Ideas Give Technology the Edge

The Niger Delta extends southward to offshore Cameroon. Sediments in the area are Tertiary sands and shales nearly identical to those producing in offshore Nigeria.

In 1977, Elf and Royal Dutch/Shell reviewed the area and concluded that future fields in Offshore Cameroon were likely to be small, and that Royal Dutch/Shell's modest share of the concession made it of minor value to them.

American Shell's international division (Pecten) was offered a chance to take over the Royal Dutch/Shell interest and its ongoing obligations in the Rio del Rey area.


Garland Speight and F.P. (Hoppy) Conger traveled to The Hague to review the data from Cameroon. Both Speight and Conger were familiar with Shell's closely held techniques for direct detection of hydrocarbons with seismic -- and they were delighted at what they observed.

"It's a meadow of bright spots!" they reported.

The team agreed that the fields would probably be small by international standards, but could be found with few dry holes. Their experience in the Michigan reef play made them confident that many small fields could be linked efficiently in a regional production plan.

Pecten took over Royal Dutch/Shell's 20 percent interest in the Rio del Rey concession. Elf was operator in Rio del Rey, and was proceeding on a very slow-paced seismic acquisition and drilling schedule.

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The Niger Delta extends southward to offshore Cameroon. Sediments in the area are Tertiary sands and shales nearly identical to those producing in offshore Nigeria.

In 1977, Elf and Royal Dutch/Shell reviewed the area and concluded that future fields in Offshore Cameroon were likely to be small, and that Royal Dutch/Shell's modest share of the concession made it of minor value to them.

American Shell's international division (Pecten) was offered a chance to take over the Royal Dutch/Shell interest and its ongoing obligations in the Rio del Rey area.


Garland Speight and F.P. (Hoppy) Conger traveled to The Hague to review the data from Cameroon. Both Speight and Conger were familiar with Shell's closely held techniques for direct detection of hydrocarbons with seismic -- and they were delighted at what they observed.

"It's a meadow of bright spots!" they reported.

The team agreed that the fields would probably be small by international standards, but could be found with few dry holes. Their experience in the Michigan reef play made them confident that many small fields could be linked efficiently in a regional production plan.

Pecten took over Royal Dutch/Shell's 20 percent interest in the Rio del Rey concession. Elf was operator in Rio del Rey, and was proceeding on a very slow-paced seismic acquisition and drilling schedule.

Jack Threet, vice president of Exploration for Pecten, made an offer to Elf that Pecten would spend the next $29 million to earn an additional 29 percent working interest. Pecten conditioned its offer on being operator during the "earning period" and insisted on selecting all wildcat locations during this time.

Elf accepted Pecten's offer.


Jim McCliman's Cameroon exploration team took over operations and drilled about 20 wildcats in the Rio del Rey area during Pecten's brief operatorship; most of these wildcats were oil discoveries. The wildcat locations were picked on the basis of "bright spot" analysis by a very talented team of senior staff interpreters that included Glen Harris, John Delbridge and Homer Finck. Geologic operations were supervised by John Cochran.

Success brought unusual problems; interpreters needed to avoid gas discoveries, as gas was valueless in Cameroon, and costs of drilling gas discoveries were not recoverable.

Gas was much easier to find with "bright spot" technology than oil. The seismic interpreters loved finding a new field with each wildcat, and several gas discoveries were drilled.

It was pointed out that a gas discovery was a dead loss for Pecten, and that management would not approve the half dozen new drilling recommendations that predicted gas as the likely product.

My chief interpreter went away very disappointed, then returned to plead with me: "Marlan," he said, "I know I said these next wells are probably gas ... but I'm often wrong!"

Elf resumed operatorship with a 51 percent share, but Pecten's wildcat successes made it obvious to Elf that some special geophysical analyses were being employed. Elf was quick to decipher and make use of the technology in later drilling.

Pecten obtained a neighboring concession to the south of Rio del Rey named Lokele; Pecten was operator and held 80 percent of the working interest.

Phil Jenson, vice president of production, supervised Pecten's development of the fields found by Pecten on the Lokele permit. These were the first production platforms constructed and operated by American Shell (Pecten) internationally.

Staffing of the production platforms had some special problems, as Pecten had committed to train French-speaking Cameroon nationals to operate the facilities. Pecten was fortunate to be able to bring employees from Shell's Louisiana operations, and Shell Oil's "Cajun" engineers and operators did a marvelous job in training their Cameroon replacements -- while enjoying the fishing and shrimping in the swamps and bayous of Cameroon.

(Of course, "cameroon" is Portuguese for shrimp, and those of Cameroon are justly famous.)

Oil production from Rio del Rey and Lokele peaked at 200,000 barrels per day, from an ultimate oil reserve base of about one and a half billion barrels. Only one field was significantly larger than 100 million barrels; most of the fields were 20 to 50 million barrels, confirming Royal Dutch/Shell's original technical analysis of field size distribution.

The government of Cameroon unilaterally altered the profit sharing of the contract in 1982, citing "changed circumstances." Such contract abrogations have become common around the world, and remain a continuous hazard to long-term investments whether you invest in Cameroon or offshore California.

But also, Cameroon used its oil wealth wisely to improve the infrastructure of the country, building highways, a railroad and providing electricity and water wells to villages. For many years Cameroon was the only country in western Africa to show positive growth in GNP.

Pecten also provided university education for many Cameroon citizens, as well as a continuous program of in-house technical training for geologists, geophysicists and engineers. SNH, Cameroon's national oil company, contains many Pecten-trained scientists -- and Pecten "alumni" now hold important jobs in the Cameroon government.


And what can we learn from this play?

I learned that even sister companies with the same technology can look differently at an exploration play, because each group has different experience and different needs.

I think I learned that one has only a year or two of competitive advantage in new ideas or technology -- that advantage needs to be ridden hard for its brief advantage.

Now, is that the way it really happened?

Maybe not, but that's the way I remember it.

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