Geoscience lacks a reliable measure of hydrocarbons in Earth's sedimentary volumes yet to be explored. Instead, the industry has resorted to gauging discovery pool volumes posted each year, which have been trending downward. There are problems, however, with drawing conclusions about this trend:
- Exploration opportunities are hampered by technical (Arctic), political (California), and commercial (ultra-deepwater) restrictions.
- There is lack of uniformity in reserve discovery size per unit sedimentary volume, rendering comparisons with past finding rates inexact.
- Armed with rising success ratios and improving recovery rates, oil and gas producers are delaying decisions on new exploration until the need is clear and development can follow. The result is that discovery volumes tend to parallel oil and gas prices.
These factors suggest that estimates of global hydrocarbons yet to be discovered remain largely conjectural. Could this mean, then, that the industry's position at the peak or decline side of the King Hubbert curve (bell-shaped curve of historical and future reserve additions) is questionable? Perhaps.
Coupled with rising drill-bit-to-market velocity for both oil and gas, and future improvements in subsurface vision, the factors cited above could very well freeze the industry's position on the King Hubbert curve.
Deliver wells, not functions
The day is fast approaching when oil and gas producers will simply order wells or development programs for offshore locations. Changes in technology, time management methods, manpower and economic reality are all supporting this phase shift.
Field-specific geoscience and reservoir models and data, long considered the confidential intellectual locus of oil and gas producing organizations, may be about to emerge into daylight. Service companies cannot properly design full-life field development programs and reservoir optimization strategies without seeing the full geological picture.
For service companies, mergers and consolidation are being driven as much by the need to service field-wide opportunities as the search for economic scale. For producers, there are understandable legal, environmental, and safety reasons to remain in the management loop. However, the need for greater outsourcing is one of the consistent recommendations made by efficiency consultants. The availability of performance measures to evaluate outsourced tasks allows producers to disconnect from some longstanding management functions.
As drilling and development water depths surpass 10,000 ft, the industry will be working with challenges that are faintly familiar now but will move to center stage:
- Riser stiffness is minimal in great depths and swift currents could force suspension of drilling for long periods of time. Mud return lines and umbilicals also will be vulnerable.
- Turning drill pipe through two miles of ocean is inefficient, and producers will continue to investigate designs that shift drilling operations to the seafloor.
- Production decline could be rather steep in ultra-deepwater, forcing producers into tough decisions sooner than expected.
- Moving product to the continental shelf through pipelines with vertical inclines of 10,000 ft could prove difficult. Without pumping, slugging and flow separation could present other problems.
Beyond these problem areas, there is another challenge relating to technology. Oil and gas operations in international areas will come under the purview of the Law of the Sea Treaty or United Nations. The treaty, still in proposal stage and unsigned by key participants, requires technology transfer in exchange for licensing rights. Although the wording is vague, the implication is ominous.
Ultra-deepwater is a brave new world - in more ways than one.
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