Staying in Zone: Geoscience Matters

AAPG making the case to energy industry leaders

CERA was a diverse and dynamic week. A record-breaking 4,500 CEO’s, leaders, energy ministers and global representatives from more than 70 countries attended the March 4-9 event to ponder the future of the industry. And this year, AAPG got to play an important role in this conversation.

I attended CERA Week for the first time in my long career and I was very impressed. Daniel Yergin and James Rosenfeld, founders of Cambridge Energy Research Associates, first began CERA Week 35 years ago. The program provides comprehensive insight into the global and regional energy future by addressing key issues – from markets and geopolitics to technology, project costs, energy and the environment, finance, operational excellence and cyber risks.

Yergin has long been a friend to AAPG. He spoke at the AAPG 100th Anniversary Gala in April 2017 and we thank him for his leadership.

This year’s speakers included U.S. Secretary of the Interior Ryan Zinke; U.S. Secretary of Energy Rick Perry, Senators Lisa Murkowski and Dan Sullivan of Alaska and John Cornyn of Texas.

When I thanked Secretary Zinke for what the U.S. administration is doing for our industry he smiled and said, “Keep the faith.”

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CERA was a diverse and dynamic week. A record-breaking 4,500 CEO’s, leaders, energy ministers and global representatives from more than 70 countries attended the March 4-9 event to ponder the future of the industry. And this year, AAPG got to play an important role in this conversation.

I attended CERA Week for the first time in my long career and I was very impressed. Daniel Yergin and James Rosenfeld, founders of Cambridge Energy Research Associates, first began CERA Week 35 years ago. The program provides comprehensive insight into the global and regional energy future by addressing key issues – from markets and geopolitics to technology, project costs, energy and the environment, finance, operational excellence and cyber risks.

Yergin has long been a friend to AAPG. He spoke at the AAPG 100th Anniversary Gala in April 2017 and we thank him for his leadership.

This year’s speakers included U.S. Secretary of the Interior Ryan Zinke; U.S. Secretary of Energy Rick Perry, Senators Lisa Murkowski and Dan Sullivan of Alaska and John Cornyn of Texas.

When I thanked Secretary Zinke for what the U.S. administration is doing for our industry he smiled and said, “Keep the faith.”

I was also able to thank Houston Mayor Sylvester Turner personally for his leadership during Hurricane Harvey last August. In fact, I was able shake hands with many of the CERA Week attendees and tell them about AAPG. I was interviewed by IHS Vice President Bob Fryklund and I talked about the value of AAPG to geoscientists and I am pleased this video is publically available on the CERA Week website (visit Ondemand/CERAWeek.com and search “Sternbach”).

The CERA Week Schedule also included Secretary General of OPEC, His Excellency Mohammad Sanusi Barkindo; Fatih Birol, the executive director of the International Energy Agency; Mary Barra, the CEO of GM; and author Walter Isaacson, CEO of the Aspen Institute, to name just a few.

At the time of this writing, 330 videos are available free online. I encourage you to view, learn, and access this treasure trove of thought leaders. You can see many presentations online at the aforementioned web address.

High-Level Global Issues for Energy

My high-level summary from the CERA conference would be that demand is strong, future supply could be tight, cost reductions are significant and technology will enable future cost savings as well as energy breakthroughs. Pipeline permitting will get easier in the United States and more infrastructure will be built. Climate change is a real concern and companies are taking measurable action on emissions.

And lastly, natural gas is the fuel of the future.

Will conventional exploration be revived? Current Investment is down. OPEC’s Barkindo, John Hess (CEO of Hess) and others expressed concern that $1 trillion less investment in recent years will lead to future energy shortages from conventional reservoirs. Counter point to that, Luca Bertelli of ENI gave a brilliant talk on how ENI discovered recent conventional giants, with less cost and a quick-to-market production strategy. Their upstream strategy employs a technical focus on turbidite reservoirs, carbonate platforms and petroleum systems excellence – all of which is bottom line testimony that geoscience matters!

Are unconventional resource forecasts over sold? Mark Papa, CEO of Centennial, said that the best core areas are drilled first, and therefore future production may be less because of reservoir exhaustion. The counter point is that technology is evolving fast and core areas are growing in both areal extent and efficiency. Lorenzo Simonelli, CEO of GE-owned Baker Hughes, pointed out that getting an extra 2-3 percent recovery in a large oil field is as good as finding another oil field and thanks to existing infrastructure, perhaps even more profitable.

An important geoscience factor, rarely discussed by industry but crucial to success, is finding and staying in the optimal landing zones. Bill DeMis is one of the few thought leaders talking about this critical geological (and mechanical) component of success. I expect more on this topic in future papers on super basins for the AAPG Bulletin and other publications showing how geoscience matters.

Exploration in conventional resources benefits from better-imaged subtle traps. This includes subsalt reservoirs in the Gulf of Mexico, pre-salt microbialite reserves in Brazil, sandstones fringing basement highs in the North Sea and subtle traps in Guyana supercharged by La Luna source rocks. As Bill Maloney says: “Technology advances and subsurface visualization allows geoscientists to see in the data what they already see in their minds.” Once again, geoscience matters!

Communicating the Value of AAPG Globally to the C-Suite

This year, as a result of our work with Fryklund and Pete Stark (also of IHS) on super basins, and thanks to the courtesy of Yergin, I was pleased to lead a delegation of current and future AAPG leaders at CERA. AAPG had a big footprint this year and that is very important for our industry and for the Association. An extended AAPG team presence at CERA Week included members of the AAPG Corporate Advisory Board, and in particular I am thankful for the thoughtful leadership of Bill Maloney, Susan Cunningham and Bobby Ryan.

AAPG needs to tell CEO’s that geoscience is foundational. As I listened in on the CERA Week special topic sessions, I realized that all these investors, financial analysts, CEO’s, engineers, regulators, government officials and policy advisers wouldn’t be here discussing energy if it were not for the geoscientists who are the foundation of their industry. I would say to any CEO “that the application of geoscience to find, develop and produce oil and gas is the primary building block of any company. AAPG can offer your team knowledge-enhancing insights, constructive debate, a large and unique database plus access to one of the world’s largest professional geological networks.”

In short, geoscience matters!

Staying in Zone

How does AAPG differ from other scientific organizations? We are of the energy industry and the energy industry is of us. The extent that we focus on the commercial and financial aspects of the industry that supports us is critical to our success. The extent that industry recognizes that geoscience matters is critical to their success. This mutual win is why we must communicate our foundational role to the leaders of this industry by reminding them that both geoscientists and geoscience matters! That is how we “stay in zone.”

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