University of Nigeria Virtual Library

Serial No. Author 1

ONUOHA, Mosto O.

Author 2

Author 3

Title Technology and the Challenges of Oil and Gas Exploration in

the 21st Century

Keywords

Description Technology and the Challenges of Oil and Gas Exploration in

the 21st Century

Category

Geology

Publisher

The Nigerian Academy of Science, Lagos.

Publication Date

January, 15, 2000

Signature

PROFESSOR K. MOSTO ONWHA, FAS, FNMGS

TECHNOLOGY AND THE CHALLENGES OF OIL AND GAS EXPLORATION IN THE 2151 CENTURY

K. MOST0 ONUOHA

DTE-GPH Shell Pelroleurn Development Company of Nigeria

Port Harcourt

I Foreword Since oil and gas play such important roles in the economy of our county, it is perhaps fitting tlut the first Public Lecture organised in the now legendary 2/st century b.y the Nigerian Academy of Science should deal with the subject of oil and gas exploration. I wish to state emphatically, that all the views canvassed here are mine and do nor in any way represent those of the Shell Petroleum Development Company of Nigeria Limited who are my present employers. A11 the materials used in puffing this paper together are those available in the open literature. No data that are proprietary or confidential to any company are discussed.

In preparing this paper. I have used information from some of my previom presentations at conferences and lecture series organised by the Nigerian Association of Petroleum Explorationists (NAPE), the Nigerian Association of Geosciences and Mining Students (NACAMSJ, and at a few other occasions. I take personal responsibility for any errors or omissions contained in the discussions that follow in this paper.

ii Acknowledgen~ents I urn gruteful to flze Presidenr, Council and ro all the Fellows o f the Nigerian Academy of Science for the opporfunity giverz to me t o p ) und deliver- the first Academy Lecriirc. in he new millennium. U. the exceller?r facilities a~wilable a f my present place of work, ir have been very difficulr to put foge!lwr a quality prcsetzfation. the)-efore thanL$ul ro the mincrgement of Shell Petroleurn Develo Cornpunj for all the facilities and logistic support that were a v ~

for this work. My special thanks go f o Promise Egele (S~tbs, Serwices Manuger), Altstcn Ezebilo (Chief Gcophysicisr), and Pn Omuku (Corporare E?crernal Relations Manager) all of Shell , t b r support and encoumgemerzf. I sl~all always cherish the lovc prqerfril support of iny wife Nile-Ola, and rim of our children.

i fireword ii Acknuwledgemettts iii Executive Surtzmary

1. In t reduction 1.1 Main objectives and stnlcture of the paper 7 1.2 Some historical perspectives 7

The Present as a key to the future: a look at the last 20 years of the upstream oil and gas industry

2.1 Strategic and organisational changes 8 2.2 World demand for crude oil arid gas 10 2.3 Spot oil prices 10 2.4 World crude oil and gas resources 12 2.5 lmprovements in discovery and recovery rates 14 2.6 Lessons from the Gulf of Mexico 19

3. Innovation in E & P 3.1 Innovation and the exploration / discovery process 19 3.2 Switching to new technologies 2 1 3.3 The oil industry's dependence on technology 22 3.4 How should oil companies access technology? 22

4. Seismic technology in the new milknnium 4.1 The seismic market 23 4.2 Seismic data acquisition improvements and

multi-component applications 24 4.3 Seismic data processing for cycle time reduction 26 4.4 Seismic data visualisation and interpretation 27 4.5 Seismic modelling 28

5. The role of information and data management technologies 5.1 E & P information technology trends 28 5.2 Integrated data interpretation and management 3 1 5.3 Data warehouses and geobanking 33

6. Technology and Deepwater Prospects

7. Forces at work in E R: P in Nigeria

7.1 Business environment 7.2 Government policies 7.3 Reaction of the operators

8. Outlook for the new millennium 8.1 Technology remains the key 8.2 Exploration strategies in the new millennium 8.3 People's expectation of the energy business in

the new miltennium

9. Concluding remarks References About the Author

1.1 M o b Oh~ecfhvs a ~ d Sfrrrc/irrc of r h ~ Paper rhe beginning of a new century and especially of the new ~nillcnniunl should be a time for retrospection. This period also offers us an opportunity fo pccr into thc fururc of the oil and gas industry in an attempt to try to understand ulhcrc rhc industry tnay be hcading. In order ro succcssfi~lly forecast what the futurc will hold. i t is worth reflecting on where we have come from. Today. thc pctroleum industry is driven by technology. Innovations in thc areas of seismic, information. and data management technologies. rogcthcr with knowledge of thc energy dcrnands of a gowing world populafion, provide us with a basis for the prediction of the likcly course of exploration and production (E & P) activities in thc coming ycars.

This paper previews the espected trcnds iri global oil and gas cxploration in the ncxt 20 to 30 ycars and highlights i n particular the key role that trchnology will bc cxpectcd to play in order for the ir~dusrry 10 niect the challcngcs of the futurc. The strategic and organisational changes that have taken placc in thc industry i n the last two to rhrce decadcs arc: reviewed togcthcr with the rolc of technology in enhancing pctroleum discovery and rccovcry rates. Wc look i n particular at the hindrances that oftsn exist between thc introduction, and thc widespread application of ncw technologies in E & Y.

A major part of the paper is dcvotcd to discussions on emcrging technologics to boost exploration in the new millennium. Such seismic, information. and data managemrnt technologics arc today already changing radically the way oil cxploralionis~s work. Thc challenges posed by dccp water exploration, oil and gas recovery from marginal tields and those located in byc-passed rcser\,oirs of old plays. and minimal cnvironnicntal degradation during E & P activities, all secm poised to be adcquatcly addrcsscd by technology. The paper also briefly discusses thc forccs that will determine the shapc of E Br P activirics in Nigcria i n thc ycars lo comc. In finally assessing the outlook for petroleum exploration in the new rnillenniurn. the paper presents some kcy stratcgics for survivai or1 the part of t h e operating companics i n the rnidst of rising and chatigitig expectations horn society.

1.2 Sorne Hisfariccrl Per-specrives Let us start off by casting our minds back to thc statc of oil exploration activities some orlc hundred ycars ago. Towards the cnd of thc 19th century. scvcral oil wells had been successfully drilled in parts of the southcrn USA, in nonhcrn Gcrtnany. and in the Paris Basin. In thost: days. the expcrts who Icd rhc scarch for oil were geologists. arid thcy bwed their work mainly on visible (cxrernal) cvidcnce provided by the principles of stratigraphy and scdirncntology. Geophysical tcchniqucs, rcprescntcd rnainly by the usc of gravity and magnetic instrurncnts. had earlier rnade their debut in nlirleral exploration. but received on1 y wry limited applicatior~s in the search for oil. There werc then no other reliable tools available for probing deep inlo ~ h c groutid to dctcct any pctroleurn rcsourccs that may exist bclow the surface of the earth.

Just before thc 19th century drew ro n closc. oil exploration entered a ncw phasc with thc invention of thc torsion balance by the Hungarian gcophysicist named Lorand vorl Eolvos. Suddenly, a new technology for thc direct dctcction of anomalics crcafed by buried subsurface structures having distiricr density contrasts had come on the sccnc. The torsion balar~cc was cffeclivcly dcploycd i n the beginning of this century for the rnapping of anticlinal structures that could bc potcnrial traps for oil or gas. Many oil ficlds i n the Texas panhandle of the USA and some oil-bcaring strata associated with salt domes i n the North Gcrman Plain were discovcred in the carly part of thc 20th ccntury using the torsion balance. This bulky and cxrrcrnely sensitive equjprncnt subsequently gave way during the 1930s to thc rnodcrn gravirnctcr. which prowd 10 bc operationally more fricndly and efficicnt.

Thc seisrnic technique which today is thc dorriinant rnelhod for hydrocarbon exploration. was introduced in 1919 shortly after the first World War. The invcntion and subsequent popularisarion of the autornobilc in the early part of thc 20th ccntury created a sudden demand for fuel for these \:chicles, thus prompting oil exploration activities to cornrriencc virtually in all thc continents. Oil and gas exploration and production actually dcvcloped into a significant and unique business aftcr thc second World War.

2. The Present as the Kev to the Future: A Laok at the Last 20 Years of the Upstream Oil Industry

2.1 Smfcgic and Org,ut~isational Cimlges many changes have taken place il l the upstrcarn oil and gas fromicr i n the last 20 years. Starting in the early 1970s. a ncw e~lvironrnen!al awarcncss was barn, leading to new environtnerllal demands on operating companies. Suddenly. it became clear that the industry was not in a position to redress thc problcrr~s of the p a t instantan&ously. Nationalism and nalionalisation became forces that the oil indusrry could resist but riot arrest. Middfc East politics disrupted oil supply chains and led to uncontrollable pricc flucruations. There wcrc sevcral industrial accidcn~q. sornc of them with grave environmcnial consequcnccs. Oil priccs. privatisa~ion. and (he opcning up of what wcrc then new opportunity areas all led to the introduction of chatlgcs in the oil and gas cnvironmcnt. ( ssc Fig. 1 ~h ic l i is ~nodified from Cavoulacos and Deffarges. 1977)

Bctwcen 1975 and thc early 1980s. frclnrier erpbmlion was the ordcr of the day. 'This was thc era of "elephant hunting". or going for the giatlrs in frontier areas. Somc of rhc majorrcgions of clcpliant hunting during this period wcrc Alaska. Wcst of Shctlands. Nigeria, offshore China. and Papua Ncw Guinea. An arca is dcerned a fronticr wlien it rnects two rnain conditions:

The area has not been developed due to geographical challcngos. This may bc duc ro the relative location. lack of infrastructurc, undcr a boundary dispuw. or affected by some orlicr factor that has lefr it relatively undcvelopcd. The area prcscnts a technological challcnge. This mums that special and advanced technologies arc esscnlial for operations in such an arca.

I t shotlld be rioted that when an area is classitled as "challcrigirig'or nccessitatcs major rcohnulugical i nnova t io~ costs illmosr always go up - wcll above operating cask in more established areas.

- -

K f h e Upstream Oi l Industry ~ r o r i t l e m

Early 1980s

beveloprnent 1 Producllon Mew V ~ n t u r a ~

- Qaa B Power Plays

Mld-19908

Betuocn thc early 1990s and 1995. devclopme~~t/production new ventures had become increasingly more populilr and i t was no longer strange for E & P companics to be invohed in gas and ponscr supply vcntures as IICW lincs o f business. Today. successful develop~iient/producrion new ventures arc bci ng actively pursucd in many countrics. including VenczucIa. Russia. Kazakhstan. Azcrbaijan. Kuwait and the Erniratcs. Somc major E & P companies i n India. Pcru and Chilc arc currently exccuring power projects. During this period. successful upstream pIaycrs changed thcir business strategies in ordcr to create or add value. Thcy did this by identifying and capturing market-driven opportunities and through organisational changes within thcir companics.

Organisational changes cmphasising specialist-d compctcncies, cross-functional tcams and expandcd alliances haw now becomc the ordcr o f rhc day in he i~idus~ry. Assct teams are being sct up in E Rr P companies and thcre is now an active pursuit o f opportunitics for outsourcing. and restructuring and strcamli~iing o f busincss processes to reducc cyclc lime and cnhance cficicncy. Assct tcams consritute a new multidisciplinary approach in which tcani mcnlbcrs with various expertise work on rr given asset/rcservoir under a tram lcader. The focus i s placed on asscr management as n wholc by intcgnting the tcchnoIogics and thc activities o f the many disciplines involved.

When we rcvicw the E & P succcsscs o f the last 25 years. cspwially during the cra o f "o~e~~~'hun!-hurrri~lg''. we can summarise thc trchnological devclopmcnrs hat enhanced the probabil~ty o f success These included:

improved surhcc evaluation and 3D seismic techniques; harsh environnicnr (deep water. Arctic) drilling and production rechnology: fastcr and more accurate directional drilling and measurement-while-drilling (MWD) capabilities; high resolution. high spced logging and testing tools: subsea completion (multi-phasc tlow technology); enhanced sccondary and tcrtiar}. recovery schemes.

