Thanks to stubbornly-high commodity prices, record profits are being
rung up at a host of oil and gas firms. For the most part they're
using the accruing volumes of cash to pay down debt and spruce up
their financial standing in general.
Like most
businesses, however, these companies can't go on forever selling
what's on hand. At some point, they must replenish the inventory,
i.e., get busy exploring for hydrocarbons once again.
Finding
the skilled folks to do the oil finding looms as a thorny problem
to be addressed.
"Going
forward, one, if not the, critical issue facing the industry is
the availability of skilled explorers," said Brian Maxted, founding
partner of Dallas-based Kosmos Energy LLC. "The companies are now
thinking about exploring again, but there are no people to go out
and explore."
This issue
will be a principle theme of the Michel T. Halbouty Lecture presentation
"Exploration Perspectives and Paradigms — Finding Oil in the Future,"
which Maxted will present at the 2004 AAPG Annual Meeting in Dallas.
The current
lack of skilled explorationists can be attributed to a number of
culprits. There are a couple at the top of the list:
- With
all the mergers, companies are going through growing pains and
not taking new graduates in like they used to, creating a dearth
of skilled younger workers.
- Cutbacks
in exploration have hindered older workers from honing their exploration
skills.
"One of
the things I've seen in recent years is that you can still become
trained formally in different aspects of oil and gas exploration
through a structural geology, geophysical, geochemistry course,"
Maxted said. "But there's no course in the end that's "How to Find
Oil," no course puts it all together.
"It's not
just technology skills and abilities you need, but some of that
mental side of finding oil," he said. "A lot is about perception,
approach and appetite for risk.
"I want
to try to explore this with my presentation and use my experience
of past successes and failures to see if I can put some kind of
lessons learned together that can benefit a wider audience."
Needed:
Regional Expertise
Maxted
noted that such lessons learned, both positive and negative, are
a vital part of oil finding that's missing both within companies
and between companies in the industry.
The issue
of risk must be re-evaluated, given that risk aversion is prevalent
in most companies today. Much of the blame for this phenomenon can
be attributed to 3-D seismic.
As workstations
developed alongside evolving 3-D technology, the focus turned to
finding oil on a workstation. This became a powerful visualization
tool, creating an image to use either pro or con to convince management
in decision-making, especially if a brite spot was related to a
prospect.
"These
were typically lower risk," Maxted said, "and what happened is,
where reservoirs with oil were seen on 3-D, there was a significant
migration, especially with the majors, to relatively low-risk exploration
in various parts of the world, including the Gulf of Mexico.
"The industry
is now to the point where most 3-D seismic signature-type features
have been drilled," Maxted said. "So they're saying, where do we
go next?"
Perhaps,
Maxted suggests, it's time for a return to prominence of the regional
geologist who reigned as kingpin in the industry once upon a time.
"Over the
last 10-15 years, the geophysicist became much smarter and the geologist
took a back seat," Maxted said. "It was only when we started seeing
multiple failures with 3-D that the geologist became important again.
"Now that
many of the seismic signature areas are drilled up, the regional
geologists are an important part of the exploration puzzle to understand
source rocks, reservoirs and traps," Maxted noted. "But that's an
area that's suffered most over the last 10-15 years because of lack
of training, so there's a dearth of this critical skill."
The industry
will be highly challenged as it segues from the successful, low-risk
cycle of 3-D, geophysics, workstations and such to a higher risk
cycle of more frontier-type plays without abundant resources to
pursue these plays.
"This will
be interesting to watch, since there will be more losers than winners
in this cycle," Maxted said. "The key is what will differentiate
and distinguish between those that are going to find oil in the
future and those that aren't. I want to try to explore this in the
paper, try to look for factors that determine success over failed
exploration."
The successful
company of the future is one that will be:
- Primarily
technically driven from a basin and petroleum system standpoint.
- Able
to put geological models together that support geophysical interpretations.
"Many of
the geophysical plays have been drilled out, and if you can't image
and see things with seismic, they are perceived to be high risk,"
Maxted said. "There is no technical tool that lets you see oil in
a seismic section in some of these areas, so it will require a mindset
change from a risk standpoint.
"Companies
will have to go back out and take risks," Maxted said.
Wall Street
demands it.
"The market
today does not reward for simply growing bigger," Maxted said. "It
rewards for creating value for the shareholders. Buying reserves
and production doesn't increase shareholder value."