September 2022

What’s New in Exploration: Does “it” make money?

Answer: well, not if taxes take all “its” benefits. The new Anti-Inflation legislation in the U.S. appears to be a victim of pandemic stupidity among governments.
William (Bill) Head / Contributing Editor

Answer: well, not if taxes take all “its” benefits.  The new Anti-Inflation legislation in the U.S. appears to be a victim of pandemic stupidity among governments. It is clear to me that the world is on the wrong course when it demands to limit, tax or stop exploration. Stopping exploration for traditional energy (that is, energy common to our machines for the last 160 years) is the same as saying to stop growing food. In fact, one will directly lead to the other. It’s not a good ending for those who are forced to follow that path.  

Fig. 1. SEG and AAPG teamed up in August for a new joint annual meeting called Image ’22.

However, are the regulators or their bosses really that naïve? When I worked for DOE under a research contract, I first thought that former President Obama’s installed leaders were naïve amateurs. After a couple of years, I no longer believed they were naïve. Why then create a deliberately destructive policy? One does not need much conjecture to answer. However, we may have found a flower among the weeds. A World Oil web post, July 22, titled “Global Oil Map Being Redrawn as Industry Embraces Renewables,” said, “Oil majors that want to reduce their carbon footprint will have to shift their activities to energy basins where drilling rigs can be powered by renewables and which have ample space for carbon sequestration, a report indicates.”  

I smile. Government-induced green drilling in oil basins favorable to CO2 injection— really?  Um. No, stop! Stop! Please don’t throw me in that briar patch! This may be the best news we have heard in a long time. Also good are plans to identify abandoned orphan gas wells that may be eligible, too, as candidates for green sequestration. However, too much green emphasis can invite an army next to your border. Right, Germany? After 20 years of go-green policies, what is the cost of Saxony Uniper’s electricity compared to 2002 levels? By the way—if sea level rising is going to be a problem, then why do collectivists want seashore Soloviev property near Black sea? Just askin’.  

Daily notices this summer from WO and professional societies have been trumpeting new exploration commitments near fossil energy-starving countries around this planet. There is not enough space here to list them all. Surprising to me are plans and discoveries around the southern African Horn. I cannot remember anyone describing geo-favorable conditions for oil formation and migration near South Africa, except for the people in tiny booths along the back wall at SEG/SPE/AAPG conventions. New data alway brings new light.  

Big Blue predicts expansion of exploration for the next several years. Exploration spending is gaining, reportedly up about 20% from last year. Well, last year was terrible, and at ~$100 oil, what did we expect? Still, my operating cost of $14/bbl is attracting no one for recompletions or more drilling, because of uncertainty in future regulation, not price disparity. Ok, everyone also wants big reserves. But big risk takes big money. That will not change. What is changing, and has been for a while, is the increased emphasis on reservoir knowledge, as part of early drilling decisions.  

Science: The more we know, the more we know we don’t know. Reservoir understanding has always been at the top of risk analysis, in both science and business, for production development. Simple questions of how much, and how long “it” will produce, have evolved to what the hydrodynamic characteristics of the parent rock are, what interactions are occurring with fluids, and if we can measure any of those parameters indirectly from the surface or borehole. Certainly, over the decades, analogs of semi-calibrated borehole tools and acoustic inferences have given us greater evaluation methods. However, none—I repeat, none—are 100% even in the laboratory. 

Current technical papers attempt to push us toward a realistic 80% answer. (Today, all tech is about 60%, even with flowing hydrocarbons. None, to date, have been able to get better than about 8-13% recovery, even using physical horizontal methods.)  A couple of Monday’s technical presentations on Aug. 29 at “Image ‘22,” the SEG and AAPG new annual meeting (Fig. 1) in Houston, have shown examples of the extensive reservoir discussion going on right now in our industry:  

“Using multidimensional scaling to estimate the impact of shale volume, fault seal, and fluid migration methods on 3D petroleum saturation, Norwegian Viking Graben,” Anatoly Aseev, Tapan Mukerji and Allegra Hosford Scheirer, Stanford University (INT. AUD.: 4). Speaker: Anatoly Aseev. 

“The competition of oil and gas for trap space and seal capacity,” Martin Neumaier, ArianeLogix; Jan de Jager, JdJ Geological Consultancy; and Ben Kurtenbach, ArianeLogiX (INT. AUD.: 4) Speaker: Jan de Jager. 

STEM education has never been more important to our future, as our numbers of experienced explorers continue to decline. Technical program abstracts will be available from either organization.  

About the Authors
William (Bill) Head
Contributing Editor
William (Bill) Head is a technologist with over 40 years of experience in U.S. and international exploration.
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