2.2 IVorld Dernm~d for Gude Oil und Gus One o f the most important fundamental changes that took place in the last few decades o f thc 20th century was the rise in the number o f cnergy consumers in the world to over two billion. riiost o f whom arc located in developing countrics. World energy consumption has gradually been growing over thc years. Oil, gas. coal, hydroelectric power. and nuclcar encrgy arc all very important in [he energy equation o f the world today. In developing countrics alone. energy consumption has grown by thrce-quarters in the last twenty years. while on a world-wide level. oil consumption has increased by some 60%. although iis rotal market sharc has slipped. Coal's sharc has fallen, while gas utilisation has climbed. accounting for nearly a quarter o f encrgy in usa (in Britain alone - 358). The use o f nuclear energy has grown even fastcr - by a quartcr in !he past 10 years. providing more o f Europe's energy than coal.

Tha world oil demand growrh and oil demand sensitivities are shown on Figs. 2 and 3 respectively. The steep rise in dcmand among non-OECD countrics is quite cvident. Thc projected sansitiviries which cover the first decade o f the new millennium. corrcspond to different scenarios indicated on Fig. 3. The world's primary energy consun~ption by type is indicated in Fig. 4 (in million bards o f oil equivalent perday). Thc basic da~a tor thc plot is from OPEC (1997). Gas ulilisation i s expectcd to continue to increase and possibly surpass coal within [he next dccade. A recent USA Department o f Energy report has also confirmed that oi l demand wi l l grow by 30% by the year 2010 (Peeblcr. 1996). This means that the industry will have to incrcase o i l production by an amount roughly equal to the currcnt output o f the Unitcd States. North Sca. and Saudi Arabia combined.

2.3 Spot Oil Prices In I998 the Brcnt crude price avernged US $12.75 a barrel. compared with US $19.10 a barrpl a year carlicr. Thc decline in crude o i l prices started in the fourth quarter o f 1997 as increased OPEC crudt production, a decline in oil dcmand growth in the Asia- Pacitic region and a milder winter in the northcrn hemisphere left oi l markets oiwsupplicd. Production restraint by OPEC and certain non-OPEC producers provided somc support for prices bur was not sufficient to prcvcnt a Iow o f less than US $10 a barrel being rcached in thc fourth quartcr of 1998. Energy prices are constantly being driven down, reflecting:

Abundant resources Relentless compctiiivc prcssurcs. and Accclcrating technological progress.

World Oil Demand Growth

million b ~ d OECD / Non OECD

Fie. 3 Oil Demand - Sensitivities million bld 50

48

46

44

4 2

40

38

3 6

3 4

3 2

Thc marginal cost o f non-OPEC oil dewlopmcnts has alrcady fallen to around $14 a barrel. This scerils bound to continue. The trcnd in crude oil price dcvelop~nent is captured in Fig. 5 with the Brent blend as benchmark. Factors that wi l l kcep pushing priccs up include resunlption in growth o f the Asian countries, bettcr and more cffectivc market managcrilcnt by OPEC. and instability 111 the countries o f thc Middlt: East. I n rhc near future, incrcasc in Iraqi oi l exports, loss in OPEC cohesion. and prolonged recessions in the Wcsr are factors that can lead to lower oil priccs

World's Primary Energy Consumption by Type

(in million barrels of oil equivalent per day)

1981 1985 1989 1993 1997

Fie. 4 S elected Y e a s

2.4 World Crude Oil mrd Gus Kcsourcesr Thc preponderance o f known oil rcservcs (sorne 75%) l ie in OPEC countrics. notably those in the Middle East. Thc cxtcnt o f unknown reservcs i s obviously spcculative at somc 700 billion bbls; this is probably a cautious cstirnatc. wilh scope for technology in achieving improved recovery frorn these resources. Apart from the dorniriancc o f countrics o f the fornicr Soviet Union (FSU) and large rcsourccs in Iran. gas rescn.cs are more widely spread than arc those o f oil. and lcss (40%) are in OPEC. The cumufativc production figurcs cxcludc gas flaredivented. Thc undiscovered rcsource (somc 100.000 mrd n?) is considerably more spcculative than for oil. with lcss scopt: likely for improvcd recowry. Oi l and gas production forecasts for thc USA and the rest o f the worId art: available from rrlany sources. c-g. Edwards (1997).

Although a lot o f hydrocarbons have been produced in the Iasl one hundred years, proven reserves available can still bc expectcd to last for well over cighty years. Fig. 6 shows the lifc span in years o f the world's proven reservcs bascd on figures obtairicd from OPEC (1997). The proven reserves for a given ycar art: at that year's average depletion rate. which is equivalent to rhc rcservcs/production ratio for the given ycar.

Crude Oil Price Development

Meanwhile. the gap bctwecn world oil production and ncu discovcries continues to widen. Over thc past dccade, less than half the world's production has boen rcplaccd by new discovcrics. I n fact. over the past fivc years, thc rcplacernent ratio has dropped to about 30% Meanwhile. gas discovcries arc nearly kccping up with production.

Incidentally. though the overall rcplaccmcnt picturc is as skcrched abovc, pcrforrnancc in terms o f tho quantity o f oil acrually replaced varies widcly from region to region. I n sonic pctrolcurn provinces. rcplacement efforts have bccn very successful. contrary to the situation in somc othcr provinces. As an example. we consider the 20th Ar~r~ual Rcport o f the US Encrgy in for ma ti or^ Administration (EIA). which states that crude oi l rcsenfe additions in thc US in 1996 replaccd 8 5 8 of 1996-oil production. Fig. 7 sh0n.s the liquid oil rescrvcs addcd for thc period 1987-1996 for thc rest o f the world. excluding North Amcrica. Thc [rend is that o f decreasing \-olumcs addcd. I t i s pcrtincnt to mention here that Africa currently lcads the world in lcrms of both new oi l discoveries and rcscrt'es rcplacemcnt. Tablc I (bawd on data from Petroconsultants. 1997) prescnts a summary o f thc regional oi l cxploration pcrforrnance in rhc Iast few ycars. Angola. Algcria and Nigcria have really bccn doing very wcll in terms o f rescrve rcplacemcnt.

I Liquids 'Reserves Added (World, excluding North America)

I

Fis. 7 ' Year I

2.5 Ifnproveniem in Discovey und Recover). Ram Thcrc has been a significant irnprovenien~ in exploratior~ succcss rates in rcccnt tinics and ive expcct these high succass rates ro bc sustaind and even improvcd upon in thc ncw millennium. Risk rcduction wil l continue to bi: achicvcd as the success rates conrinue to improve rcsulring in significant irnprovernenrs to economics. Fig. 8 tells the

Table 1 (a) REGIONAI, OIL EXP1,ORATlON PERFORMANCE

Oil Discovered (billion barrcls)

I 1 I I Far East / 11 -32 1 5.78 I 50 1 45

Reserves Replacement %

REGION

Africa

I I 1 1

Latin America 10.28 1 5.07 1 8 1 32

1997

(4.54

Australasia Europe

Middle East

Table 1 (b) OIL EXPLORATION PERFORMANCE Oil Reserves Added (billion hbl)

story of cor~tinuous irnprovcnlcnt of success ratcs with tirr~c in thc last 25 ycars. Dcspitc sigriiticarir improvements in cxploratiol~ success ratc. only about 17% of today's drilling arc exploration-based. The balance is on development wells.

1993-1997

12.76

0.95

3.36

Oil discowry per well dcclitlcd from ovcr 50 tni\lion barrcls of oil (mbo) pcr well in the early 1950s to about 20 mbo per rvell in thc 1970s. lo just 7 mbo pcr well in the carly 1980s. In Figure 9 which shows the avcragc amount of oil discovcrcd pcr wildcat

1997

168

3.45

4.39

1993-1997

100

40

5

3 1

12

--

Success Rate

(after Durharn, 1998)

well, the data have been averaged for 5-year periods (data details arc available in Attanasi and Root. 1993). The Middle East dominates and wil l probably conrinue to dorrii~iate the average annual oi l discouercd and the oiVper well discovery rates. As we all know, when t k largest fields in a petroleum province are found. oi l discovery rate drops dcspitc impmrvn~n t s i n geobgic undcrstanding and exploration technology. 111 the 1950s. the avcrags field siec in thc Gulf of Mexico was 140 million barrrls. but today i t i s lcss than 10 million barrcls{wc Fig. 10). The finding ratcs o f giant oil fields appcar to have peaked in the USA in I932 and i~iternationall y in 1965.

Can the shrinking ficld sizc trend be rcvcrscd by tcchnology? I do not chink so. Indccd. I agrcc w i ~ h Durharn (1998). that it is naive to think that this can happen with time. All that wil l happen is that due to ~cchnology, wc wil l find the reserves in mature rcgions casicr and dcplctc thcm with greater economic bcnefit. The discovery rare drops because' the remaining fields arc orders o f magnitude smallcr than the large discovcrics. Improvements in technology and geologic understanding wil l however help to rnitigarc cxploration risks. Within a province, mpidly declining discovery rgcs produce declining returns to exploration, and they, in turn, encourage explorationists to begin exploring ncw provinccs or frontiers.

I n the North Sea, the average probable ficld sizc in 1998 u8as about 50 million barrcls o f oi l equivalcnr (mboe) compared with nearly 100 rr~boc in 1994. Thc vcry latcst prog~iostications indicatc that dcvelopments in future arc going to b r a lot smaller in size. The size o f rcscrvcs discovcrcd in the UK Norrh Sea since 1994 is nor any\tphcre

Antount of Oil Discovered Per Wildcat Well (million barrels / wildcat well)

Areragc FicId Size (Gulf of Mcxico)

7

(after Durham. 1998)

17

How Recovery Rate is Increasing

+Production (Depletion) Production (Eff lclency)

Fie. 11

near to replacing rescrvcs produccd since lhat rime. This is why explorarion just has lo move out into fronticr areas. Although the field sizes d isc~\~crcd are dcclining. recovcry rale and not just succcss rate is also going up. Recovcry rate now i s about 34%. hut is expectcd to get as high as 49% by thc year 2006 (Durharti. 1998). Projecting from prcscnt day trcnds, Fig. 1 1 shows the expected impact of tcchnology on recovery rate in the next few years.

As we stand at thc beginning o f the 21st century we find ourselves in an era o f rapidly fluctuating oil prices, l o w r head-counts, greater technical barriers, and growing demand for oi l and gas. These are some o f the rriain challenges o f the industry in the new rnillenniurti. Undcr these conditions. i r can be said that the main challenge facing E & P corripanies is nor just to cur costs. bur to increase 'rcvcnue. Thc only way cortipanics can makc more money in this kind o f environrtient i s by bccoming morc produckive. Companies havc lo lcvcrage their knowledge assets more successfully than their compctilors. In rhe coming years, succcss wi l l depend mainly on a company's

ability to harness new tcchnology to rcducc cycle time and increase productivity. ;-

Sorrie tcchnologies incrcasc productiviry incrcmcnrally, othcrs through suddcn leaps. but accurtiularcd small gains can add up. over timc, to dramatic changes. A decade ago. i t took perhaps 30 - 40 days to drill a 10,000-fr well. Now that well can bc dri1lcd in about five days bccause o f numerous small tcchnical improverticnrs. e.g. bctrer dri l l birs. mud progranirtirs, crew organisations. etc. IPccblcr, 1996). But cach gain has bcen incremental. shaving of f a few days evcry ycar. The cost o f adding recovcrablc rcrseri'es drastically rcduced in thc last 15 }cars mainly hccause of:

more poucrful seismic processing innu\fativc drilling and complc~ion lechniqucs; rcvolulionary busincss practices.

