds off of being homesick. My husband and I also kept busy, walking the entire length of the Freedom Trail in pouring rain. But during one meal, I asked him, “What do we do the rest of our lives?” To which he replied, “Work.”

Not a very comforting thought.

But the fact is, I won’t stop being a parent just because I don’t need to keep the refrigerator stocked with Diet Coke again until November. This is when the real milestones start – college graduation, possibly graduate school, possibly marriage and kids. Regardless of where Anna ends up or what she ends up doing, I’ll always be her mom, and she’ll always be my kid. We’ve laid the groundwork for that over the past 18 years. It’s her chance to shine. And I’ll keep my sunglasses handy so I can enjoy her journey.

Several people have commented to me over the past few months that if BP learns from the Macondo blowout the way ExxonMobil learned from the Valdez incident, it will emerge a better and MUCH safer company in the end.

Now that same sentiment is being echoed in the general media. A recent USA Today article used a recent tour of ExxonMobil’s Hoover-Diana platform to hit home the safety culture point. Two visitors board the platform, and company policy dictates that each visitor have an escort. Only one escort is available.

“The day is routine. The weather is good. In six years, no one on the Hoover-Diana has sustained an injury that’s caused them to miss even one day of work,” the article notes. Yet the host, Ricky Martin, doesn’t waiver – he finds another escort.

This type of safety culture is a challenge to instill. Safety should come as naturally as breathing. But when it competes with things like deadlines or potentially costly delays, it can unfortunately take a backseat. And that’s when accidents occur.

While the Valdez incident was blamed on an intoxicated captain, the article explains, other factors such as a broken sonar system, crew fatigue, and improper maneuvering of the vessel by the third mate also contributed to the incident. After that, the company had to take a hard look at its safety practices, or the lack thereof.

CEO Rex Tillerson testified before Congress in June that the grounding of the Valdez led to a “top-to-bottom review” of operations. “That resulted in a safety system that now touches practically everything Exxon does, including well design, equipment standards, and safety escort rules,” the article states.

Perhaps the most telling exercise of this safety mentality came when the company halted drilling on its Blackbeard well, a high-pressure, high-temperature well that reached 30,000 ft before drillers made the decision to stop progress because they felt it would be too dangerous to complete the well. A blog on ExxonMobil’s site said, “At the time, we were criticized that we ‘didn’t have the guts’ to finish the well.”

An article in the New York Times described the drill-no drill conundrum the company faced. “Seismic reports suggested that 2,000 ft further down was a giant prize: an ‘elephant’ field of around a billion barrels of oil and gas [sic],” the article states. “But six miles below the sea floor, the conditions were hellish, with high temperatures and pressures reaching 29,000 psi, more than twice the force needed to crush a truck.”

The article states that a discussion began between the geoscientists, who were close to their goal, and the drillers, who weren’t comfortable with the conditions. The drillers won out, and the well was written off as a US $187 million dry hole.

Paul Sankey, a Deutsche Bank analyst, is quoted as writing, “Exxon’s ‘lack of guts’ looks a lot more like justified conservatism and prudence, and a prescient awareness that safety, caution, and catastrophic risk avoidance would be key themes as oil companies were forced to push the envelope in the search for oil. The fact is that Valdez pushed Exxon to the highest safety standards in the industry.”

A funny thing is happening in news coverage these days – reporters are interviewing other reporters. I honestly didn’t think they’d stoop so low. But enough Hart editors (who are, for the most part, also reporters) have been asked to do interviews that our company invested in media training.

There is a reason I’m in print journalism. I often joke that I have a face for print journalism. Being photographed makes me nervous, and being videotaped terrifies me. I must say that my fears were in no way allayed by the media training experience.

Chris Wailes and Emily Bernard from Pierpont Communications Inc. arrived at our offices carrying bundles of scary-looking electronics and gave us a two-hour presentation on how to survive an interview. I daresay I don’t want to give away too many of their secrets because I don’t want my sources using this on me, but for someone who has to be interviewed on national TV by a not-necessarily-friendly reporter, the tips are extremely useful.

