AAPG 2006, Houston

There were few new software announcements at this year’s AAPG although we noted interesting new developments centered on Landmark’s Geoprobe. Elsewhere, folks seem too busy on their projects or trying to hire folks from each other. Petris and Paradigm didn’t even exhibit. The message from the AAPG Forums confirmed the position of the National Oil Companies regarding resource access. Scott Tinker (University of Texas) highlighted the International Oil Company’s ‘trilemma’ of reserves, technology and talent, all of which are ‘at risk’. The AAPG Forum on reserves and reporting summarized the sometimes divergent views on this timely and complex issue.

Robert Ryan’s keynote described the use of digital oilfield technologies on Chevron’s Kern River field in California where recovery rates approach 90% in parts of the field. Chevron is starting one Indonesian development with ‘sensors on everything’. One ‘frontier’ is the Gulf of Mexico (GoM) which is no longer the ‘dead sea’. The GoM just will not die, as witnessed by the current move to the deepwater Wilcox fold belt trend. Another approach is to turn unconventional into ‘conventional’ – such as the 3 trillion bbl of oil in the Green River oil sands. Notwithstanding the potential, today’s bidding levels for resources are ‘crazy’ and Chevron is taking a step back.

Saudi Aramco

Aboud Afifi stressed that Saudi Aramco was working hard to satisfy future production needs with a rig count rising from under 40 in 2003 to around 120 in 2006 and flat out to 2011. By 2009, production capacity will be up from 10.5 (currently) to 12 million bbl/day. I-field, smart technology is deployed on new fields. E&P manpower is more or less 15,000. Aramco currently trains 500 graduates, this is to rise to around 800 by 2010.


Shell is one of the select group of companies to be allowed in to explore Saudi Arabia’s ‘empty quarter’, the South Rub al Khali (SRAK). Shell’s Ceri Powell described this as being the size of 1,000 North Sea blocks. SRAK is tough for operations with 130°F in the summer, no roads and 200m high dunes. Shell has shot the largest airborne gravity survey ever and has evaluated the area’s potential with its ‘Light Touch’ laser sensing technique.


Abdulkade Alfifi detailed Aramco’s technology prowess ranging from its in-house seismic processing, through statistical reservoir modeling coupled with high resolution laser scans of outcrop analogs. Aramco’s IField/Smart well Haradh Inc III development includes instrumented quad lateral smart completions. The 10 million cell Ghawar reservoir model runs in one hour on PC technology. Aramco is currently working on PowerS II with unstructured gridding and potentially one billion cell models including smart wells. Geoscience professional development includes sponsored degrees for the 200 Saudi students around the world. Aramco ‘will develop our people and invest in technology to meet future needs.’

Gloomy picture

Both Jack Casey (University of Houston) and Ricardo Rodrigues (Shell) painted gloomy pictures of the situation regarding geoscience graduate programs and R&D. Casey is sure that the industry needs more geoscience graduates. Peak oil is around 25 years out. But SEG/AAPG membership demographics peak at 51-55 years in 2006 and this cohort will retire in five to ten years. Rodrigues reported on a National Science Board report highlighting declining US science. While R&D funding got a boost from the President’s American Competition Initiative, the bad news is that oil and gas R&D will be terminated in 2007 (from $64 million in 2006). Other programs have been similarly axed. Geoscience departments are dissolving, merging or closing.


The Reserves, Now and In the Future session offered some lively if divergent views on the complex problem of reserves reporting. Chairman Dan Tearpock (SCA) described the many different methods for reserves reporting as an industry ‘train-wreck’. Two years ago an inter-society AAPG/SPEE meet resulted in the first training program for reserves estimators. This initiative was later joined by the World Petroleum Council. Other organizations (SPE/SEG) have been invited to join. Pete Rose (Rose Associates and AAPG President) is skeptical of the use of ‘reasonable certainty’ in the SPE guidelines as used by the US SEC. ‘Reasonable certainty is a probability statement with no confidence level.’ An ‘insidious deficiency’ that ‘brings discredit to reserves estimation’. Rose’s simple remedy: all professional societies should agree on a 90 % confidence level.