2.6 ks.votrs.frotn r h ~ Gu!f qf M i w b I n thc late 1980s - carly 1990s. the Gulf o f hlcxico was a 'dead sea' to opcraling companies. Most USA offshore drilling flwt moved our to the Noah Sen. Far Easl. and to other placcs. Operators claimed that the Gulf o f Mcxico (as well as most o f the rest o f thc USA) hcld no largcr undiscovered hydrocarbon deposits. The truth was that an increasingly hostilc busincss and political climale were cxpclling the rigs and operating companies. Since 1995, thc story has changed. Dri l l ing rigs havc bccn steaming back to the Gulf o f Mc~ico whilc Ieasc sales arc bringing thc US treasury rccord sales receipts. Gulf Coast shipyards and fabricators havc also been H-orking to capacity. Whcn wc stop to examine closely the circumstances that brought about this regeneration o f activitics in thc Gulf, wc discover that the following factors siand out clcarly:

USA fedcral actions have created a more hospitable busincss en~sironment for America's oil industry. including royalty paymcnt rclicf un decpw:iter producrion, and mure rcasonablc levels of operalor cnvironmenral financial liability. Many companies h a w found operations outside the USA borders no less difficult than inside thcm. Technological innovation enabled thousands o f barrels of bye-passcd reserves throughour niaturcd regions o f ~ h c Gulf to be uxposed; odds o f wildcat succcss improved from onc-in-fivc to one-in-two. Tcchnologics lhat helped in panicular includc high-anglc drilling, and real-time down hole data acquisition and con~plczion techniques. Stablc. rdativcly high oi l and gas prices (this was bcfore thc 199'8 crash in prices). Ncw operational technologies have made profitablc thc rescrvcs that \vould have bccn ignored as too sniall to bc cconomical. Today. only lack of equipmcnt, space and a growing critical skilled labour shortage is slowing things down in the Gulf o f Mexico.

A major learning point from the Gulf of Mcxico cxpcricncc is rhat an area urit lcn of f today as hostilc and unprofitable for E & P activities can cxpericncc regcneralion and bccomc a zone o f competitive hot plays in ~ h c future. A l l that is requircd for this lo happen is a favourable intcrplay o f events, especially those involving ail priccs, opcraror environmental financial liabilities. and host country's busincss and political climate. This lesson is important for us in Nigeria. Dcspitc our vast oi l and gas rcscncs. the political/busincss environment also has to be right in order to kccp operators busy and also attracr new invesrmcnls in this scctor.

3. Innovation in E Rr P

3.1 fr~tmafior~ und rhe Explorutio?l/l)isco~~e~p Process In urder to really apprcciatc the rolc o f technological innovation in nircting thc challenges o f rhc E R: P industry, i t is good to ensure rhat wc understand what we really mean by [his tcrm. Innowtion may be defincd as ;he introduction of a hitheno

unknown dcvicc or way o f doing things lciding to a shiti in the standard practices. Innovations generally have berreficial effects and we associate thcin with progress and prosperity. The E 8: P busincss has wirncsscd many advances and technological innovations in thc last f i f ty years. Revolutionary changes in ihc way opcraling companies do business havc brought increased rcvcnuc and cash flow. Thc ultimate goal of exploration is to bc able to dctcrminc from physical measurements on the surface or abovc the carth exactly what thc dri l l would find ar any spccificd Iocation and dcpth. Our research and development (R & D) efforts in the E & P business, and othcr awmpts at innovation. are usually fired by the desire cither to achieve grealer success in prcdicting what the dri l l would find at any specificd point below the surface. or to find ways o f reducing operational costs.

An analysis o f the historical rccord o f oil e.rploration/discovcry in Nigcria revcals somc salient facts about exploration stratcgics in virgin arcas. I t took many years o f exploration (from the early part of this ccntury until 1953) before oil was discovcrcd in Nigeria. first i n the Akata-l wcll in thc Eastcni Niger Delta. The first major commercial; discovcry was, however not made until 1956 in Oloibiri. Since little was known in thc beginning about subsurfacc srructurcs and hydrocarbon trapping conditions in thc Delta. drilling on an arbitrary grid or simply at random rnay havc found any o f thc major ficlds faster, than by thc actual methods used in the search for oil in those earlicr ycars. Stratcgies that worked in Iran. Saudi Arabia. and the Gulf o f Mexico were quickly put to usc in the Niger Dclta as i f rhc subsurfdce conditions wcre the same. As morc and morc discoveries were madc in subscqucnt years in thc Niger Dclta. our industry blossomed, due to the introduction o f h t t e r tcchnologics and basin specific exploration stratcgics.

This experience is o f coursc truc in many other basins in the world. The reason rhar a discovcry in a virgin area is not found as easily by our normal cxploration routines as by random search or drilling i s lhat we humans invariably approach new problems with old solutions. Wc explore a new basin with some rnenral image o f just what kind o f geologic anonialy might constitute a trap for hydrocarbons. In the early days o f exploration in the Alberta basin o f Canada, cxplorationists kept searching for and mapping anticlines, drilled rnany holes into them and found rhem all dry, only to realise rnuch latcr hcrc, that oi l existed not in structural traps. but in bioherms (reefs). According to one account. 15 1 dry holes wcrc drilled ovcr a period o f 17 years before oil was discovered in rccfs. and thcn things suddenly changed (Savit. 1984).

I n the North Sea, i t took the drilling o f ovcr 200 unsuccessful nlclls (i.e. no commercial finds) in ~ h c southcrn and northern portions before the floodgates o f exploration succcss were opened. I n the heavy-oil province o f Venczuda. oi l alas found in most of the anticlines. but only a f~c r w l l s drillcd on all thc crests turned out to bc dry and then came someonc who had thc insight to try thc south flank o f one anticline. After such unexpcctcd discoveries, an era of high success usually followed in each basin. We witnessed such an era o f high success here in the Niger Delta aftcr the rolc o f the groeth faults and the associated roll-over anticIi ncs in hydrocarbon trapping had been understood. This initial growth cra was bctwccn the timc the first shipmcrrt of crude oi l

left Nigeria in 1958. and the onset of the civi l war in 1967. %,hen the expansion o f thc oil industry in Nigeria suffered a temporary set back.

We can therefore state categorically. that exploring a new basin by stubbornly following an invalid conccpt, a conccpt that rimy have bccn valid elsewhere. secms ro have bcen the industry rule rather than exccption in those early years. Successful exploration depends on thinking and doing something new and different from timc to timc. This requires innovation especially in thought. After all, as Nigerian oil explorationists oftcn remind theni1seives. oil is found in the minds of men. We must rhus occasionally bc willing to try ncw techniques and dri l l the unusual prospect. Usually. one or two successes with a new tool or technology wi l l gcncrarc considcrablc interest and following, especially if the details o f the method or technology arc made "secret" or classified as proprietary. The gerlcral bcIief usually is that what is kept secret must bc very valuable,

3.2 Swifclrir~~ to New Tech~roIo,gie~ The first United States patent for scisrnic exploration was granted in 1917 to Rcginald Fesscnden who conceivcd the idea o f exploring the near surface with shock waves creatcd in the ground. Independently, Mintrop in 1919 proposed thc usc of reflected waves for exploralion purposes in Gcrmany after the first World War. The first authentic seismic reflection invcs~igation was carried out in 1926 by J. C. Karcher i n the United States and up t i l l the beginning o f the second World. there were less than 200 seismic crews opcrating around the world (Savir. 1979).

Digital recording and processing o f seismic data was first proposed around rhe year 1950. while the first repon o f acrual deconvolution o f a seismic wavclet was made in 1952 by Henri Salvatori. then President of Western Geophysical. By 1963, therc wen. a few digital crews, mainly in thc USA. but by 1970. digital recording and processing was now widespread in the world with thc cxccption o f the forrncr Sovicr Union and China who waited ti l l about 1980 to introduce the technology widely in their opurations.

The possibility of using the "Bright spot' technology as a direct hydrocarbon indicator was pubIished in 1960 from observed dau, but it took more than ten ycars for the method to get into full scalc usc. History therefore informs us that. that i t takcs I5 - 20 years for a completely new idea to mature into widesprcad use. This is why today's technology is often the fruit o f projects stancd long ago. A good cxample is the coiled tubing technology o f today which has actually bcen under devclop~ncnt since rhe 1970s. but has now burgeoned under the pressure of being one technological so1u;ion to low oil and gas prices.

I t is not unusual to find some reluctance or unwillingness on the pan o f opcralors in switching to ncwer and more innovative technologies. Several reasons may be given for this occasional lack o f enthusiasm. Thc timc rcquired to dcsign. lest. construct and distributc complicated and expensive machinery can bc quite substanrial. Thus. anen when a ncw lcchnology has bcen successfully demonstrated, lead time may bc required

for its widespread distribution. On the part of usurs, it is quite reasonable to delay Ihc replacement of expensive machinery by newer equipmen1 until one is quite certain. that the rcsults with the new equipment will be sufficiently improved to compensatc for the ~hrowing away of old. but still useful cquipmcnt. Perhaps the old equipment can still produce good enough results. In addition, there is thc timc delay rcquircd to discover how to operalc thc new equipment or technique and to use the results produced. and then. to tcach a large nurnbcr of people to be builders. users and operators of the nevi mcthods.

Nobody invests in new equiprnent or ncw technology just for the siikc of it. Everything just has to be right to encourage the invcstmcnt. Thc necd for better, more efficient techniques must bc therc ( i s . rhc prc-existing lools or technologies must have inadequacies that are rnadc up for in thc ncw tools). Powerful tools for finding and producing oil were not really necded until much later in the 20th century when automobiles got more and more popular among thc populations of the world. thus creating a demand for largc quantities of fuel to power them. 11 was thc uncxpcctccl rise i n oil prices brought about by OPEC in the wake of thc Arab-Israeli war of 1973. that boosted the search for ncwcr tcchnologics to maximise production from old ficlds in the USA. This subsequcntly gavc birth to 3D seismic and some other related technologies.

3.3 The Oil Indusmy j. Dependence on Tecitnology It has been stated that fhe oil industry's future depends on developing its technology. Here wc now brictly summarisc why this is indeed so: r Technology plays a vital role in cutting costs - a fact that will become even morc

important as it becomcs harder to squeeze o u ~ further operational efficicncics. r It is essential for replacing reserves. an assignment that is increasingly bccoming

more and morc difficult as resources arc depleted. Technology providcs a major avenue for developing thc oil and gas busincss, extending the reach of cxplorationis~s. rcvaaling new plays. offering new recovery possibilitics from rcscrvoirs in diverse situations. and commcrcialising more gas. Without the hclp of technological innovations. i t would be impossible to r~iect [he increasingly stringent cnvironmcntal standards that thc society rcquircs today from operating companies.

3.4 How Simrld Oil Compmzies Access Technology? Presently, the involvcmenl of oil and gas opcrators in rcscarch and dcvclopmcnt (R &D)-is declining, lcading to loss in profits for both tho opcrators and ser17icc providers. Greater responsibility for technology dcvclopmcnt is now bcirtg shouldered by the service providers. But how should companics and major operators access tcchnology? Should thcy rely on others - service cotnpaoics. academia. other industries - or develop it rhcmsclvcs? Opinions vary on this. bur most large multi-nalional oil companies still try to develop some of rhc tcchnologics they require while also relying on the ope11 rnarkct for othcrs. Service companics do not always sharc the need of the operators to inlroduco new advances immediately. If they have a profitable technology, their intcrest is to delay bringing forward a rcplaccrnent until they have niilkcd maximum

value from the cxisring producr.