The main idea is to be prepared with a message and stick to that message, regardless of how off-the-wall the questions might be. This is easier said than done (about which more later), but the consequences of being led away from your key message can be devastating.

You also need to assume that you’re “on air” from the moment you enter the building until the moment you leave. Always assume that any camera that you see is on. Wailes recounted an amusing experience – he was going in for yearly training and got wrapped up in a chat with his teacher. The teacher kept trying to get him to say that at least some of his attorney clients were, well, insert your favorite bad word here. He was finally pressed to say, “They’re NOT [bad word]s.” Later the tape was edited. He was horrified to hear the first question and his answer: “So, I understand that some of your clients are attorneys.” His one-word answer was the bad word. Luckily it was only a training exercise.

Much of the training had to do with simple preparation (drink only lukewarm water one hour before the interview because other drinks can mess up your vocal cords) and body language. Typically a TV interview captures the interviewee from the chest up, but hands should still be visible. Also easier said than done.

So after two hours of going over the basics, which wasn’t nearly long enough (some people go through several weeks of this training), we were given a fake interview request. My request was to talk to a reporter from CNBC during one of our unconventional gas conferences about gas shale development in the US.

We had 10 minutes to develop our message while trying to remember all of the advice we’d just received: staying on point while inserting analogies, quotable quotes, absolutes, etc.; keeping our hands visible; pacing ourselves while also inserting pauses for effect; moving our heads; leaning forward (leaning backward makes you look 30 pounds heavier, not a good plan!); and somehow smiling and being passionate about our topic at the same time. Then it was off to the “studio.”

The camera and microphone were already on when we entered the room, so had I said anything inappropriate, it would have been available for editing into the interview. Luckily I didn’t say anything too outrageous. Planning to discuss US shale plays, I was a little taken aback when the conversation immediately steered toward the Macondo disaster and the potential implications for regulatory reform. Somehow I steered the conversation back to what we were supposed to be talking about. But I was already barely treading water.

About two minutes into the interview, I realized that my hands were not visible. So I brought them up. What does one do with one’s hands in that position? My response was to gesticulate wildly, as if I was being interviewed in a swarm of gnats. I also seemed to have a perpetual scowl on my face, although I was simply concentrating on the questions. Do I always look that grumpy? I hope not.

My biggest faux pas was to defend hydraulic fracturing by saying it was technically impossible to pollute the water tables from a formation 10,000 ft deep. Not that this is necessarily inaccurate, but by saying the word “pollution,” I made the heinous mistake of introducing a negative word into the interview. It actually was part of my key message, but a crafty editor could have had a field day with it.

We watched and critiqued each other’s videos. I would say my only positive feeling about the interview was that I did stay on target and sounded halfway educated in my responses. I thought the rest of my colleagues did a much better job.

So when CNBC comes calling, I’ll know whom to steer them to.

The United States Geological Survey (USGS) declared the Bakken Shale the largest continuous oil accumulation it has ever assessed. And so far North Dakota is reaping the lion’s share of the spoils.

But Keith Kohl, editor of “Energy and Capital,” thinks that Montana is due for a renaissance after production dropped from 99,000 bo/d in 2006 to 76,000 bo/d in 2009. “Montana became the forgotten step-child in the US oil industry,” Kohl wrote.

The Elm Coulee field in the eastern portion of the state put Montana on the map in 2000, and by 2006 it was producing 56,000 bo/d from about 350 wells. By 2007 it had become the highest producing onshore field in the lower 48 states.

Then the USGS made its proclamation, and the rest is history — the number of rigs drilling on the North Dakota side of the border has increased 333% since December of 2008. By the end of July of this year, North Dakota had overtaken Oklahoma to be the country’s third most active drilling state, Kohl wrote. Last year it surpassed the Sooner State to become the fourth-largest oil producer in the US.

By comparison, there were only five rigs drilling in Montana in Baker Hughes’ latest rig count. But Kohl said that other signs point to a drilling boom in Montana. Why?

