January 2018

What's New in Exploration

2018: The best [or worst] year ever?
William (Bill) Head / Contributing Editor

You decide. Many explorationists are grateful that 2017 is behind us. The “E” of E&P has been experiencing a terrible slowdown for over 16 years, as well as de-funding. Why? In one word, shale. 

To complement missing upcoming human talent and judgement, A.I.  has been advancing with robot-software workstations in interpretation; A.I. that safely runs entire offshore platforms, remotely flies support aircraft, or handles pipe while drilling. A.I. research that I have heard of “over the horizon,” if it works, will be incredible. A lot of that is progress, and needed, but I argue, what’s the point then of better health for mere humans, when the machine age is descending toward replacing humans at the 40-year-old mark? 

Using actuarials, you could live 40+ years as a retiree, stuck in a large city and waiting on a government check, since your 401k only had 20 years to accrue. Hope you started saving early, and planned on a change in career or hobby when you reach(ed) 45 years old. So far, U.S. federal law on age discrimination for the 50-plus crowd has proven ineffective in our industry. Cross-corporate HR seminars figured that out in 1986. 

Favorite demographics remain the ages of 19 to 49, but 75-plus-year-old professionals are still working as consultants or owners of oil. According to the AAPG and SPE, plus-50s do earn more per year than younger troops. Wages of this small upper-end group are background noise in an AFE compared to the real risk of exploration. 

So—what to expect in Exploration in 2018?

1.  Oil price looking better to stable, o’jalá (hopefully).

2.  Rig count is up slightly, and projected to trend up slowly. The U.S. rig count was over 3,700 in December 1980. Today, worldwide, it is about 2,000. Yes, E&P has been at this level for some time, and it is the “new” world order.

3.  World production? Reporting barrels or BOEs has always been Black Art. See this study reported in December, in World Oil’s website news. Let’s just say production is still trending up, but no faster that expanding population demand: http://www.worldoil.com/news/2017/12/1/mit-study-suggests-us-vastly-overstates-oil-output-forecasts.  

4.  Replacing knowledge and judgement is always expensive. Are there new graduates in oil and gas?  A survey by Bloomberg claims that less than 2% of college students want to pursue a career in this industry: https://www.bloomberg.com/news/articles/2017-07-17/oil-giants-make-a-play-for-millennial-hires. Roughly 2 % of 17.5 million U.S. 18-to-25-year-old students might work itself out in our favor. Add in 2% of the rest of the world’s estimated 65 million students, and we are okay.  The study claims that there is a rush of new retirees, forcing companies to work harder to get at the 21-to-35-year-old folks. Really? Most professional societies in our field have programs for their thousands of unemployed young members, and for elders who still have their spark.

5.  What about emerging opportunities within new U.S. foreign interests? Not China, but maybe Sakhalin. Okay for the North Sea and the Arctic, especially Alaska and Canada. The U.S. East Coast might now accept exploration as new revenue with recent U.S. tax revisions. No to Venezuela, but yes to Argentina and Colombia. Brazil’s politics are forgiven. Africa, no change. How about the U.S. embassy’s move to Jerusalem?  

Don’t forget politics. Think about political exploration problems in the Middle East!  Greece’s Energean and its India partners are going to encounter some in their new venture offshore Israel. I was part of a review of my company’s 1995 international activity for the then-new senior V.P. of E&P. He had been living in London, running the company’s business in the North Sea. He was new to the world, apparently, and wanted to know what we were up to elsewhere. After a review of our exploration efforts in the Syrian Palmirides Uplift, shown on a wall map that was at least 12 ft by 4 ft including the Mediterranean (as in the map on this page), he asked if Damascus was a port city (?).

His comment was a promise for a very long meeting. Sensing that we might have success in Syria, near the end of our continually interrupted presentation, the new V.P. ordered our chief counsel to go to Damascus, to negotiate a pipeline crossing the Golan Heights to a large city that he noted on the map, Tel Aviv. The meeting got a lot longer, with a cacophony of discussion. As the exploration oversight supervisor for the area, near the end of the session I opined on a better course of action. 

After my unsolicited comments, I was sanctioned to Calgary for two years. The chief counsel left our company for a more certain and peaceful gig in Switzerland. We failed to obtain production, anyway, in onshore Syria, so pipeline transport and selling became irrelevant. The senior V.P. eventually retired at 20 3my annual salary. What do I know! wo-box_blue.gif 

About the Authors
William (Bill) Head
Contributing Editor
William (Bill) Head is a technologist with over 40 years of experience in U.S. and international exploration.
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