I r is in the intercsl of every operating company to keep abreast o f technological devclopnicnts in thcir business. Exploiting tcchnological advanecs from other companics and sources often depends on your own rechnological capabilities. A strong ~cchnology base i s essential for monitoring the quality o f tcchnology services we obtain from others. Scrvicc providcrs are value-added organisations that bring adr,anccd ~cchnology lo diftirent a s p ~ ~ l s o f the E & P business, e.g. scistnic proccssirig or in~erpretation. rcscrvoir charactcrisation or to thc wcll s i k in the case o f drilling. Access to this new tcchnology enablcs operators to b a o n ~ c rnorc protitable. I t is only fair thal these servicc providers reccivc equitable rcturn for thcir own invcstmcnt in developing tltc ncw tcchnology. Adequate compensation for R Rr D invcsrments should conrinur to be provided through mutually agrccd cornmcrcialisation processcs bctwccn thc operators and scrvicc providers.

4. Seismic technology in the new millennium:

4.1 The Seisnric Murkef Rcccnt tcchnological dcvclopmcnts confirm that the seisrnic rncthod is sct to play an cvcn rnorc crucial rolc in E & P in thc future. Prcscntly, tho scismic marker is a $ 4 billion market and it is growing annually at about 20%. Expccted arcas of growth in rhc now rnillcnniuni include rcscrvoir rnanagcmcnt, dcepwarcr, rans sit ion zone. and land- bascd 3D. Wc should cxpect a morc pronounccd shift to rnorc production appIications, cspccially tirnc-lapsc (4D) and multi-comporrent (3CtK) scismic. Thesc today arc actually at the cuuing edges o f ~cchnology. 4D and 4C scisrnic arc already strong busincss dr iw-s in rnany arcas o f the world. Thc challcngcs posed to cxploraiion by the transition zonc (frorn the beach to about 50 f t o f waicr) arc now also bcing successfully rargetcd and met.

Improvcnicnts in hydrocarbon recovery t iom rcscrvoirs arc stcadi l y being madc through sornc innovalions in seismic technology. Some o f thc following dcvcloprnenrs arc anticipated in the coming pars:

Further reduction in thc tirncs o f scismic acquisition and processing so rhar they bccornc compatible with the overall rcscrvoir devcloprncnt proccss. Scisniic proccssing in rhc dcpth domain wil l becnrnc more rou~inc. This rcquircs an cxcellcnt standard o f upstream proccssing (surfacc corrcctions, artcnuation o f rnulriplcs. amplitude prcscrvation). an accuratc evaluation o f thc vclocily field, and good integration bctuccn surfacc scismic and we11 data. Dcpth irnaging must in this nay bccornc the norm for processing in rhc ncw millennium. The multi-componcnt seisrnic lcchniquc (compressional and converted uavcs) and 4D (tirnc-lapse) scismic wil l be proniotcd ntorc and rnorc by the servicc companics and wil l become a vcrivablc roo1 for rcscrvoir charac~crisarion.

Table 2 shows thc progrcssion o f seismic technology wirh pas[. cuwenr. arid cxpectcd dct.clopmcnts up through h e year 2030. 2D. bright spot and 3D seismic tcchriologics

Table 2 PROGRESSION OF SEISMIC TECHNOLOGY

I Seismic Technology Type 1 Year Range I Peak Period I I

D Seismic Technology

Bright Spot Technique

30 Seismic Technology

4 0 (time-lapse) Seismic Technology Pre-Stack Depth Migration (PSDM)

before 1 965 - 1 986

1 968 - 1987

1975 - 2002

I

have bcen with us for quite somc time and havc all passed their peak periods o f application. The 4D (time-lapsc) seismic technology is gradually getting more and more popular. Its application is cxpectcd to pcak in the next 5 - 7 years while the popularily and application of multi-component scismic technology is cxpectcd to increase. Ultimately. onc cxpccts 3D/3C elastic wavc inversion to be fully in use in thc next 15 - 20 years.

Today. pre-stack dcpth migration (PSDM) is cnjoying widespread application. Mainframes and supercomputcrs are no longer required for its implementation. Its impact on seismic data quality from somc previously problematic arras havc bccn quite dramatic. As an example we look at Fig. 12. which i s rcally taken from an advert from a seismic data analysis company. Pamdipn Gcoph~~sicol o f Houston. Texas. Thc top section shows that convenrional 3D rimc processing o f a Tcrtiary grabcn failcd to image the steep flanks o f thc grabcn. IncidentaIly, these steep tlanks are impomnr in this place for targeting gas prone sands pinching out at faulr boundaries. I n rhc lowcr sccrion of Fig. 12, new technology has been used to build a 3D-depth/\mclocity model. which was then used tbr 3D pre-stack dcpth imaging. PSDM did not only improvc thc resolution o f steep dips. but also enabled the imaging o f reflectors previously unsccn.

1974 - 1 975

1975 - 1979

1988 - 1992

1995 - 201 0

1994 - 2009

Df3C Shear Imaging / Rock Fluid I 1

4.2 Seismic Dura Acrfuisitior~ h~rprovernents u ~ d 1Mulfi-Con~par7er~r Applicutions '

The current trend in multi-streamer marine survcys sornetimcs involvcs rota1 strcamcr lengths of 24-36 km in thc water. New rcchnology in the market is alrcady being used to improve recording quality and facilitate Jeploymcnt o f in-sea cquipmenl. For instance. fibre-opric technology has been adopted for lead-in cables. reducing cablc diameter by overall 20%. The main advantage with fibre-optic technology is data transmission reliability and a secondary bcnefit is that these lead-ins raks up less space on winches. Most vessels arc now aIoo equipped with a system for adjusting sourcc

2003 - 2005

1997 - 2004

1993 - 2025 007 - 2020

Dt3C Elastic Inversion 201 1 - 2035 020 - 2030

Fig. 12 Improvcrrents in imaging and resorcsolution through PSDM

divcrgc~lce so [hat subarray positions can be adjusted individually. guaranteeing the consislcncy of thc source signal. Despirc the reduc~ion in diameter, thc acoustic charactcrisrics of thesc strearncrs in terms of noise Icvcl are cquivalcnt to thosc of ~xc\fious-gcncratior~ strcarncrs with a widcr diamerer. Reducing srreamcr dianletcr is an cl'fcctivc way of solving the problem of on-board storage of the ever-increasing lcngths of arrays bcing requesrcd by clicnls.

With such giant stridcs made ill multi-streamer ~cchnology, why takc thc mublc of

going to explore from the sea floor'? What is responsible for tbc divorsitication o f rnarino exploration to include sea bottom recording systcms? Thcrc are two main

, rcasons for going to the sca floor. Firstly. i t allows the rccording o f not only hydrophone data but also of horizontal and vertical gcophone data. Hydrophonu and vertical gcophone data can bc combined for deghosrirrg and dereverberariotz. Horizontal geophone data offer the advantagcs of converted-wave inforn~ation: rclative insensitivity to fluid contcnr leading to clcarer imaging through gas chimneys. additional conslraints for quantitativc interpretation and. possibly. better pcnctration through hard layers.

Thc second reason is that the use o f ocean-bottom recording systems allows a greatcr prccision and flcxibility i n survcy dcsign: the Iocation o f the rccording units is fixed and vory long offscts and a wide rangc o f azimuths can be recorded, even in partially obstructed arcas. Indced, i t is not too much to say thar ocean-bottom systerns have brought the land geornctry to the marine environmen!. Therc arc several major advantages and applications o f multi-cornponcnt (4C) seismic data. Thcse include:

Imaging geologically complex arcas where traditional seismic cannot fully image beneath complex structures. Lithology or fluid prediction. To date the largcst number o f multi-component jobs has been for this application. Compressional waves react to the matrix and pore spaces o f the rock. so any change in thc pore f i l l can dramatically affcct the compressional wave velocity. Howc\er. shcar waves react only to the matrix o f thc rock, so whcn both arc combined any changc in the comprcxsional waves but not in the shear waves can indicate fluid changc versus changcs in the rock. Imaging bencarh gas clouds or gas zones. Shcar waves can propagate through areas thar compressional waves sinlply cannot penctratc. like gas sarufaicd scdi rnents. Imaging rescrvoirs with low compressional wave impedance contrasr. Sorne reservoirs basically do not reflect much o f (hc compressional wavc. bur do have good mode convcrsio~~ response. Traditionally. 3D seismic was initially a dcvclopment tool, [hen i t moved into exploration, and today with the advancenicnrs in shcar wave technology. we haw broken the barriers into production applications such as rcscrvoir characterisation and fluid detection.

A recently acquired 3D multi-component survcy in thc Alba Field o f thc U.K. North Sea rcd~f incd [he reservoir and changed plans for the relocation o f future dc\tlopment wclIs. The converted wavc data revealed that in marly arcas. the shapc o f the sand body i s much different from what was prcviously thought.

4.3 Seisrt~ic Processirtg for C j d e Tirrre Reduction Despitc rhc consistent increase in data volumes ro be processed and wer-greater algorithm compIexity. thc duration of 3D seismic projects. acquisition and processing combined. has bccn significantly rcduccd. I t is indccd raking remarkably shortcr and shortcr time to product il~terpretablc 3D seismic data than before. This situation has bccn madc possible mainly by:

conducting a reasonable part of thc pmccssing at the acquisition srage, eithcr with

local con~puting capacity (c.g on-board proccssing). or by transmitting compressed data to processing centres; overhauling working rncthods and softwax tciols in proccssing centres to irnprove thc effectiveness o f gcophysicists and the productivity o f computer rcsourccs: aiming for error-free data through the introduction o f a systematic QC policy for data and inslrurncntation a1 each stage during acquisition and processing. I n 199 1. more than 500 rnainfrarnc days were rcquircd to process a marine seismic survey o f sornc 1500 sq. krn, whcreas the sarnc mass o f data can now be handled in only a few machine days by the new gcncration o f parallcl computers.

Gcncra1l)- speaking. ncw 3D scisnic processing capabilities haw givcn some operators a frcsh appreciation for mature properties (sornc greater than 30 years old). Field 3 D btudies backed by new processing software routincs arc revealing ncw drilling opportunities in oldcr areas. Cornputcr powcr doublcs every 18 rnonths for thc same cost (almost a factor o f 100 every ten years). This rnakcs the tirncrable shown below possible for a ~ypical 100 x 100 krn ( 1 2.5 x 12.5-rn bin) survey. leading to a drarnatic reduction in cyclc time in each case:

2D synthetic shor modelling 1975 ?D post-stack irnaging 1985 3D pre-stack depth migration and 3D synthetic shot pre-stack modelling 1995 3D full elastic wa\c rnodclling 2005 3D elastic ufave inversion 201 5

4.4 Seismic Dora Visualisotio)~ and hrrerj~rcrotiorr The 2 1 st century rnarkctplace wil l be one o f tlerce conipctitivc pressures; wherc having the best-i ntegratcd technology is csscntial for a company to rnaintain its true cornpctidve edge. 'I'raditionally. scisrnic interpretation has been done in lwo dimcnsions. Whether on papcr or on screen. our intcrprctation then only progressed by examining two-dimensional scisrnic slices in a line-by-linc fashion and assembling rhc rcsult in our minds into thc three dimensional earth niodel WC need. Rut all that has now changed. Our interprctalion is no longcr constrained by f i x d data views. ~Masirnurn data clarity no longcr depends on its original acquisition orientation. Wc can now vicw and interpret seisrnic data in any oricntation that we desire. intcracling on the screen with the data in 3-D space.

As our interprctation proceeds. thc 3-dimensional earth model. once developed on1 y in our minds. is instantly created on the screen. No longer arc we dcpcndcnt on stacks of paper maps, cross sections and pcrspcctive diagran~s that try to accurately communicate our vision to others. Our 3-dimensional vision i s thcrc on screen for everyone to sce and understand. Wc can now see and extract more inforrnation from our 3D seismic data bccause o f these tcchnical devclopnxnts. Be~tcr and more cotnplctc understanding o f our prospect or rcscrvoir is achieved in less lime. Wc also now haw an enhanced understanding of thc data to answ8cr critical questions and increase confidence in thc interpretation. Thus thc entire company or organisation benefits from lower risk. rcduccd interpretation cycle time. and greater productivity.

