Speaking at the European Association of Geoscientists and Engineers (EAGE) annual conference and exhibition in Leipzig, Yoram Shoham, head of geophysical research at Royal Dutch Shell analyzed some fundamentals of the E&P business and made some forecasts as to where the industry would be 15 years or so hence. Shoham estimates total world-wide E&P spend as approximately $400 billion per year. This make for a giant market, but one which, seen from the eyes of a fund manager, is stagnant. Annual growth is only about 2-3% in this sector - well below the minimum 10% expected from today's greedy investment community.
More mergers
The pressure is on therefore to do something about this low growth, and the conventional wisdom is that the economies of scale obtained through mergers and acquisitions are the way forward. Notwithstanding the financial fundamentals, technology does play a role in growth and Shoham gave the following examples of technology driven growth opportunities observed in the Shell group;
Engineering has allowed a tension-leg platform to be installed in the Gulf of Mexico in 1000 meters of water and work is in progress to push this limit to 2000 meter mark.
3D seismic has made extraordinary progress and has impacted bottom lines all over the world. 3D can and has been acquired in mountainous terrain and by the end of 1999, the Shell group will have acquired a total of 165 million square kilometers
Amplitude studies have doubled success rates in certain areas.
Enhancement in seismic imagery has allowed, for instance, the detection of a 20 meter wide graben and detailed sedimentological analysis has been performed at 3000m depth
A commodity?
Shoham asked rhetorically "has geophysics become a commodity?" Of course not - there is still plenty of scope for human ingenuity. Touching on a theme dear to PDM readers, Shoham described the move from integration of tools to integration of disciplines, allowing a "minimizing of the white-space". But progress in this field has a long way to go. We should be aiming to "merge everything into a well integrated puzzle". This would allow us to circumvent the scaling problem whereby different disciplines see the model at different scales. Looking to the future - up to 15 years from now, Shoham sees real-time processing of multi-component seismo-elastic data recorded with "smart" disposable geophones. Other mid term progress is anticipated in the areas of 3D stratigraphic reservoir prediction, reservoir management through smart well sensors and real-time adaptive control systems. Shoram concluded that is was geoscience that was turning these dreams into reality.
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