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.