Ar one time. geologists. geophysicists and cnginccrs scldorn involved thomselvcs in the other's business. Today. teams are the rule. Just as the world of paper maps gave way to computcr scrccns using 3D \nisualisation. that paradigm is also now shifting into the world of 3D visualisation centres which allow geoscientisrs to interact with subsurface data in rcalisric 3D environments to analysc reservoir production sin~ulations. In thc new 3D-visualisalion centres, multi-disciplinary teams work in collaboration to intcrpret complcx problems. optiniisc busincss operations, and enhance decision making. thcrcby rcducing cost and time on projects. More of thesc dara visualisation ccntres are likely to be established by operating cornpanics as we enter the next ccntury.

4.5 Seimic Moife l l i~~ Seismic modelling is a basic tool encompassing cvery aspect of rhc seismic rncthod including acquisition planning, processing and interpretation and has bcen proven to aid accuracy and cut costs for these tasks. Just as scientists and engineers simulatc rockets. aeroplanes and automobiles beforc building rho real thing, so has the gcoscicntist now learnt to simulate seismic waves and their rcflcctians to rnap the shape of subsurface formations bcfore drilling. Today, therc are lhrcc broad arcas of activities wherc seismic modelling aids thc geoscicntist:

discovcry, in\'cntion and education: survey planning and dcsign; interpretation validation.

The final product of an intcrpretation is oftcn a map showing the final judgement regarding wherc we think drilling might be most successful. I n order to evaluatc thc accuracy of such a map or establish thc validity of thc interprctatioa. u 't - - resort to seismic modelling. Sincc the map is the result of an intcrprcratia~! of data. the geosciendsts can demonstrate that fact by using thc map as a rnodel to gcnerate seismic data ( i t . a process that can bc rcgarded as solving the seismic direcr problem). If modelling simulates data similar to the original seismic data, the interprctarion rnight bc righr. If not. additional intcrpretation is in order. Modelling is rhc tool that links the acoustic properties i n depth ro the scismic reflection profile characteristics in time.

Traditionally. acquisition of seismic data was done without much linkagc to the - .

prpccssing or interpretation steps. Thcse old habits are changing arnong the vanguard giophysical groups. Now. an entire exploration cffon is considered i n its totality with , all intcrnal linkages in placc. I n rhc co~ning years, the norm is going to be for an acquisition paranlcter to be evaluated in terrns of its cffecr on intcrpretqtion. An interprctation nccd i s going to be the source of dcsign for a panicular processing sequence. and the gluc that holds rnuch of this togethcr is of course scismic modelling which is going to play a more significant rolc in our scherne of things.

5. The Role of Information and Data blanagenient Technologies

5.1 E R: P It? forrrr~tion Technology Trertds By thc carly 1960s. oil companies had srartcd using rnainfrarne computers for

ncie~ititic data processing. Monochrornc slorage tubc [errninals were used for graphics and ~ietwork while data rnpe:: were in the order o f a few kilobytcslsecorid. The latc 1970s to early 1980s found cornpanies rnoving to mini-computers. Colour storage tubc terminals were used for graphics and expcrirncntation with local area networks. The end o f 1980s to rnid 1990s marked the beginning of computer graphics worksation technology and the ability to concurrently support multiple networking topologies.

Today. the new era scaleable shared rnernory multiprocessing technology now allows terabyte size E & P datasets to be processed and speedily transferred to rcrnote placcs using data cornpression techniques. Fig. 13 shows thc computer power growth (in megaflops) for various systcrns in cornrnon use. The difference betwecn the power of the ordinary desktop pcrsonal cornpurer at thc lowest end and that o f rhe multi-node 1BM SP2 at the other end is very clcar.

Computer Power Growth (in Megaflops)

IBM Boo0

4=i

A log verllcal scale Is requlred to capture the enormous difference between the compute power of PCs, on the low end, and multi-node ISM SPZs, on the high end

Fig. 13

Fig. I4 rcveals the shifts that have taken place in E & P value components. indicating the past, prcscril (transitional trend). arid also the expccted trend in the new millennium. We note the progression: frorn sand alone applications and lob functions o f rhc early 1980s lo the multi-play applcts arid collaborative assct tcams o f today and the future; from the rnainframc arid custom developed cornputcr systems o f the p ~ t tumty years to the knowledge cra o f network based informatiori tcchriology (IT) facilities. There has literally also been a11 explosion in the data volume haridld with

- Stand-alone applications Application suites

Sland alone job functions Geographic asset teams Collabrallve asset teams

Malnlrame I mlnl based Worksfntion based Network based

Custom developed Build / Buy Set up l Outsource

Small data volume Large data volume Unlimited dala volume - Fia I4

Communications Technology

Mass Storage Technology

RISC Processors

Collaborative Applications

3-D Visualization

Internet & Network Computing

Distributed Solutions

Fin. 15

indiczitions o f our ability to handle virtually limitless volurnes o f data in the future. Fig. 15 surnrnarises tho drivers and irnpacr o f 11' in E & P business. New cornniunications technology, RlSC provcssors. facilities for the rnass storage o f data, and object- oricntcd software arc all contributing to cost reductions and the evolution o f new ways o f working.

I n the new millennium, network computing has now rnade i t possible for skilled pcople dispersed geographically in diffcrcnt parts of the globe to work together on a chosen project from a cornnion database. Indeed, such collaborations are already adding a lot o f value to E & P business (scc Fig. 16). Faster. more accurate decisions result, leading to cost sa\lings and increased profit. Information technology i s rapidly changing the cornpeti~ive dynamics o f the petroleum industry. I n the 21 st century. !he industry i s entcring a new era o f growth in which better decision-making, business advantages. and cxponcntial gains in productivity wil l depend on a company's abilily to inregate rhe collecrivc knowledge o f thc cntirc organisation.

Fia. 16 (moditied from Bays. 1997)

5 .2 htfegmted Darn Inrerpr-emrion nrrd Ma)iagernent As the world around us bccomcs more and rnore complex, so does thc infor~nution wc deal wirti. The world i s rapidly moving from simple tcxt-based inforrnarion banks to oncs that incorporare a \vide varicty o f audio. video, and graphics data. This data is a

challcngc to manage; it is enormous and highly complex. The key to trlanilging cotnplcx data lies i n tinding a more efficient systcrn for capturing. organising. acccssing. analysing. and storing informa~ion. Wc rcquirc a system that is fast and econornical. a reliable systcni rhat can handle Inrgc-scale processing and rapid access with no time delays.

Thc acquisition. pmccssing and rnanagcrr~ent of data have becn the key to the growth of our industry. From rcgional basin studies ~hrougll dcvclopmcnt and productio~t, rnost of our critical tcchnical decisions are bawd on inference about what cxists in the subsurface through interprctativn of data. This data processing and information rnariagemcnt has enabled us, through infor~na~ion tcchnology. to crcatc knowledge and cnterprisc learning rhat is used in decision making.

Thc ~'aluc of data rnanagcrnent kceps increasing ycarly as tllc focus tightens bctwecn thc E & P disciplincs of geology, geophysics. rcscrvoir cngincering. and pcirophysics. Today. geoscicnrisls and reservoir engineers routinely team up to dcvelop consensus interpretations, expediting rhose intcrprclaiions through an array of cotnputeriscd E Rr P packagcs. While rhcse cotnputeriscd products arc an important piece of the solution. integrated data rnanagemcnt is viral. Most E & P companies consider their data as much an assct as rhcir fields and production. Whcn thew assets are rnanagcd cffcctiwly. Lheir valuc increases. An organiscd data b a x can bc sold. traded. or uscd to find and develop reserves. The increasing availabilily of database rnanagcrnent systcrns has changed thc way companics use E & P dam. Thcsc systcms are going to incrcasc in popularity in the coming years.

Thc foundation of integrated data interpretation is data tnanagcmcnt - whcthcr d a ~ is accessed through a cornlnon databasc (tight intcgrafion), or cxchangcd by transfcr among databases (louse integration). Thcre is vertical. and also horizon~al data inregration. Vcnical data integration is inrcgra~ion within a disciplinc. This type of integration is comrnonly sccn i n scisrriic proccssing packagcs with thc capability of crcating a scqucnce of processing applications, causing thcrn to act on a set of seisrrlic data. Horizontal integration crosses disciplincs. loading to a bctwr undcrsranding of hydrocarbon rcscrvoirs. Tight integration describes a computing environment using a siriglc databasc, with cach applicaiion or group of applications acting on the same copy of thc data. Accessing da~a frorn thc sanic data storc climinatcs thc need for rcfortnatti~tg or transferring bciwccn applications. Loose intcgation on thc other hand, is charaterised by a systcrn containing rnultiple databascs. with cach application having an indcpcndent copy of the data being analysed.

Though the relative simplicity of a tightly intcgratcd E & P system presents obvious advantages. this goal has becn clusivo until fairly recently. The Petrotechnical Open Sofiwarc Corporation (POSC) is chancred to develop and rr~ainrain spccilications to bc uscd as standards for information describing tllc full cyclr of hydrocarbon exploration and production assew. Its efforts to crcalc standards by which applica~ions can be tightly inlegrated across disciplincs arc begittning to yicld dividends. I n the 21sl century. the E & P industry will gain a lot more benefits from intcgratcd dnla

storcs at national. corporate. and assct l e x l s when those stores arc based on an industry standard information model.

Sorne "mapper " programmes and routines arc now available to the exploration industry from image prmessing technology. Thcse havc introduced new and complimentary tcchniqucs for use throughout thc range o f exploration applications. In seismic intcrprcration we can now dctcct subtle faults and channels using techniques including rcal-rirnc sun illumination and custornisablc fillers and histogmms. Available mappers can mosaic multiple irnagcs to givc regional pcrspcctives, construct complete bascrnaps and proccss and integrale satcllirc. airphoto. gravity and magnetic dala sets.

As the arnount o f detailed seisrnic data now available for geophysicists and gcologists continues to grow. sofiware supplicrs have to constantly raise their game to meet the dcnmnd for products that can handle the pacc. One o f the leading vendors recently introduced a fully integrated 2DJ3D seismic interpretation and rnapping system that operates in Microsoft Windows for PCs, and is powerful enough to interpret 2D and 3D datasets. Thc systern is also able to sirnultancously integrate geophysics and geology, rnerging the lines, and balancing the surveys. The ability l o merge 3D data with existing 2D interpreted data. an enhanccd SEG-Y loader that simplifies the loading o f both 2D and 3D data, the inrerpretation and display o f fault and well information on both 21) and 3D seisrnic lines, and a lot more arc sorne o f the features available on this new systern. There is no doubting the fact that software developers and suppliers are now ready for the challenges o f the new rnillcnnium.

5.3 Duru Wurehouscs a d Gcobanking Data nlanagemcnt is regarded as one o f the kcy areas for the future success in the E & P industry. With the significant volume o f growth in seisrnic data after the introduction o f the 3D and now 4D. effective data rnanagelnent is imperative. One o f the most important technology dcveloprncnts in this area is the concepr o f 'geobanking '. an cxarnple o f which is the GenBunk project already undertaken in Norway by using IBM's PetroBank technology. The systern offers an extensive volume o f high quality conlmon database for the industry, ensuring minimum duplication o f stored data and rapid and efticicnr data access and data trade. Data stored and made readily available include culwral. seisrnic and well data on line and countless concurrent users horn many E & P companies are today accessing the bank in Norway.

In this particular data-warehousing project. the E & P cornpanirs and the authorities involved are clairning significant cost savings from using thc bank. Thcy report that retric\,al and workstation loading tirnc o f datase~s havc comc down to hours when using the bank, in cornparison to days and weeks using historical methods. The benefits o f Gcobanking is nor only the dirrcr time saved associated wit-h managing data, but i~ also improves productivity o f the E & P professionals by allowing them to spend their time focused on the task o f finding and producing oi l and gas at a cornpctitivc cost. Geobanks are available uwld-wide with banks currently opcralional in Stavanger. Houston. London and Perth and more are expcctcd ro be set up in thc near future.

