Setting the scene

Finding Petroleum focuses on the “sweet spot” where Business, Exploration and Technology overlap.
Over the next few weeks, I want to see if I can identify some key technology trends, and therefore potentially successful technology companies. My approach will be to look at business and exploration* trends to identify the key ‘pulls’ on technology; it seems important to think about the issue this way round – as opposed to identifying “wouldn’t it be neat if…….” technologies and ‘pushing’ them into exploration (and business).

This seems like a good moment to declare my views on energy policy, climate change…..
Where I am on this is that:
a) There's just no point in denying that burning fossil fuels is having an impact on the planet. I was very much in the 'old' BP position of "as scientists we should accept the evidence and think about how to respond". Pretty well as Shell articulate today.
b) As we see in most of life, we will wait a long time for politicians to do anything sensible….and if you don’t believe that, I suggest you review what happened in Copenhagen a few weeks ago!
c) I don't believe wind and solar will provide more than a fraction of the energy we need (tides may be a special thing for the UK) and I still find nuclear a bit scary
[partly because of b) - imagine if this UK Government treated the nuclear industry like they treat our armed forces!].
d) So I see little alternative to fossil fuels for the foreseeable future. That said, I'm going to trust a) our inventiveness and b) technology. For example, you will perhaps have seen that the US has discovered enough Gas (which is by far the cleanest of the fossil fuels) that somebody as experienced as T Boone Pickens thinks they could aim at getting by without 'foreign oil' and I like Carbon Capture & Sequestration if it means we can use all that coal without choking everything and everyone.

So the first question I ask myself is - where are the Majors (and larger Independents) going to find oil & gas new resources in the next decade? It seems to me that there are two distinct options:

1. Building relationships of “mutual advantage” with resource-rich Governments and their NOCs who need help in bringing their current assets to production and in discovering new ones, for example in Iraq, Russia….. IOCs bring finance, “Know How” and technology.
2. Re-engagement with Frontier Exploration in, for example:
a. The Arctic
b. Onshore, notably in central Africa, East Siberia
c. Deep Water, the last handful of unexplored areas.

After a decade of ‘easy’ exploration, in which relatively young (mainly Tertiary) sediments were explored offshore using regional 3D seismic as the principle exploration tool, we are returning to a style of exploration which is ‘hard’, requiring clever geological work and integrated geoscience, in deeper targets, in more remote environments.
However, even if things are getting harder, ‘explorers’ still have to pull the same performance levers that have always been available to them, namely increasing their success rate at the same time as reducing the cost of what they do: this is true whether drilling exploration wells in a frontier province, development wells in a field that is being brought onto production or new wells in a currently producing field.

Ultimately, this is about spending less on drilling, drilling costs being the single biggest component (typically 50% or more) of any campaign to Find Petroleum. So there should be enormous ‘pull’ on technologies that allow us to find the required resource with significantly less wells and/or spend significantly less on any one well.

Gas will be an increasingly important global theme, particularly unconventional gas, perhaps especially in Europe, emulating the massive successes onshore in the USA. For some countries, gas storage will be an important sub-theme; the UK is very exposed to gas market swings, having only about two week’s storage capacity whereas Germany for example has more like 100 days.

Staying with a storage theme, the oil & gas industry will also increasingly involve itself in the storage of CO2, the ‘S’ part of CCS, both with the deployment of enhanced oil recovery schemes that utilise CO2 and its eventual permanent storage in fully depleted, rightly abandoned fields.

This will fit neatly into a focus on increasing the recovery factor of each and every oil or gas field, including developing fields that are currently ‘stranded’, extending the life of mature fields and resurrecting prematurely abandoned ones.

*In reality, our focus is on a “sweet spot” where Business, Exploration & Production and Technology overlap. In fact, we have can think about two broad strands, namely Finding Petroleum and Producing Petroleum…………………..but that’s for another day!