How to rejuvenate hydrocarbon exploration in prolific but tired petroleum systems.
Decommissioning is an expensive option. Source: Bureau of Safety and Environmental Enforcement.
It is never easy to let go of the assets which formed the backbone of your organisation’s balance sheet for many years, even as the end of productive life approaches. Incremental volumes add significant value to tired settings with high exploration maturity, partly because the extra production can flow through existing infrastructure. Just as valuable to operators are the incremental savings in ‘money of the day’ brought about by delaying decommissioning of the same infrastructure. Despite the fact that all extractive resources are finite, it seems that prolific systems, whether located in the North Sea, the Gulf of Mexico or Indonesia, just keep giving, as technology, technique or just happy accidents extend productive life.
These ‘super basins’ seem to have generated more hydrocarbons than there are reservoirs to contain them, so the surprises tend to be around unexpected reservoirs or sub-seismic traps. So long as they keep delivering there remain opportunities, but the downside is that they also prevent anyone from being able to generate a meaningful ‘yet-to-find’.
Understanding White Space in Petroleum Exploration
There are four components to ‘white space’ in petroleum exploration:
physical white space (gaps in data);
technical white space (gaps in data quality);
intellectual white space (gaps in play-based thinking);
and organisational white space (gaps in business focus) – see image top of opposite page.
Finite resource creaming as an expression of exploration maturity over 20–120 years (and counting).
Each is associated with varying degrees in exploration maturity but the key to unlocking what remains of prolific but tired petroleum systems is intellectual white space. This exists because we have become so focused on extracting value with diminishing returns from bread-and-butter plays, that we have become perceptually blind to new play opportunities. In effect, we have forgotten how to think outside the play. We know this is true because these petroleum systems continue to deliver surprises in areas that were thought to have been well picked over including, for example, Johan Sverdrup in the North Sea, the Norphlet play in the Gulf of Mexico and Badik and Parang in the Tarakan Basin. It could be argued that ignorance is scope in frontier basins, but it erodes value in basins with high levels of exploration maturity. Many of these basins have no shortage of connected data but they are often short of connected thinking.
Understanding which component of white space needs to be overcome to add value in exploration materially changes how you deploy resources to achieve it.
Collaboration is an integral part of day-to-day petroleum exploration which works, but only if it does not compromise enterprise confidentiality. Collaboration through data exchanges or infrastructure sharing are tightly controlled as much by perceived quid pro quo enterprise transactions as by avoiding perceived anti-trust behaviours. Exploration risk can also be traded through collaborative equity exchanges to obviate exposure through risk optimisation, which may involve a minimum amount of knowledge sharing. Such transactions are all closed forms of collaboration between carefully selected organisations, with clear value of information controls to protect intellectual property. Open collaboration, however, whether through an exchange of data or knowledge, is a completely different transaction and one that challenges conventional views of enterprise driven dynamics (see GEO ExPro online exclusive article: Sharing Knowledge for Value Creation).
There is no question that enterprise driven principles are key to unlocking frontier, emerging and core basins, providing the engine for essential investment and value creation. But when the petroleum system approaches its perceived ‘end-of-life’, jumps in value require leaps in perception rather than data. Value-adding perceptions may be geological, such as the existence of a seal in aeolian deposits of the Haima in Oman; engineering, like analysing what constitutes the deepwater limit for oil production; or commercial – for example, redefining what is meant by ‘stranded gas’ in the North West Shelf of Australia. This is when collaboration through a more open exchange of knowledge (not necessarily information) potentially becomes a new value driver, but it requires a conscious shift in enterprise dynamics which are currently purely opportunity driven.
Hydrocarbon Exploration Rejuvenation Process
Who knows what, where? A ‘knowledge heat map’ of the world, based on 2,500 contributions by 180 knowledge holders, is very useful (knowledge from SpatialCV™, basin outlines from Tellus).
