Luck Rewards Knowledge, Preparation

Syria was "off-limits" to Western oil companies for much of the 1950s, '60s and '70s; Russian and Romanian oil companies shared exclusive exploration rights in Syria with the Syrian Petroleum Co., without significant success. Technical efforts included some high quality surface structural mapping that guided the drilling of a number of unsuccessful wildcats on surface anticlines.

Shell Oil's international subsidiary, Pecten International, became interested in Syria in the mid '70s. Syria had a number of old heavy oil fields, little or no light oil production, and the exploration techniques being used by the Syrians, Russians and Romanians appeared to be 1940s and '50s technology.

Pecten had an investment philosophy to invest only where its technology and money were needed, not just wanted. Syria seemed to need new technology and investments.

Pecten discovered that much of the well cuttings and electric log data from early exploration in Syria resided in the warehouses of Reading University in the United Kingdom, and was available for local research. Roger Vernon of Pecten was offered as adjunct professor to Reading University for a year, and his research was able to provide Pecten with valuable information about the stratigraphic section, source rocks, reservoirs and basin temperature history.

Igor Effimoff of Pecten led a parallel study to understand the regional structural picture in Syria. Hans Widmer provided an integrated picture of the prospectivity of Syria.

Political risk experts in the '70s were nearly universal in their view that Syria was an unstable, unreliable country that would be very hostile to American involvement in their petroleum business. Only professor James Bill, then at the University of Texas, offered a knowledge-based alternative opinion.

Hearing of a relaxation of restrictions against Western oil companies, in 1977 Pecten sent a senior executive to Damascus to make an on-site assessment of political risk and hydrocarbon prospectivity.

Great dissatisfaction with the Russian presence in Syria was observed. Russian staff lived within guarded compounds and behaved as an occupying force in a less developed country.

No anti-American reactions were observed during several weeks of direct interaction with Syrians in the government, in the shops and in the countryside. Pecten was courteously received by the Syrian government, and encountered a number of American-educated professionals in the government. Pecten also had a number of discussions with American diplomatic and commercial officials who offered their help in assisting Pecten's operations in Syria.

Pecten decided the political risk was substantial, but manageable.

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Syria was "off-limits" to Western oil companies for much of the 1950s, '60s and '70s; Russian and Romanian oil companies shared exclusive exploration rights in Syria with the Syrian Petroleum Co., without significant success. Technical efforts included some high quality surface structural mapping that guided the drilling of a number of unsuccessful wildcats on surface anticlines.

Shell Oil's international subsidiary, Pecten International, became interested in Syria in the mid '70s. Syria had a number of old heavy oil fields, little or no light oil production, and the exploration techniques being used by the Syrians, Russians and Romanians appeared to be 1940s and '50s technology.

Pecten had an investment philosophy to invest only where its technology and money were needed, not just wanted. Syria seemed to need new technology and investments.

Pecten discovered that much of the well cuttings and electric log data from early exploration in Syria resided in the warehouses of Reading University in the United Kingdom, and was available for local research. Roger Vernon of Pecten was offered as adjunct professor to Reading University for a year, and his research was able to provide Pecten with valuable information about the stratigraphic section, source rocks, reservoirs and basin temperature history.

Igor Effimoff of Pecten led a parallel study to understand the regional structural picture in Syria. Hans Widmer provided an integrated picture of the prospectivity of Syria.

Political risk experts in the '70s were nearly universal in their view that Syria was an unstable, unreliable country that would be very hostile to American involvement in their petroleum business. Only professor James Bill, then at the University of Texas, offered a knowledge-based alternative opinion.

Hearing of a relaxation of restrictions against Western oil companies, in 1977 Pecten sent a senior executive to Damascus to make an on-site assessment of political risk and hydrocarbon prospectivity.

Great dissatisfaction with the Russian presence in Syria was observed. Russian staff lived within guarded compounds and behaved as an occupying force in a less developed country.

No anti-American reactions were observed during several weeks of direct interaction with Syrians in the government, in the shops and in the countryside. Pecten was courteously received by the Syrian government, and encountered a number of American-educated professionals in the government. Pecten also had a number of discussions with American diplomatic and commercial officials who offered their help in assisting Pecten's operations in Syria.

Pecten decided the political risk was substantial, but manageable.

Difficulties

Technical assessment was difficult. No data could be reproduced or taken out of the country. The seismic data were stored as dusty piles of paper, indexed by memory.

Since most surface anticlines had been drilled, technical review focused on areas of deep structure that was non-conformable to shallow, and to areas of substantial stratigraphic thicknesses.

Most interesting was an area of poor quality data under the Euphrates River alluvium, where seismic hinted at deep structural events that were not conformable to shallow structure.

On the basis of the pencil sketches made from memory of the seismic data, Jack Threet, Charlie Blackburn and John Bookout of Shell Oil approved entry for Pecten into an area in southeastern Syria, near Iraq.

