Celebrating the past is an important aspect of our 100th anniversary and featured prominently at the Annual Convention and Exhibition (ACE). From a full-day event on pioneering women in geoscience, to the special History of Petroleum Geology session, to an inspirational talk inspired by Wallace Pratt and presented by Erick Devine, an actor, portraying him at the Division of Professional Affairs luncheon, the nearly 7,800 attendees at ACE were reminded at every turn of the legacy of our profession. We truly stand on the shoulders of giants.
But as we look ahead to the rest of 2017 and beyond, our focus must be on the future.
There are many looming questions for our profession, from the evolving role of geoscience in conventional and unconventional exploration and production to how alternative energy sources will affect global energy markets in the years and decades ahead.
Not a Swing Producer
CERAWeek is an annual event presented by IHS Markit (parent company of Cambridge Energy Research Associates, for which the event is named) and hosted by Dan Yergin, who spoke at the centennial gala at ACE. Known as the “Davos of energy” it serves as a hub for energy ministers and CEOs from across the globe to gather and talk.
One of the principal discussion topics this year was how unconventional resources were affecting energy markets.
I’ve heard people suggest that U.S. shale producers are the new swing producers in the market, bringing the marginal barrel of oil to the markets. But that’s not how market experts see it. They differentiate between swing producers, short cycle time projects, and long cycle time projects.
The swing producer is one who has excess production sitting behind the valve. And that resource can come to market quickly and easily with a simple twist of the valve. Saudi Arabia still dominates this role on a global basis. Surely other producers occasionally have excess production, but on a consistent basis it is Saudi Arabia that plays this role in world markets.
Short cycle time projects, in contrast, might take anywhere from six to 12 months to deliver first oil to market. This is where small conventional exploration and most unconventional resource development takes place. Shale producers can quickly bring new supplies to market, and they are filling an important and growing space in the oil and gas markets portfolio. At times they can nearly be swing producers.
That leaves the long cycle time projects: the massive, complex operations that take five to 10 years to fully develop and deploy. Typically large discrete oil and gas reservoirs, these developments are the engineering and commercial marvels that most of the public thinks about when it thinks of “Big Oil.”
Reading the Signals
Each of these project types has unique opportunities and challenges of its own. Each contributes in its own way to supplying oil markets and, historically, the natural boom and bust cycles that characterize commodity markets have sent appropriate signals to oil and natural gas producers to invest in the types of projects that will best position them to meet expected demand.
The current oil and natural gas prices have been sending signals to producers resulting in underinvestment, which sets the stage for another future price shock. And, this had some presenters at CERAWeek fretting earlier this year. Fatih Birol, executive director of the International Energy Agency, and Mohammed Barkindo, secretary general of OPEC, both warned that the cutback in investments during the current downturn – while understandable – would put pressure on future supply even as demand continues to grow.
Our job at AAPG is not to predict the markets, though each of us in this profession needs to understand that we’re operating within these markets. But our principal responsibility is to help you more effectively find oil and natural gas, whether that is in short-term or long-term projects.
And in the next 90 days we’re presenting you two opportunities to do just that.
This month of the Offshore Technology Conference (OTC) convenes in Houston. Thanks to the efforts of AAPG Members on the AAPG subcommittee, led by Buford Pollett and Eric Cauquil, who each year work to develop a strong geoscience technical program. They’ve done it again this year, and I encourage you to attend OTC, visit the technical sessions, and the exhibition.
The second opportunity is in July when we will launch the 2017 edition of the Unconventional Resources Technology Conference (URTeC) in Austin, Texas. Much like OTC, this multidisciplinary conference for geoscientists and engineers is dedicated to advancing the science of unconventional resources.
Whether you’re pursuing long cycle time or short cycle time projects, it’s time to get exploring.