Rejuvenation of tired petroleum systems depends on geology, data, knowledge holders and – crucially – the backing of the regulator for the relevant segment of the petroleum system. The process outlined in steps below takes open collaboration to an unprecedented level and provides the means to achieve it using freely available crowd-sourcing tools. Each stage has been ground-truthed in other initiatives, public and proprietary, so we know that they work, but the simplified process discussed requires critical mass of opinion to be effective, which we believe can only be achieved if the initiative is supported and sponsored by a combination of the regulator and academia.
Step 1. Knowledge Sharing
The first step is to find out who knows what, where and when, not just in the area of interest but globally. One way of doing this is through the freely accessible Knowledge PinMapTM, which allows a crustal view to be established to help build meaningful analogues later in the process. Participants are invited to build their personal ‘SpatialCVTM’, which will remain anonymous, through which they can identify plays where they have developed expertise.
Step 2. Play break-Out
Regulator-appointed agents then create inventories of both bread-and-butter plays and potential plays with analogue content. This stage requires a unified play terminology recognised by all knowledge holders for a specific petroleum system and involves what can be an extended period of convergence if play definitions have not been previously agreed.
Step 3. Play Kracqing
Regulator-appointed agents will crowd-source scores for each play using an observational matrix provided by the KRACQS™ metadatabase, which was designed as part of an experiment conducted on knowledge stacking (Loftus et al., 2018).
Step 4. Play Ranking
A panel of experts for each play is appointed to screen plays and to invite new concept thinking in plenary sessions. The agents can then rank the play potentials using regulator weighted metrics and establish globally calibrated yet-to-find values through play analogues.
Step 5. Publish
Distribute the results and ensure they remain evergreen by crowd-sourcing the continuously evolving opinion of participants as they react to changing circumstances.
Recent experiments on stacking knowledge have demonstrated the power of crowd-sourcing to screen play potential.
The authors described in the online GEO ExPro article how two-way crowd-sourcing opens up a whole new reference frame by consulting a broad college of opinion. Applying value-driven observational scores to targeted participants using free online facilities can be achieved through open collaboration without compromising enterprise confidentiality if participants have been granted formal clearance from their respective enterprises, even if their entries remain anonymous. Industry-wide opinion can then be associated with a compiled inventory of play potential across mature basins entirely through crowd-sourcing to deliver a common understanding of yet-to-find and value to each enterprise before decisions can be made whether to invest in or divest assets. Soliciting industry-wide knowledge has not been attempted before in the oil and gas sector and could play a key role in rejuvenating tired petroleum systems.
A Common Understanding
No isolated enterprise, however dominant in its understanding of an area or its access to data, can ever see the entire picture of a petroleum system that has been picked over by many operators for years, however robust their method of future potential assessment. Advisors to the industry have repeatedly stressed that collaboration is essential for unlocking the remaining potential in mature basins. The method described here not only demonstrates how to do it but provides the means to achieve it as well. The method requires careful management by the regulator (or its appointees), as they must determine how to pool knowledge in a way that all participants can potentially win by the integration of local geology with cost exposure, infrastructure maturity and legal framework. However knowledge pooling is achieved, the collaboration of industry with the regulator would form a powerful partnership in defining how to rejuvenate each basin. By crowd-sourcing opinion and shaping that in to a commonly agreed inventory of play-based value, the rejuvenation process invades intellectual white space, connecting knowledge by sharing knowledge in order to achieve a common understanding of value through open collaboration.
Authenticated knowledge can be shared anonymously without compromising enterprise competitive advantage.
References
Loftus, Guy W.F., Neal, S., Scardina, Allan D., 2018 – Accelerating North Sea development through open collaborative exploration. [PETEX in. press]
Loftus, Guy W.F., 2017 – Risk Optimisation (a ‘novel’ approach for frontier exploration). Geol.Soc.Lon conference ‘Managing Risks across the Mining and Oil and Gas Lifecycle’,July 2017
www.k2vltd.com/article-12
Loftus, Guy W.F., Bloemendaal, S., Burgess P., Cleverley P. and Glass F., 2018 – Collapsing Cognitive Bias. [in. prep]
www.k2vltd.com/article-7