E & P companics'biggcst data problcms arc in tinding all thc data they haw. For thc older and nwrc cstablishcd companies. dccadcs of hydrcxarbon exploration i r i particular pcrrolcum pror'inccs haw yicldcd a trcmcndous amount o f information that nced to be p rqc r l y warehoused for futurc rcfcrencc. As data volu~ncs increase, companies wi l l riccd to put more resources into making sure chat the best and most complcrc data sas arc available quickly. As data nianagemcnt improvcr; and systcrns arc increasingly linkcd rogcrhcr. sccurity concerns wi l l become more prominent. In the new millennium. erecting and maintaining dcfenccs wil l be a continuing part o f E 8: P dab1 nlanagomcnt.

6. Technology and Decpwatcr Prospects

In the last f ~ w years. wc have secn an apparently iriexhaustiblc enthusiasm for global dccpwatcr acreage opportunities. This is with pIcnry o f good rcason. There haw beer1 sevcral important discovcrics in niorc than 500 metres warcr depth. As at present. the search for oil and gas in dccp blocks has rreached advanccd slages in many areas of thc world, irrcspoctivc o f thc rnariy c hallengcs facing the exploratioriist i n such fronticr areas. Fig. 17 gives information on the assigned dccp water b l ~ k s around the world as at thc beginning o f 1999. This mirrors the great interest that now exists in deep warcr exploration. O f thc 717.000 squarc kilornerrcs o f blocks assigncd in Africa, 40% o f these arc in West Africa. Many anticipate that rescrvcs offshore West Africa wil l prow at least as bounriful as those across thc Atlantic in thc Brazilian Campos and Santos basins. Twclvc finds betwccn 1997 and 1998 offshorc Angola can orily fuel thnsc cxpcctations - panicuIarly whcn thc rurnours mention 5 to 6 billion bards o f rescrvcs.

As o f now, offshore Nigeria and offshore Angola remain some o f thc most arzracrive arcas for the operating con~panies. Amoco, one o f the operators offshorc Angola. rcccntly drilled a well (Platina-I) in I,400m (4.590ft) of watcr. making i t the sccond deepest lvatcr dcpth t drilled in the subregion after Bosi-l drilled in 1.4541n (4.700fi) o f watcr by Exxor~ offshorn Nigcria. Unril 1993. a lnmt all features o f o i l and gas exploration in Nigcria \verc restricted to IIIC onshore areas or to the shallow offshorc in watcr depths less than 200rn. Exploration successes in other lands couplcd with advances in dccp watcr ~echnology spurred thc Nigerian government to award somc decp offshore blacks in 1993. Sincc then. more b l ock have becn carved out even in the ul~ra-deep water. down to sornc 3.000m.

From the time exploration ac~i~$i t ies started i n Nigrria's decp offshorc in 1993 up till thc end o f 1998. 21.000 kni o f 2D seisn~ic lines and 21.500 square km of 3D seismic data had been acquircd by the deep watcr opcrators (Ndefo. 1999). The first deep watcr production (from Bonga field) i s no1 expcctcd until the year 2001. I n Angola. the famous Block 17 (Girassol) which is operated by Elf Aquiwinc. remains one o f the greatest finds in recnr tintes with over ~hrec million barrels o f oi l rescrvcs. F i g 18 gives sornc idea o f the avcrage oi l production from decp water as a1 January. 1999. Thc total African decp water oil production o f 250.000 barrels per day comes presently from offshoru Angola, Congo and Equatorial Guinea. Table 3 shows the global distribu~ion o f deepwater reserve giants. There i s evcry indication that more giants would bc found, especially affshorc Nigcria and Angola. I

I

hvcragc World Oil Product ion FJ-om neepwatcr

Pie. 18 (

South America \ y A.iia/Auslralia: no1 !el producing: Yigurcs arc in lhousands of harrc-Idday)

Table 3 GLOBAL DEEPWATER RESERVE GIANTS T h c

Name Marlirn

Dalia

ponga 1 1 billion bhell ~OML 21 2. Nigeria l ~ l a n n i n ~ ]

koncador

Banzala

(bbl) p.5 billion

1.4 billion

technical challenges in deep watcr rnake some o f the heaviest dcrnilrrds on resources. We may wish ro illustrate this here by considering the factors that we ha\z to contcnd u i t h at 2000 rnctrcs depth. They include: water tcrnpcraturt-s barely above the freezing point (so deposits in flowliries arc a special problern); construction. operation and rriaintenancc have to bc done remotely; mooring systcms. risers. pipelines. flowlincr. control umbilicals - all have ro be designed to $pan very long distances from rhc seabed to thc surface facility: enormous external prcssures. the environmental forces and the longcr lengths hat dernand thicker, heavier components niade from materials that can betk? withstand corrosion. I t also takes rather spccial ~ c l I s to deliver 20,000 barrels a day - and to keep on doing so.

1.3 billion

1 billion

Girassol

Kuito

Llano

A lot o f the technology that are required for succcssful operation in dcsp water a n m t simply available o f f thc shelf. They require huge investmerits o f money and know-how. and an experienced, skilled tcam o f people quipped to implcment the solutions. The key to real staying power in deep watcr E 8: P i s for the operators to build long term, sustainable relationships throughout the industry with governnicnts. panners. contractors and with society at large. Economic dc\8cloptnent o f dccp water discovcrits arc now possible because o f the developtncra o f reraion leg platforms, compliant t w c n , floating production. storage and offloading (FPSO) facilities and subsea systems.

Petrobras

Elf

r-

Thcw are other challeriges that face the dcvelupnient o f deepwater discovcrics. The auractivcness o f such projects to an investor is affected by the legal and fiscal cnvironmcnts o f [.he regions coriccrricd. Two essential requirements therefore emerge:

First, we need to know what the concession ternis arc - and what thcy wi l l be. notwithstanding rhc swings and upheavals of, for example. thc political environment. With all the geological and financial risks involved already.

Petrobras

Chevron

3 billiori

1 billion

1 billion

Catnpos Basin, Brazil

Block 17. Angola

Producing

Planning

Campos Basin, Brazil

Area A, Cabinda

Elf

Chevron

EEX

Producing

Planning

Block 17, Angola

Block 14. Angola

Garden Banks 386, GOM

Planning

Planning

Planning

a gamble on contract tcrrns may be a risk too far. Secondly. the rernis and timetable must allow sustainable - and thar includes profirable - dc\.clopnient. Thinking back to the three-legged stool - if one leg crunlbles. cvcn a carefully co~~structcd whole wil l fall down.

Fig. 19 gives a good glimpse o f how dr i l l i~ ig in increasingly greater water depths has evolved with tirne.

Fie. 19

Offshore Fields - Maximum Depth

7. Forces at Work In E 8: P in Nigeria

7.1 Rusiness E~zviror~r~~e~rr Bcforc ending this paper. i t is appropriate to review the challenges facing the upstrcarn oil and gas industry here in Nigcria. The E & P business environment in thc country is dorninared mainly by activitics in the Nigcr Delta. This situation is unlikely to change soon, even in the ncw millennium. irrespective o f the drilling and other cxplordlory activitics that haw bcen going on in other scdi~ncntary basins. e.g. rhe Chad Basin. and Inore recently. in Rauchi and Gornbe Statcs o f the Uppcr Bcnue Trough. Because o f the irnportancc o f the Nigcr Delta, rhc critical succcss factors o f E & P operators in thc country are seriously affected by thc forces that are at work in the region. Thc issue o f enviro~imental prolection in thc Niger Dclta rernains topical as we entcr the new rnillcnniurn, and wi l l continue to rcccivc the atrcntion o f all s~akcholders. I t rllusr however bc pointcd our. that there i s no way that the environrncntal problcrrls o f the past can be rcctificd instan~ancously. Time. effort and dedication \v i l l be necessary.

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companics who hold most of the leascs ro do something concrete on their dormant acrcagcs. or run the risk o f having thcm revoked by the government and allocated to the smaller and morc aggressive new comcrs. Many foreign opcrators havc also joined the sccne. especially in the dcep offshorc. The govcmmcnt has also becn trying to incrcase dzcpwater activity with sevcral bidding rounds for newly markcd out ultra-dccpwatcr concessions.

Some o f the ir~digenous companics have madc vcry strong showings on thc sccne and havc already joined the league o f producing companies. c.g. Moni Pulo. A M N I International Pctroleum Company, and Consolidatcd Pctrolcum Company. Aje-I, a well drilled in 100 m of water some 30 km from thr Lagos coatIinc and SE o f the Scmc field in the Renin Republic. by Yinka Folawiyo Pctroleum Company, one o f rhe indigenous companies. turned out to be a vcry important discovcry ( reserve estimate: 7.5 MMbbl). This is thc tirst major discovcry in offshore Nigcria outside the Tertiary Niger Delta. Indigenous companies producibiliry has gorlc up from a mere 800 barrels o f oil per day (bopd) in 1994 to 129.600 bopd in 1999. while booked rcscrvcs have jumped from ncar zero to ovcr 540MMR during the same period. Thcrc arc no doubts whatsoever, that thc indigenous oil operarors in Nigcria today have come a long way.

The provision o f adequate funds by rhc Federal Govcrnmcnt o f Nigeria to financc joint tenture ac~ivitics in the oi l ir~dustry has been a constant problem in recent ycars and one hopes that this situation wil l soon improve. Other cxogcnous factors that arc shaping. or have the potential to change rhc industry's facc in Nigcria include the guidclincs on thc cessation o f gas tlaring. the shift and cnlphasis on LNG, and thc government's intcrcst in the developmer~r o f marginal fields left idle for long by thc major operators. For all gas flaring to end by 2010. operalors must work out wcll in advance how they wil l successfully deal with thr produced gas. This is certainly going to influcncc thc strategies they adopt for continued oi l production. The intcrcst in natural gas commcrcialisation is highly cornmcndable since the counlry is highly endowed with gas resources.

Activities in the N ip r ian deep offshore have sccn the spudding o f 33 exploration1 appraisal wcIIs in 300 - 1,5001~1 o f water in the lasr five ycars. Although lack o f rigs for the dccp offshore has becn a major problem for opcrators, ncvcrthclcss. the area rcmains one o f the most active today in the E Rr P world. A fcw hcart-warming discovcrics hakt bcen made( e.g. Shell's Bonga Field). but thcrc havc also been sornc disappointments. Apart from having to invrst heavily on IT and in other ncw technologies available to thc industry world-wide, operating companies in Nigcria also have to invcsr in the provision o f facilities such as alrcrnalivc power supply and dedicated communication systems since the public utilities arc unreliable.

To atrracr and sustain new invcstrncnts in [he Nigcrian oil indusrry, and to encourage operators willing to ienturc into thc drep offshore where the risks arc vcry high. Nigeria n~ust offer a conducivc fiscal, peaceful and political environn~cnt for the opcrators. The govcrnmenr remains a key dererminant o f the farc of rhc industry in [he country. Sornc

aspects o f the law governing operations in the industry nccd to be reviewed in order to ensure pcace and stabil~ty in thc operating arcas. The provision5 o f thc Petroleum Act arid the regulations derived therefrom need lo be reviewcd so that land owners have a say on the rernls and conditions under which thcir land can be accessed and used for E 8i P actiiti~ics.

