T EN S TEPS TO S UCCESSFUL E XPLORATION AND D EVELOPMENT THE FUTURE OF ENERGY EXPLORATION: Essential Tools for the Next Generation Jeffrey B. Aldrich 730 17 th St, Suite 410 Denver, CO 80202 Sept. 2020 01 303 277 0270 office www.sproule.com 1
A S TORY OF 3 G ENERATIONS IN THE O IL P ATCH • $/Bbl (2020 $) https://www.macrotrends.net/1369/crude-oil-price-history-chart 2
A S TORY OF 3 G ENERATIONS IN THE O IL P ATCH • Post WWII Generation • Flat Price: Big E: 2D • Pluses: Found 80% of worlds oil • Without any digital computers • Foundational Science • Negatives: Silo Management, • Gender And Ethnic Biases • Key Mentors: • John Amaruso • Arnold Bouma • Evertte DeGolyer • Marlan Downey • Maurice Ewing • Michel T. Halbouty • Rufus LeBlanc • George Mitchell • Bob Sneider • Max Steinke • James Lee Wilson https://www.macrotrends.net/1369/crude-oil-price-history-chart 3 •
A S TORY OF 3 G ENERATIONS IN THE O IL P ATCH • • My Generation Post WWII Generation • • Uncertain Price: Little e: 3D Flat Price: Big E: 2D • • Pluses: Multidiscipline Teams, Pluses: Found 80% of worlds oil Digital Computing, 3D/4D • Without any digital computers Seismic, Deepwater • Foundational Science Exploration, Unconventionals • Negatives: Silo Management, • Negatives: Pulled back from • Gender And Ethnic Biases Big E exploration, Focus on Wall Street $$, Short Term • Memory Key Mentors: • John Amaruso • • Key Mentors: Arnold Bouma • • Evertte DeGolyer Denise Cox • • Marlan Downey Vlasta Dvořáková • Maurice Ewing Michael C. Forrest • • Michel T. Halbouty Robbie Gries • • Rufus LeBlanc John Kaldi • • George Mitchell Pete Rose • • Bob Sneider Scott Tinker • Dan Tearpock Max Steinke • • Peter Vail James Lee Wilson https://www.macrotrends.net/1369/crude-oil-price-history-chart 4 •
A S TORY OF 3 G ENERATIONS IN THE O IL P ATCH • • • My Generation Post WWII Generation Your Generation • • • Uncertain Price: Little e: 3D Flat Price: Big E: 2D Volatile Price: New E: • • Pluses: Multidiscipline Teams, Techno Pluses: Found 80% of worlds oil Digital Computing, 3D/4D • Without any digital computers Seismic, Deepwater • • Pluses: Virtual Teams, Foundational Science Exploration, Unconventionals A.I., Big Data, DNA Reservoir Testing, • Negatives: Silo Management, • Negatives: Pulled back from ???? • Gender And Ethnic Biases Big E exploration, Focus on Wall Street $$, Short Term • Negatives: Global • Memory Key Mentors: Political Pressure • John Amaruso against Carbon Fuels, • • Key Mentors: Arnold Bouma • • Evertte DeGolyer • Denise Cox Key Mentors: • • Marlan Downey Vlasta Dvořáková • Maurice Ewing Michael C. Forrest • ??? • • Michel T. Halbouty Robbie Gries • • Rufus LeBlanc John Kaldi • • George Mitchell Pete Rose • • Bob Sneider Scott Tinker • Dan Tearpock Max Steinke • • Peter Vail James Lee Wilson https://www.macrotrends.net/1369/crude-oil-price-history-chart 5 •
10 R ULES THAT ARE NEVER TAUGHT IN SCHOOL 6
Sometimes the Questions are Complicated and the Answers are Simple. Dr. Seuss 7
1: A LL M APS A RE W RONG 8
1: A LL M APS A RE W RONG b.. a. Development 2D Original limited 2D 3D Seismic c. 4D Seismic d. 9 EI 330 in Gulf of Mexico
1: A LL M APS A RE W RONG • “All Models are Wrong – some are Useful” – George Box 1976 • Drill On The Least Incorrect Map • Don’t Fall in Love With Your Own Map 10
2: D RILL T O M AKE M ONEY – L ET O THERS D RILL F OR S CIENCE 11
2: D RILL T O M AKE M ONEY – L ET O THERS D RILL F OR S CIENCE • All data acquired for a dry hole is infinitely expensive. • Any data acquired and not used to lower the risk of the next well is dereliction. • Don’t loose sight of the financial goal by being blinded by scientific objectives 12
3: I F Y OU C AN ’ T V ISUALIZE I T , D ON ’ T R ECOMMEND I T U NTIL Y OU C AN . 13 Think and Wonder, Wonder and Think. Dr. Seuss