For one thing, Kohl estimates that Montana leases are looking more attractive as companies continue to hone their drilling and completion techniques. More telling is what’s happening at the permitting level. The Montana Board of Oil and Gas is being “flooded” with drilling permit applications, Kohl wrote. “According to one administrator, Tom Richmond, oil and gas there could [account for] more than 300 permits this year.”

Montana’s Bakken acreage is not as extensive as that in North Dakota. But with Bakken competition at a frenzied pace to the east, Montana could prove to be the next “sweet spot” in US oil shale development.

Map: The Bakken Shale covers a large portion of eastern Montana. (Image courtesy of Energy & Capital)

In today’s world of eye-popping technology, it’s often hard to remember that we once lived without cell phones, BlackBerrys, computers, the Internet, DVD players, etc.

What’s even harder to imagine is geologists and geophysicists working without workstations and modeling software.

But these technologies were not available to those entering the industry in the ‘70s and’80s. They have, along with many more exploration technologies, been developed in the relatively recent past. Rocky Roden, a geophysical consultant, recently outlined some of these game changers.

Roden spoke at the recent Houston Geological Society “TechnoConference,” the theme of which was “Ten years of technology.” His talk, titled “Geoscience Technology in the Search for Hydrocarbons this Past Decade,” was a smorgasbord of technologies that truly have altered the way we look for oil and gas.

Until 1985, he said, technology was really not a big factor in exploration. But the introduction of workstations enabled explorationists to work with 3-D data, and the advent of horizontal drilling increased success rates.

“From the mid ‘90s until today, technology drives what we do,” he said. “This is predominantly driven by the increases in compute power.”

He showed a laundry list of significant discoveries in the past decade, mostly driven by these improvements. After a trough in 2004, the industry has rebounded in discoveries, with deepwater discoveries accounting for 42 to 54% of the total from 2006 to 2009. Petrobras’ success in its presalt finds is partially responsible for this increase.

So what technologies have been driving these successes? Firstly there are advances in seismic acquisition and processing – wide-azimuth surveys, the use of longer offsets, and prestack depth migration, for instance, have all helped improve imaging beneath salt. On land, cableless recording systems allow for very dense receiver arrays, providing a better subsurface image.

Another advance that is still not widely used is multicomponent seismic. These surveys can be 3-D/3-C surveys, which record a three-dimensional survey with three-component geophones; a 9-C survey, which records three components of motion from each of three sources that generate orthogonal motions; 4-C surveys, used offshore and employing three hydrophones and an ocean-bottom seismometer; and 4-D surveys, time-lapse 3-D surveys recorded through time, usually to measure acoustic response differences as a reservoir is produced. Time-lapse surveys are not always acquired with multicomponent surveys, but the added shear wave information offers useful insights about lithology and fluid content.

Roden added that 4-D surveys are now so common that 75% of the seismic surveys being shot in the North Sea are 4-D assessments of existing fields.

Seismic processing has taken advantage of increased compute power, and companies use multiple CPU clusters to speed up processing time. Roden said that processing contractors have some of the largest computer processing facilities of any industry or government in the world.

Unconventional gas operators are taking advantage of advances in seismic technology for fracture characterization. This can be done in the wellbore with logging tools and vertical seismic profiling tools but can also be done from surface seismic by studying geometric attributes, especially similarity and curvature; analyzing compressional waves through azimuthal variations of amplitudes, amplitude vs. offset, normal moveout velocity impedance, attenuation, etc.; measuring shear wave splitting and anisotropy; passive seismic monitoring; and remote sensing, which identifies fracture lineaments.

Controlled-source electromagnetic is another significant development. Roden said that although the technology got tremendous hype when it was first introduced, it still provides a good complement to seismic.

The use of attributes has grown significantly since complex trace attributes were introduced in the 1970s. Roden said that there are now hundreds of attributes, which effectively are a measurement in the data that helps make an interpretation.

Spectral decomposition breaks the seismic data down into discrete frequency bands, he said. It can help identify layering, stratigraphy, and sometimes even direct hydrocarbon indicators. Pore pressure prediction and visualization have also been significant advances.

What will the next decade bring? Roden offered a few ideas:

1. Moore’s law will end in 2020.

2. Human knowledge will double. More scientific knowledge was created in the first decade of this century than in all of prior history.