Actually, Rice University accountancy chair, Bala Dharan, was happy with ‘reasonable certainty,’ a term that is widely used by accountants. This probably means ‘a 60-70% confidence level’ for auditors. Reserves are key to market evaluation. Reserve growth is highly correlated with market returns. Dharan agreed that there is a confusion of reserves and resources definitions with un-intuitive usage.


Andrew Oram (Moody’s Investor Services) was skeptical, saying that reserve numbers can be misleading. Oram let lose a bamboozling set of ‘exhaustive and rather complex evaluation metrics,’ involving ‘ceteris paribus,’ debt/daily production ratios and the like. How many E&P investors really understand what’s under the hood? For Oram, the debate about reserves bookings will not change business fundamentals. Bookings tend to confirm old news already ‘baked in’ to valuation.


Scott Tinker, University of Texas, described the International oil companies’ (IOCs) ‘trilemma’ of reserves, technology and talent, all of which are ‘at risk’. Only 7% of worldwide reserves are open to US companies. Even the mighty ExxonMobil is only N° 12 in the 2004 reserves hit parade. Overall, IOCs hold less than 10% of world reserves. Technology is at risk as there are only two R&D labs left in US. The last two decades have been about IT research, but we now need to ‘get back to the rocks’. Geology needs tougher enrollment standards and Universities need to break out of their silo-orientation. Other presentations confirmed the parlous state of geoscience education and R&D.


Last year, the abandonment of Landmark’s GoCad-based Power Model left Landmark without a credible 3D modeler. Today, a generic topology engine for 3D modeling has been added to GeoProbe along with enhancements for fault and horizon clean-up and editing. At the SEG later this year, Landmark plans to show more structural validation tools. The upcoming Geoprobe 5.0 release will offer native OpenWorks data access. Oilware’s Log Index Agent builds a catalog of well log data by spidering directory structures and indexing log data down to individual curve level. Standard header images are produced and duplicates flagged. Perigon’s iPoint subsurface data viewer allows drag and drop montage building from data sources such as borehole data, cores, logs and FMS imagery – drawing data from OpenWorks, Finder or other data sources. GateWayPlus, an ArcGlobe-based data browser adds 3D visualization to PetroWeb’s GateWay Plus offers unified access to the main online seismic data vendors, now through an ESRI ArcGlobe interface which is claimed to be an ‘effective way to locate 2 and 3D surveys in remote regions of the world.’ In house, proprietary data can be layered over public data sets. GatewayPlus provides large scale plotting, multiple map projections, local data support and spatial filtering. Reservoir Visualization is turning well logs to 3D ‘seismics,’ transforming large (>1,000) well data sets into 3D volumes that can be interpreted using standard workstation packages.

Posters, presentations

Melanie McQuinn, IHS Energy, notes that clients tend to want to populate their databases with ‘successes.’ But failures often tell an important part of the story. McQuinn advocates building datasets from all available sources. Here, metadata is the key. IHS has defined globally-valid metadata which will be available in a new ArcMap 9.1-based IHS product aimed at power users.

Pete Stark described how IHS Energy has ‘re-tooled’ its query technology to take advantage of modern data mining and GIS. A parameter-driven spatial query searched 1 million wells penetrating the Barnett shale and retrieved 210 wells with shows.

Lori Hathon unveiled Shell’s computer assisted petrography (CAP) technique, an image analysis system collection and storage of thin section data. CAP measures particle geometry and can be used to estimate acoustic and physical rock properties.

This article has been taken from a 14 page, illustrated report produced as part of The Data Room’s Technology Watch reporting service. More from tw@oilit.com.

Click here to comment on this article

Click here to view this article in context on a desktop

© Oil IT Journal - all rights reserved.