3: I F Y OU C AN ’ T V ISUALIZE I T , D ON ’ T R ECOMMEND I T U NTIL Y OU C AN . There are tools to use (Seismic, Wells, Cross-Sections, Maps, Grav/Mag, Models etc.) but these are not substitutes for understanding but methods to use to come to an understanding. A 3D model is no better than both the data and the CONCEPT that created it. The 2 Things that most assist accurate visualizations are 1) Field Analogues 2) Hand Contouring 14
4: I T I S B ETTER T O B E 100% L UCKY I N A N O VERLOOKED Z ONE T HAN 50% R IGHT I N T HE T ARGET Z ONE . 15
5) Y OU D ON ’ T K NOW A L OT M ORE T HAN Y OU T HINK Y OU D ON ’ T K NOW . 16
5) Y OU D ON ’ T K NOW A L OT M ORE T HAN Y OU T HINK Y OU D ON ’ T K NOW . C ERTAINTY DOES NOT EXIST IN THE FUTURE , ONLY IN THE PAST ! J EAN L A H ERRERE 2007 17
A UDIENCE P ARTICIPATION ! • Choose the correct 1. 1-Chance of Success (1-COS) definition for the three terms 2. The Chance of Success 3. Variations in Individual Values • A) Uncertainty ___ 4. The range of possible outcomes • B) Probability___ 5. The deviation from the median 6. The Most Likely outcome • C) Risk___ 18
R ESULTS 19
6) C ALCULATE P ROBABILITIES , D EFINE U NCERTAINTIES I N O RDER T O R EDUCE R ISK . Can’t you do better than Based on our integrated team that? Just analysis, the full stochastic give me a evaluation of the property has number! a range of resources between 300 and 850 MMBls with the current price strip 20
6) C ALCULATE P ROBABILITIES , D EFINE U NCERTAINTIES I N O RDER T O R EDUCE R ISK . • Do not confuse ➢ Range of Possible Outcomes ➢ Variations of Individual Values ➢ Chance of Failure 21
7) M OST F IELDS R ESERVES G ROW T HROUGH T IME – D ON ’ T S ELL Y OURSELF S HORT I N T HE P OST M ORTEM . Midway-Sunset Field, Estimated Ultimate Reserves through Time 22
7) M OST F IELDS R ESERVES G ROW T HROUGH T IME – D ON ’ T S ELL Y OURSELF S HORT I N T HE P OST M ORTEM . • This is why the PRMS was created ➢ Value not just the PROVED RESERVES ➢ Value the CONTINGENT RESOURCES ➢ Value the PROSPECTIVE RESOURCES • Use the PRMS to plan the Work Program to advance volumes up the ladder as fast as possible 23
8) M ULTIDISCIPLINE T EAMWORK IS THE B EST S OLUTION . Geology Geophysics Petrophysics Reservoir Engineering Land and Legal Economics Operations \Drilling\Completions HSE Adapted from John A. Masters 24
8) M ULTIDISCIPLINE T EAMWORK IS THE B EST S OLUTION . • To Determine What Questions Need to be Asked • To Look at the Problem with Fresh Perspectives • The Solution is Not Complete Until All Agree 25
9) I F I T I S C OMMON K NOWLEDGE I T W ON ’ T F IND N EW O IL A ND G AS . 26
9) I F I T I S C OMMON K NOWLEDGE I T W ON ’ T F IND N EW O IL A ND G AS . • A) “Everyone already knows it” • B) “Everyone knows it won’t work” • C) “It has already been looked at” • All things told to John Masters about the Falther Formation that became the Elmsworth Field – the largest gas field in North America – after it had been penetrated by over 200 wells without being recognized as being productive. • “Business as Usual” attitude and processes are not creative – question everything! 27
10) H YDROCARBONS ARE F IRST F OUND IN THE M INDS OF E XPLORATIONISTS ( MODIFIED FROM W. P RATT ) Think Left and Think Right and Think Low and Think High. Oh, the Things You can Think Up if You Only Try. Dr. Seuss 28
A CKNOWLEDGEMENTS The author wish to thank Sproule Consultants, LLC. for the time and permission to prepare and present this talk. However – the contents, opinions and thoughts of this presentation are the authors alone and may not reflect the opinions of Sproule Consultants. The “ 10 Rules of Successful Exploration and Development” are available by contacting the author through Sproule Consultants. 32 8/30/2020
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