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Keys to future exploration success in the face of technology & generational shifts
07 February 2019IHS Markit Energy Expert
In the last installment of our three-part series on
conventional opportunities in an unconventional world, Mark Savery,
Executive Director Upstream Product Management at IHS Markit sits
down with Thomas G. Harris, President & CEO at BlackRock
Exploration & Production to discuss the importance of
cross-functional collaboration, application of modern technology to
exploration decisions, and strategies to equip the next generation
of energy professionals.
Mark Savery:
Tom, what is the recipe for successful exploration in today's
world?
Tom Harris:
Mark, two things jump out to me. First, there is no secret sauce
that covers all situations. There are many avenues to "success" in
the oil and gas industry. Second, I will assume success is measured
by creating value or in this case, having a profitable commercial
outcome for an oil and gas project. If that is the case and I was
starting from scratch on a ground floor basis, I would examine a
prospective area in terms of the following 5 ingredients:
Source
Reservoir
Trap
Seal
Timing
This would help me understand the petroleum system, or where the
hydrocarbons originated from, when and how did they move from the
source to the reservoir and trap, how and when did the seal form,
was the trap in place before hydrocarbons migrated through the
system, and have the trap and seal maintained their integrity
through time or have they been compromised?
Mark Savery:
How does working across functional disciplines come into
play?
Tom Harris:
Years ago, the industry emphasized and practiced the integration
of disciplines to answer those questions above. It was helpful to
examine data through the eyes of the engineer, petrophysicist,
geologist and geophysicist. It enabled a multi-dimensional view of
the key parameters (storage, fluid composition, deliverability,
thickness, and areal extent) necessary for success. The strength of
the integrated method is the selection criteria applied to the
evaluation and generation process. The criterion (Figure 1) allow
an understanding of the project at the producing scale by using
data obtained from various disciplines at different scales. They
serve as a basis for making better decisions by illuminating the
project through diverse vantage points.
Figure 1: Selection
criteria applied to the evaluation and generation process
It has been my experience that in successful projects, the
various disciplines point to the same answer: "The hydrocarbons are
there." Likewise, when there are discrepancies between
interpretations, the project's risk is invariably higher.
Mark Savery:
How can modern data analysis be applied to historical data to
inform intelligent exploration decisions?
Tom Harris:
I have an example on Shale Profiling that speaks to this. During
the summer of 2006 at a NAPE conference in Houston, I was invited
to participate on a panel about shale gas. I asked a former
colleague what he thought about the topic, and he laughed and joked
about it being the flavor of the month. So, I named my talk "Shale
Gas - Real Deal or Flavor of the Month?"
To a room of less than 100 attendees, my presentation explained
that shale gas was indeed real, that it was here to stay, it would
change the landscape of our industry, and that there was an
abundant supply at attractive price. The talk outlined what was new
technologically and identified 10 key variables for successful
shale projects. I shared public legacy and proprietary well data
from 7 basins that my firm had analyzed and presented a
"work-in-progress" shale profiling model.
With the success of the Barnett shale in Texas many years ago,
the industry initially felt that only Mississippian or Devonian age
source rock shales would work. Using public data, 1,010 black and
gray shales of this age group were identified and plotted on a map
of sedimentary basins across the US. With a visualization and
analytical software package named Spotfire, I created a profile
chart from the normalized values of the key variables and selected
a Barnett shale data point to illustrate the profile of this gas
shale to the audience in less than half a second. The other 1,000+
shales and their profiles were grayed out in the background.
I then asked the audience to imagine their boss coming into
their office and requesting them to rank all 1,010 shales from top
to bottom that most resembled the Barnett to those that did not. In
real time, a slider bar was activated that removed those data
points from shales that did not resemble the top 80 "Barnett
look-alike" shales, again in approximately half a second. You can
see the preponderance of shales in the Appalachian basin pop
up.
I then suggested that their boss was not happy about the current
low gas prices and wondered if he could get more bang for his buck
with shale oil and all the rumors he had been hearing about the
Bakken in the Williston basin. So, in a period of one second, I
highlighted the Bakken data point, and illustrated how the shale
profile was indeed different in nature from the Barnett shale gas
example previously analyzed. Again, in real time the profile was
analyzed, the resultant cumulative frequency curve was built, and a
slider bar was activated that removed those data points from shales
that did not resemble the top 100 "Bakken Oil look-alike" shales.
The entire process took about four seconds.
Figure 2: Shale lookalike map
At this point you could have heard a pin drop in the room. As we
moved into a panel discussion, the first question from the audience
was "Are you saying that there is porosity in shales?" I think the
rest is history.
Technology has certainly changed the traditional framework of
exploration, providing tools that make it more intuitive, and
certainly faster, to come to conclusions. However, we mustn't
forget that without a foundation of deep historical data, these new
tools don't have anything to consume. This is something that is
especially important to reinforce with the new generation of
exploration professionals entering the workforce.
Mark Savery:
How do we best equip this next generation of energy
professionals?
Tom Harris:
There was a recent article in Bloomberg regarding the concept of
"Shalennials," where one of the individuals interviewed implied
that if you have 10 years of industry experience, that's all you'll
need to be successful. Personally, I think that is unwise and
misguided thinking.
From one generation to the next, one of the most important
things is the passing of information and values. As someone who
came up in this industry in the 70's and 80's, some advice I would
give to the new generation would be to ask the tough, critical
questions and to challenge the assumptions of our industry. It's
not that the people that have come before made assumptions based on
ulterior motives, but rather that they have tried to make sense of
an imperfect world with imperfect data, and they run with the
results and the tools that have worked for them for a period of
time. It's up to the new generation to challenge that line of
thinking as they gain new information and tools.
For example, in the early 80's I helped to take Amoco into deep
water exploration. We were told that there wasn't going to be any
reservoir rock out there, that there were no commercial
hydrocarbons, that we could not make any money, that wells would
not flow more than 5,000 barrels a day, that subsea well heads
would cost more than $20 million, and that we could never get more
than 5 million barrels of oil out of a well not matter what we did
- we were basically told that it just wouldn't work. But
fast-forward 20 years and we see that many of those assumptions are
largely irrelevant. Industry has been able to collect 50 million
barrels per well at 50,000 barrels a day, using well heads that
cost $2 million, and resources have been found at pressures and at
temperatures that we were told hydrocarbons couldn't exist in. By
challenging assumptions, asking the tough questions, being
persistent, and embracing both "old world" and "new world" data and
technologies, we can open ourselves up to countless
opportunities.