A joint team from Royal Dutch/Shell and Pecten spent several weeks negotiating a contract with the Syrian government when -- suddenly -- the deputy petroleum minister announced:

"I'm very sorry, the Dier ez Zor block you have been negotiating for has been awarded to another company ... You may have any other block."

Protests went nowhere, and Pecten reluctantly accepted a lightly explored "similar" block (Rasafa) about 30 miles west of the desired block.

Pecten was operator for Pecten/RDS, and Roy Stoesz began a major exploration program on the Rasafa block, with operations handled by Lloyd Daugherty, a surface geology team led by Lee Garrett, and several seismic crews under the direction of Roger Baker. Hisham Yazighi became Pecten Syria's first and longest serving employee.

Tom Velleca's staff in Pecten Houston Office designed a seismic program for the Syrian Desert.

The seismic crews had many difficulties and equipment and data quality -- but had no problems with water wells, fences or access.

Crew directions went something like: "Shoot 100 kilometers due north, go west 10 kilometers, and shoot 100 kilometers due south."

Pecten and RD Shell drilled five or six unsuccessful wells on their Rasafa block and, after spending nearly $30 million, considered exiting their Syrian play. Pecten's wildcats had established that structural traps, thick reservoirs and light oils occurred on their block, but Pecten could not find where all the necessary components of a commercial accumulation occurred together.

Pete Lucas established a "one-last-look" basin evaluation team, headed by Bob Heacock of Pecten and Phil Lovelock of RDShell. After concluding a complex structural, stratigraphic and geochemical study, the originally desired Dier ez Zor block some 30 miles to the east in the valley of the Euphrates re-emerged as the best area for commercial accumulations.

Pecten/RDShell management took a deep breath, abandoned their efforts on the Rasafa block, and in 1982 made an offer to buy out Samoco (Coastal) and partners in their four-million-acre Dier ez Zor block. Pecten/RDShell purchased all of Samoco's interest, and much of Deminex's interest.

Deminex was unable to obtain government permission to transfer their final 37 percent interest, and became a reluctant participant in Pecten's first wildcat in the Euphrates Graben.

The first wildcat selected by Jim McCliman's team was on a large, faulted structure named Thayem, adjacent to a deep graben filled with Cretaceous organic-rich rocks, which Franz Schoenagel expected to be mature and oil-expelling in the graben. Primary objective reservoir was the Judea Limestone, but an important secondary objective noted in regional work was the Rutbah sandstone of Cretaceous age.

The Thayem wildcat became the first significant discovery from the Rutbah, and was capable of producing over 10,000 barrels of medium gravity oil per day from a very thick pay section. Discovery of the 200 MMBO Thayem field provided a new petroleum province to Syria.

When news of the discovery of oil was conveyed by Pecten staff to President Assad, he exclaimed, "My people said we should stay with the Russians; I said we should try American technology -- and you have proven me right!"

Under the Syrian contract, all production operations were to be conducted by a newly created joint operating company. Lewis Stock of Pecten undertook the very difficult job of creating an entirely new Syrian/American operating company (Al Furat), while simultaneously supervising desert operations to produce and transport several hundred thousand barrels per day of recently discovered oil.

To accelerate cash flow, the very first wildcat produced oil into a temporary pipeline that was borrowed from the Syrian Army and laid on the surface of the desert. Later, a fleet of trucks transported oil directly to Syrian refineries.

Finally, on completion of field facilities in 1984, the oil was pipelined to a Syrian port for export and sale.

Pecten, RDS, and Deminex continued to explore and discover about 40 other fields in Syria, with production building to 400,000 BOPD by 1992.

In 1986, Pecten was shocked to be informed privately by the United States government that it would invoke sanctions against any U.S. company operating in Syria; Pecten withdrew its American staff from Syria and transferred its interests to its parent and partner, Royal Dutch/Shell.

A year later those U.S. sanctions were quietly withdrawn as a result of improved relationships between America and Syria, but Pecten was already gone.

The Pecten/Shell/Deminex staffs were among the first Western businessmen to have large-scale involvement in the Syrian economy, and the group established a reputation for fair and honest business dealings with suppliers, contractors and the Syrian government.

Lessons From Shell's Syria Success

What lessons were learned from this exploration success?

This play taught me that political risk analysis is not a science, hardly better than guesswork. No political risk analyst suggested that the largest political risk facing Pecten would be the reversal of support by the United States government in the middle of the play.

This play reminded me that the "best" area for finding commercial accumulations is ten times better, perhaps a hundred times better, than nearby "similar" areas. "On Trend" areas are a dime-a-dozen. Oil fields are always a specialized local circumstance.

This play taught me the virtue of persistence in pursuit of a valid exploration concept. Early tests did not invalidate the concept; they merely refined the location of eventual success.

This play reminded me that LUCK is the reward for being technically knowledgeable and well prepared.

At least ... that's the way I remember it.

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