3. Parallel processing and the integration of GPUs with CPUs will push the capacity of desktop workstations to not only handle ever-increasing volumes of data but also produce high-end graphics.

4. Nanotechnology and miniaturization of microprocessors will truly enable the intelligent oilfield.

5. Broadband data communications will continue to improve.

Looks like I’ll have plenty to write about in the next 10 years!

I always find it interesting to talk to people who have looked at things in a new way and discovered something major as a result. The oil and gas industry, of course, is full of these stories – how many times has the Gulf of Mexico been written off as “the dead sea,” for instance, before another major discovery came along?

Some of the really big discoveries have moved the industry into places where there was very little activity before. Ekofisk, for instance, changed Norway from a sleepy fishing country to one of the world’s major producers. Prudhoe Bay kick-started Alaska’s emergence as an oil giant, as did Kashagan for the Caspian region.

Wouldn’t it be great to listen to the people who had the “Eureka!” moments that led to these discoveries?

That’s exactly what I want to do. I’d like to find three or four people who can at least partially lay claim to a major discovery (realizing, of course, that these are not usually found by a single person) and have them recount their tales of frustration followed by “aha!” I’d like them to participate in a webcast and tell listeners how it feels to sit on a well knowing it’s being drilled where they told the drillers to drill, wait anxiously for the results, wait while appraisal wells indicate the field is even bigger than they thought, etc.

The problem is, I don’t know who these people are. That’s where you can help, gentle reader. If you or one of your colleagues has been part of a major discovery, I’d like to hear about it. And so would others. A mere 20 minutes of your time will educate others about the sweet taste of success when you find the big one. Or if you know of someone who’s achieved this, let me know who he or she is.

Our industry has been dealing with a lot of bad news lately. I think it’s time for us to hear some good news. If you’re interested, please e-mail me at rduey@hartenergy.com or call me at +1-713-260-6459.

I periodically get asked to participate in surveys, usually by PR agencies that want to know how to better suit our needs, and I’m always happy to participate (time permitting).

So, I didn’t think much of it when a couple of companies contacted me asking for a few minutes of my time. But these were not PR agencies. The surveyors were contracted by major oil companies gauging the media’s perception of the oil industry.

(I won’t mention the companies by name, but trust me – you’d recognize them.)

The questions in each survey were virtually the same and asked my opinion about not just the company in question, but its peer group, as well. Some of the questions were impossible to answer – I cover these companies from a news and technology standpoint but don’t necessarily swear by their gasoline and motor oil, for instance – but I did my best to give my honest opinion based on my knowledge of the company (primarily from a technology standpoint) and that company’s willingness to work with us on generating content, inviting us to press conferences, etc.

After the second survey I began to wonder about the timing. While one surveyor told me the survey had been ongoing since before the Macondo incident, I wondered why one of the surveys specifically targeted US media and why I was asked to participate in two of them within a span of four days. Are oil companies worried that Macondo will forever tarnish their image?

Well, of course, they should be, and the image has been tarnished, maybe not forever, but for a long time to come. But the interesting thing is that both of these companies have a major international presence, leading me to wonder if the recent “protectionist” stance of the US government is partially to blame – the attitude of “we let foreign oil companies lease our acreage, and look what they’ve done!” Why an American trade journalist would share that attitude is beyond me, but you never know.

Frankly, I admire all of the majors for their continued pursuit of new technology. They may not have the huge research centers of years past, but they’re still at the forefront of technology development in a very real way. I hope this came across in my answers.

As far as their willingness to work with the trade press, they score somewhat lower marks (with one major scoring almost no points at all!), but there are some glowing exceptions to that rule, as well.

So I guess I’m still a bit befuddled by the whole thing. Why did they call me? Why not a reporter for the Wall Street Journal or CNBC? (Maybe they called them too …) I’ve covered this industry for almost 15 years and can see beyond one disaster, no matter how huge, to the larger fact that, by and large, these companies are operating in a safe and environmentally friendly manner.

Maybe they just need that reassurance.