7.3 Reucrio~r cvrire Opcrutors Upstream operators in Nigeria arc rracting to the forces at work in ~ h c local E 8i P environment by cutring costs in a variety o f mays, and inlrclducing many innovarive tcchnologres and scveral orgi-inisalional changcs. Thcsc include active asscr restructuring around core strengths, propcrtics and lincs o f business, increasing outsourcing and partncring with contractors, and cfkctive han~cssing o f available human resources. Sonic cornpmies art: diversifying into powcr gcnerarion and into gas marketing. These arc u8clcorne dc\elopnicnt< that stand to benefit not only the companies. but the cconorny o f rht. country as a whole. Opcratirig con~pariies haw bcen very adversely affected by thc threats to life and property in thc Nigr r dclra region in dre last onc year. Crude oil lifting has naturally also suffercd many deferments bccausc o f this.

Fig. 21 shows the seismic crew counts in Nigcria for the period 1996-98. Marine.

, swanip and land crews have all bcen very busy during this tirnc, though 1998 activity lewls were lower than those o f 1996-97. Marine operations inlensitied during this same period as can be seen from the nurnbcr o f rnarinc rigs that wcrc active for both deveioprncnr and exploration purposes (Figs. 22 and 23). Fig. 24 sumrnariscs the oi l prodtiction data in thc country bctwcen 1958 when the tirst crude oil shipmcnt abroad stand and 1998. Data for Figs. 2 1-24 arc from cornpi~ations done by Pctroconsultants (1998).

Thc application o f n m r rcchncslogy to older ficlds is already showing that some o f the prospects and plays classif id ils marginal in the past could hold large rcscrws o f hydrocarbons recovcrabk by today's standards. Generally speaking. nev+ 3D seisnlic acquisition and processing capabilities have givcn operators in the Nigcr DcIta a fresh appreciation for mature propcrtics. son~c o f thcrn as old as thirty or more years. FieId 3D studies backed by ncw processing sofiwarc routines arc rcvcaling ncw drilling opportunities in older areas, This confirms the view that the cheapest oil in the Nigcr Delta wi l l continue to be found in or around producing ficlds. 4D (time- lapsc) seismic i s already bcinp deployed by sorne o f the operarors in thcir ficlds while ocean-bottom cablc (ORC) scisrnic data wcrc acquired rcccntly by one of thc leading operators in Nigcria in rhc shallow offshore pans o f the casterti Dclra a s h innovative way o f overcoming sonw o f the rechriical difficulries o f the pasr arid also to hchp boost rcsenfcs.

Fin. 21

Oil Production m Nigeda

Fia. 24

8. Outlook fo r the New Mil lennium

8.1 Tech~aology Renurbzs the Key -.

Frnrn all indications, the world's demand for petroleu~n in this new century wil l remain very strong. prompting E 8r P companies, equipment and crews to rernain busy around tile globe. The oilficld s e n k c sector \\ill keep responding by expanding and building new equipment while urilisation o f marine scismic vcssels and drilling rigs wi l l remain high (above 90%). The pace o f exploration will continue to wax strong as companies evaluate existing acreages arid preview dam sets in new regions. Re-exploratio~~ o f older fields. satellitc exploration away from established fields. and wildcatting in undeveloped regions wil l be practised with renewed fervour. Exploration wi l l keep expanding it1 all dimcnsiorw: new frontiers. recently opened thealrcs. and malurc regions.

The areas to watch in thc next fcw years of the 21st century include: thc virgin deep . . o f the Gulf o f Mexico, the Falkland Sllelf artd the adjoining Argentine Shelf in the Sourh Atlantic. the ShetlatidfFacroe Islands areas o f rhe North Atlantic, strong satellitc field exploration and dcvelopmcnt in the N o h Sca, deepwater West Africa. and the Caspian Sea area. Mobilc drilling units, risers. arid orher similar equipment that can bc used in 3 to 4 km (10.000 - 13.000 t i ) o f waler depth range nlill beco~ne availablc. Today (heir dcsigris are alrcady on many drawing boards becausc

operators already know that within a decade, they will likely exhaust thc prospects in thc 1.5 to 3 krn (5.000 - 10.000 fc) water depth rdngcs.

For offshore arcas (just likc onshore). 3D and 4D seismic. fluid inclusion research. enhanced recovery. and multilateral or extendcd reach drilling arc opening up nees plays in conventional water depths. Wells previously abandoned as deplctcd or dry arc going 10 bc re-cntcrcd at low cost and re-complctcd at a profit. 'These ficlds alrcady hale the infrasrructure in placc for production and simply auSait the technolow nccdcd to find what orhers missed. Fig. 25 shows the number o f offshore v< -

fields dcvcloped, under dcvelopmcnt, or bcing planned and considcrcd for

%% and Considered for Development

U NW Europe W. Africa

O N. America S. Europe

Fin. 25

devclopmcnt for some areas around the world for thc period 1997-2005. The raw data for the plot is fro111 a paper by DeLuca and LC Blanc (1997). The figurc refla% a busy zchedulc in the coming years for equipment and pcrsonncl cngagcd in the offshore oil.

In thc mid-1980s. oil companies walked away from fields in rhe North Sca because ~ h c y could not survive S 25bbl economics. By thc end o f 1997, these same fields

were producirig and generally n~c t an invcs[nlcnt hurdle bawd on 15% return on investment at S I51bbl. As an cxaniple. Iatc in 1997 the company Norsk Hydro. onc of tht: major operators in the North Sea. announced proiren rcscribcs o f otvr one billron bbl from the oi l r im of the giant Troll gas iicld. This oi l was not cconomic just a few years ago. What has happened is that advanccrncnts in 3D scimic. horizonla1 drilling. and subsea cnmpletion technology radically changed the economics.

'Technology remains the key to driving cos~s c \ t n lower in the new millennium. a period during which many marginal ficlds arc going to be dcvclopcd and p u ~ on stream. 'Technologics rhat arc crucial for thcsc marginal ficlds arc already in place and include: 3D seismic tcchnolngy. slim hole drilling, horizontal drilling. multi- phasc flow technology. lighre,cigh~ well-head platforms. arid floating rc-usable production systems. Wi l h I he [rend touwds highly focused cxploration teams. the smooth intcgrarion and coupling of multiplc geophysical disciplines wil l bccorrie more o f the order o f the day. Alrrady. gravity and magnetic data arc once again gradually becoming very rclcvant in hydrocarbon exploration. Dctlning the salU sediment boundary at the flanks of a salt dome has always bccn a big problem in thc Gulf of Mexico. a problem that svcn 3D seismic dala could not eliminate.

Flow Diagram for In~egrated Seismic-Gravity-VeIwity Interpretation

Rcfinc Seismic Migrntion Velocip Model .

Build Gmlogic Deph Modd and Dcrivc Dcnliry I.Xrrahasc

Vcrify & Retine Scimic Motlcl Using Gravity & Magncric Data

'Today high-resolution gravi~y and magnctic data arc bcing used logclhcr with seismic data to solvc this problem. 'The dc\rlopmcnt o f uLorkstation applications that make i t possible for an intcrprctcr to simultaneously rcfine he ~ubsurf i~cc model using scisniic, gravity and magnetic data. has bccn a giant srzp fornard. Fig 26

shows a flow diagram o f such an intcgration effort involving a ?I) seismic data volumc, a 3D vclocity volume. 3D dcnsiiy volume. calculated and obscrvcd gravity ficlds, intcrpreied uc l l data. and interprercd seismic horizons. Andcrson et al. (1998) rccently providcd a practical view o f data intcgration methods involving thc gravity method. Wc cxpect more widespread application o f such additional tools in rhc

- coming years.

8.2 Explor-dotr Srraregies i r i the hrew Miile~rtiirrm The challenges in the new milleenium requirc that successful exploraiionists must:

incrcasc cxplorarion efficicncy, as nirasured by the number o f significant new field discoveries pcr new ficld wildcats drillcd; aggrcssivcly pursue gas development and urilisation. sincc gas is bccuming morc and more imponant as an energy sourcc and could casily dominaic thc energy equation later in thc millcnnium: acquire new and innovative technology for ihc E & P ind~rstry.

Sucacssful operating cornpanics have to adopt a policy of cffcctivcly planning the full l ik cyclc of ficlds. Full lifc cyclc plannirig rcquircs that everything, from the decision on where to acquire or bid, through all the actit-ities in the oil lifc cyclc {Fig. 27) have to be properly planried with an cyc on the future and rhc bottom-line. The gericric benefits of such planning include:

improvcd screcnirig and timing of opportunitics; minimisatioti of regret of sub-oprirnum dcvclopmcnt; optimum balance of risks and rewards; ability to optimally charigc plans to rcact fo threats and opportunities; ability to adjust plans in recognition of the inevitable: improvement on bottom line awarcncss.

Cornpanics that arc ablc to adopt a structured process rnariagemcnt approach, acquiring. disscrninating, and applying the right rrchnology efficiently and cffcctivcly. will be ablc to shorten the lead timcs to hydrocarbon production. sustain high productiori levels, and contain costs through a life-cycle managcmcnt approach. They will bc able to manage the oil and gas rcscrvcs throughout their lifc in such a way that opportunities available in thc finding, developing. managing. and protecting a rcsourcc are rnaximised. Wirh the continuously irlcreasing complcxity of the upstrcam business. and the further maturing of most of the fields, it is cssuntial to apply leading edge technology i n order to rnaximisc economic rccovcry.

r---------- 1 LSFructured Process Management --,----A

F~cld T v w n ~ Apply Technnlvry

-A

Adopting a structured management approach (Fig. 28) ensures that all thc processes within the rcalm o f E & P activilics arc propcrly and adequately steered. managed and guidcd. This way. allowances are made for mcasuring pcrfonnancc, constantly reviewing and updating technology. and operating an up to datc and effective busincss modcl. In practical terms, those in charge o f tcchnology management must learn to identify cach tcchnology planning cyck to fit with the emcrgence o f assel refcrcncc plans for the company. A l l technology projccts have to bc directcd at the valuc drivers for rhc major assels of the company. For cach new tcchnology proposed for adoption or implementadon some critical qucstions havc to bc asked. Managemcnr must bc convinced that thc ncw technology has been successfully implcmcnted before somewhcre else. I t should have a dcmonstrably business benefit for thc operator.

Somc organisations and insrilutions arc today barcly struggling to exist, or are on the verge o f collapsc becausc their lcadcrs failcd to rccognisc that the busincss modcls on which thcir opcrations arc based havc becomc anachronistic. Business organisarions that do not havc a mechanism for cffectivcly monitoring and updating their business modcls to bring them in tune with changing timcs and tehnologies subscqucntly pay hcavily for thc negligcncc with timc. In an articlc scrialised in The Guardian newspapcr betwecn October 21 and 22. 1997. 1 argued that this was currcntly the fate o f Nigerian universities. The obsolescence o f their busincss modcls is responsiblc for the tragic situation they are in today and thc blame for this must lic with thc owncrs (fedcral and swtc governmcnts). and with the operators of the university systcm in Nigcria.

The business rnodcl must dctcrminc thc technology plan and not the orher way round. A detailed analysis o f the t~chnology plan wil l revcal if the rcquired tcchnology can bc best dcvcloprd within the organisation. or if it should bcst bc acquired from external sourccs. Oncc acquircd or developed, sufficient tcsling o f the technique in thc field wil l bc nccessary to cnsure that all objectives o f thc project wi l l be met. Some organisalions haw in the past acquircd technologies without proper planning. and viithoul adcquatc attention to the business mode1 they operate. The importance o f a structured managemcnt approach is thercfore crucial. not only in the upsrrcam oil and gas indusrry, but also in virtually cvcry othcr busincss vcnturc.

The new E & P stratcgy that is bcing carried forward into thc 2lst century requircs upslrcam playcrs to focus on innovation and opportunism, whcrcby value can be added or created w r y quickly. This wil l be done by identifying and capturing marker-drivcn opportunities through sys~en~atic deployment o f advanmgcd capabilities, such as crcativc financing. gas markcling. production lechnology. erc., andlor the optimal monetisation o f existing assets. I n thc ncw millennium. wclls wi l l no longcr be driIlcd just to sce what happens to a pariicular production problem. In the oilficld o f the futurc. dislributcd modelling. analysis. visualisation, database and networking wil l bccome thc norm so that hundreds of drilling scenarios wil l be tried

bcforc the optirnurri location i s settled upon.

