ABSTRACT
As the price of oil drops back to the levels we might have expected 15 or 20 years ago, the whole concept of ‘What is Marginal’ in our industry has to be re-examined.
But it is not just marginality of our existing production, it is also our ability to think in exploration terms of ventures which would be large enough to be successful and then to have the engineering skills to make those ventures successful. Yes, some of the opportunities are marginal - but so too is a lot of the thinking!
Indeed, what our business is about today, as it was prior to the price rise of the 1970s, is efficiently producing the reserves we can discover and building our exploration and development programmes on the reality of the world we live in, instead of the one we hope will be there in a few years’ time.
However, the strains of trying to perform for a much lower price after the heady 15-year period of unprecedented higher prices has put pressure on the industry. Many engineers and geologists, now in their middle if not late 30s, have never had to deal with the reality of long-term flat or even falling prices, and an industry which must fight for its well-being without the backstop of an ever-increasing price to cover unforeseen difficulties.
Indeed, even our educational establishments have in this past period fallen victim to the same heady atmosphere, creating new schools, extending old ones and in many cases over-specialising courses, making it difficult when times are tougher for graduates to find employment in a more varied industry.
What is important to recognise is that the last 15 years have been an aberration in an otherwise relatively stable oil price world.
Is this a disaster? It is certainly a time for soul-searching. Is it a time to hope for the next sudden price rise - or really is it a fundamental challenge and opportunity to get back to doing some of the things we did rather well in the previous 75 years? The high prices in the 70s and 80s forced us to forget a lot of good exploration and good engineering; we replaced it by solving nearly all problems by simply throwing pounds and dollars at them, frequently and mistakenly under the guise that what we were doing was new technology.
How much of what we find and classify as marginal is put there by our own short-comings, our own inability to think of another way, our own perceptions of the value of the challenge and the value of the ultimate success?
I would like to deal with the concept of the marginal field in this broader context. The context of who makes it marginal and what kind of thinking we need to find and develop the reserves we will need. What kind of background we need to change our current thinking.
What is Marginal? It is marginal tax, marginal thinking, marginal concepts, or is it what Mother Nature put down there - just very close to the limit that we will ever get to economically to be able to develop something.
Can we get back to the basics? Are our geophysics and geology creating some of the very problems of marginality that we deal with at the moment? A whole sector of marginal fields and economics is created by the expense of exploration, the number of wells drilled to find a reasonable discovery and then the amount of delineation done to define it. The amount of information we obtain from many exploration wells is still well below the acceptable value we should expect for the funds expended. Too often simply a short test is considered sufficient and the philosophy is taken that we will pick up the rest of the information on the next well.
Integrating the disciplines, from geophysics and geology, through reservoir and production engineering and through to drilling and operations was the backbone of much of the Oil Technology course in the first two thirds or more of our history. Indeed, this wider view was what made the difference.
Now over-specialisation both in education and early training makes it more difficult to get practical, cost-effective exploration and development.
We must treat the current oil price environment as an opportunity once again to reset our educational thinking and every aspect of our development philosophy - every discovery will be marginal if we allow it to be - the challenge is to combine and expand the multi-discipline skills we developed so well in the past and apply them to today’s thinking.
The Royal School of Mines pioneered much of such 36thinking in earlier days -
IT IS TIME TO LEAD AGAIN