I n many E & P companies o f ~ h c futurc, rnultiple datasets wil l be collaboratively visualiscd from rernorc locations scattcred all over the globe. and actcd upon within irrimcrsivc 3D environments. Data from the ficld wil l bc collccted in scrni-rcal-time. over packet-switched satellite link sensor ~~etworks placed in irnpomnt producing fields. Periodic seismic rc-acquisitions wil l be dclivcred via satcllitc and quality controlled rcmotcly. 4D model corriponents wil l bc distributed across equity parrncr nctworks using high-spccd. iritcrnational infornmion infrastructures - all stccrcd at rcrnotc visualisation and collaboration consoles.

8.3 People j. E.rpecrario~~ of rile B w g y Busincss in rhe New Millenniurr~ Bascd on current trcnds and many o f thc issucz discussed carlicr. we can scc that in the years ahead: -

energy markets wi l l bccorrie incrcasingly rnorc cortiplcx and cortipctitivc. Oil prices will rcmain bolatile. and pcoplc wil l kcep dcmanding rnorc from anergy companics. wortd cnergy dcmand will dcpend mainly on consumption patterns that wil l cmergc in the OECD countries on onc hand, and those in thc forrncr Sovicr Union (FSU) and in the dcvcloping countrics on rhc othcr. I n thc OECD countrics wc should cxpect the likcly slowing down o f dcrnand. This will arisc mainly from structural changc, saturating markcts. ageing populations and increasing cnergy cfficicncy. Efficiency gains arc driven by competition, concerns for cncrgy security and cnvironrncn~al rneasurcs. On thc othcr hand. economic improvcrncnt and population growth in the dcvcloping countrics and forrner Soviet Union u3ll fucl much o f the rise in dcmand for oil and gas. cornpetitivc prcssurcs wil l continue to drivc down dcvcloprticnt costs. l'hc rtiarginal cost o f non-OPEC dcvcloprncnts has alrcady faIlcn to somc $14 a barrcl. I n addition. inclasticitics in supply and dcrnand wil l continue to cncouragc pricc volatility. Wc are 'ill witnesses to how .;mall OPEC production changes can trigger large shon-tcrrn price rnovcmcnts. This trcnd is not likely to change in thc near futurc.

Peoplc's expcctations o f cncrgy businesses arc nor only changing, but wil l also keep increasing; Thc futurc wil l bring greater clarnour for more choices. highcr standards. new solutions, and grcatcr opcnncss in busi~icss dealings. The industry wil l bc expected to cxh~bit a rnuch highcr standard o f cnvironrnental conservation. to provide c\en highcr quality of services. and rise to ncw Icvcls o f transparency in business bchaviour. cspccially when dealing with host comrnunitics and go\'crnments.

I n addition to all thcsc. major E 8r P companics whosc upcrations haw a lot to contribute lo thc fonuncs o f sonlc countrics. especially thosc in the dcvcloping ujorld. arc cven going lo haw ncu; cxpcctations fois~cd on thcni. They wil l also be

expccted to solve problems dcaling with the promotion o f hutnan rights. the pursuit of sustainable de\tlopmcnt. and the reduction o f greenhouse emissions. Oi l and gas companies arc part o f socicty and so cannot shirk these responsibilities. But thcsc are however, complex and difficult issues and choosing the right courac wi l l always rcquire sontc astutc judgement on the pan of the management o f these companies.

9. Concluding Rcrnarks

The pcrrolcum industry wi l l bc cntering a new era o f growth in the ncw rnillcnnium. I n rhis ncw dispcnsarion. better dccision-making. busincss advantages, and significant gains in productivity wi l l dcpcnd on a company's ability to intcgratc rhc collective k~iowlcdge o f the entire organisation. Thc compctitivc dynamics o f the oil industry wi l l con!-inue to be changed by I~iformation Technology (IT). Operating con~panies on thcir own part wil l continuc to harness ncw technology to rcducc cycle timc and increase productivity.

I t is important. howvcr. that the suppliers o f new technology and petroleum cornpanics devclop better. collaborative rclatio~iships in ordcr to effcctively manage thc changcs that the adaptation o f new technologics bring about. E & P companics uould nccd to work rnore closcly thari c t r r bcfore with ~hosc scrvicc providers involvcd in R & D. Such servicc pro!-idcrs and software vendors would need to know more about the plans o f thc operaing companies in order ro comc up with products that adequately satisfy thcir requirements. Such co-opcration wil l positivcly impact thc speed o f technology adoption and enhance productivity.

Expectedly. seismic tcchnology wi l l continuc to play a dominant role in global oi l and gas cxplorarion in the new ~nil lcnnium lcading to furlhcr improvements in oil and gas recovcry from reservoirs. Rccovcry o f bye-passed pctrolcunl f r o~n rcscrvoirs in mature provinces wi l l be a rcgular activity in the ycars to cotnc bccausc o f the availability o f the right tools. e.g. those for seismic proccssing and depth imaging. In conclusion. i t is clear that from an indus~ry pcrspcctivc. thc devcloprnent o f technology is a key invcstmcnt for thc coming rnillcnnium. However. an upward prcssurc on finding - and field dcvclopmcnt costs against a IOU' oi l pricc scenario wi l l occasionally put pressure on the financial margins. Hcncc, in ordcr to sccure the future o f affordable. secure supplics o f oi l and gas, it is e w n morc imporlant that the fruits of technology dcvelopmcnt bc applied in an effective and cfficicnr rnanncr.

Tn thc facc o f all the currcnr unccrtaintics and weaknesses in thc oil market, E & P companies who hopc to survive and prosper in rhis ncw century wi l l have to revicw thc terms o f their competitive posture. Thc indispcnsablc qualities required will includc:

Thc ability to control costs; The abilily to sclcct the most rcniunerative invcstmcnts; Possessing or having access to thc latest technologics;

r The abiliry to confront and rcsolve cnvironmc~~lal problems: r The ability to opcratc cvcrywherc in the intcrilatioilal market; r The abiliry to scizc thc bcsr opportuniries to implerncnt acquisitions. mcrgcrs.

strategic and tactical allianccs and other appropriate actions ro improvc thc portfolio;

r The ability to i~nrr~cdiatcly rwognise and intcrprcr signals corning from the market and irnplcment rhs consequent programmes in real tirne.

hold scnior positions today in the oil industry and in the academia. He has published papcrs in many leading local and international journals and monograph series. These publications span through several areas, notably near-surface geophysical exploration. basin analysis and pe- troleum maturation modelling, Iithospheric structure, and seismotoc- tonics. He was also a member of the Nutionsrl Technical Cornmitree 011 Eurthqiiake Pherzonterza, a national advisory panel on seismological phenomena, and the establishment and operation of a national network for monitoring seismic events.

A self-confessed born-again Christian. lay preacher, and a Chapter President of the Full Gospel Business Men's Fellowship International. Professor Onuoha is married to Nne-Ola and they are blessed with five children.

hold senior positions today in the oil industry and in the academia. He has published papers in many leading local and international journals and monograph series. These publications span through several areas, notably near-surface geophysical exploration, basin anaIysis and pe- troleum maturation modelling, lithospheric structure, and seismotec- tonics. He was also a member of the Nuriorlul T d z ~ l i c u i Cornrnirree on Emthyuuke Phenomerzu, a national advisory panel on seismological phenomena, and the establishment and operation of a national network for monitoring seismic events.

A self-confessed born-again Chris tian, lay preacher, and a Chapter President of the Full Gospel Business Men's Fellowship International, Professor Onuoha is married to Nne-Ola and they are blessed with five children.

References Anderson, B. S., Weber, M. E. and Bain, J. E., 1998. The renaissance of gravity: a practical view of integration methods. AAPG Explorer, March, 12-13, Attanasi, E. D. and Root, D. H., 1993. Statistics of Petroleum Exploration in the ~aribbean, Latin America, Western Europe, the Middle East, Africa, non- communist Asia, and the South-western Pacific. U. S. Geological Survey Circular 1096, 129 pp. Bays, A., 1997. E & P data management in a globally networked world. Paper pre- sented at the 59th conference of the EAGE, Geneva. Cavoulacos, P. and Deffarges, E., 1997. Achieving profitable growth in E & P: new strategies, business model. Oil & Gas Journal, May 26,42-48. DeLuca, M. and Le Blanc, L., 1997. Forecast 1998. Ofshore, December, 52-56. Durham, L. S., 1998. Stability in oil price stirs questions. AAPG Explorer, March, 18-21. Edwards, J. D., 1997. Crude oil and alternative energy production forecasts for the twenty-first century: the end of the hydrocarbon era. AAPG Bulletin, vo1.81(8), 1292-1305. Ndefo, D. O., 1999. Challenges and realities in existing deep water contracts. Paper presented at the Pre-Conference Workshop of the Nigerian Association of Petroleum Explorationists, Lagos. Onuoha, K . M., 1987. Subtle petroleum traps: a discussion of the tools and tech- niques required for their effective search in the Niger Delta Basin. NAPE Bulletin, July, 92 - 102. Onuoha, K. M., 1997. Innovation and trends in E & P. Paper presented at the No- vember, 1997 Annual NAPE International Conference, Lagos. Onuoha, K . M., 1999. Technology and global hydrocarbon exploration in the new millennium. NAPE Bulletin, vol. 14(1), 55-75. Onuoha, K. M., 1999. The challenges of the explorationist in the 21st century. Key- note address presented at Nsukka during the Annual National Conference of NA- GAMS, July 23 1999. Organisation of Petroleum Exporling Countries, OPEC: 1997. Facts and Fig- ures. Paradigm Geophysical, 1997. GeoDepth 3D Pre-Stack depth Migration: A new frontier in 3D-depth imaging. Advert brochure. Peebler, R. P., 1996. Leveraging knowledge through information technology. The Leading Edge, October, 1 132-1 140. Petroconsultants, 1998. World Petroleum Trends.

About the Author

'.. Professor Kalu Mosto Onuoha was born on July 17, 1947 in Akanu Ohafia in Abia State, and had his secondary school education at Hope Waddell Training Institution, Calabar (1960-66). After the Nigerian civil war, he travelled to Budapest, Hungary for further studies under the Federal Ministry of Education's Bureau for External Aid Scholar- ship Programme. He majored in Applied Geophysics, obtaining the PhD degree (summa cum laude) in 1978.

Thereafter, he served as a post-doctoral research fellow at the Geo- physical Institute of Technical University of Clausthal-Zellerfeld, Ger- many. Although Prof. Onuoha returned to Nigeria in September, 1980 armed with a PhD degree, he started off in his first year at the Univer- sity of Nigeria, Nsukka (UNN) as a Youth Corper (1980-8 1). He later rose to become Senior Lecturer in 1982, Reader in 1985 and full Pro- fessor of Geophysics in 1988. After a widely advertised search, he was in 1991 appointed and he duly briefly served as the pioneer MobiU NNPC Professor of Petroleum Geology at the University of Calabar (199 1-92).

Prof. Onuoha served the UNN in various capacities including as Head, Departmenr of Geology (1987-90), Deputy Administrator, School of Postgraduate Studies (1995-96), and member of many important uni- versity committees. Currently on an extended leave of absence from the UNN, he is now based in Port Harcourt, where he works for Shell Petroleum Development Company as Technology Development Ad- viser in the Subsurface Services Department. He has served on the editorial committee of several local and international geoscientific journals and was for six years (1987-93) the Editor-in-Chief of the prestigious Journal of Mining & Geology. He is a Fellow of the Ni- gerian Academy of Science, and also a Fellow of the Nigerian Min- ing & Geosciences Society.

As an academic who has worked in the Nigerian university system for a long time, Prof. Onuoha has over the years successfully supervised several PhD candidates and countless MSc students, many of whom