Yesterday's dogs: today's elephants?

I've now been in the industry long enough to see wells being drilled on prospects which, 20 or 30 years ago were, not to put too fine a point on it, considered to be "dogs". Although many of them have turned out to be dry as expected, enough have come in to provide encouragement for companies to continue working through the inventory. So, what has changed in the interim? How are we turning yesterday's dogs into today's elephants? Well, the most commonly touted explanation is that we have "reduced the risk" on these things to the point where they now merit drilling. In actual fact, the risk must still be exactly the same as it was 20 years ago. What really has changed is our perception of it (or perhaps more importantly, management's perception of it!). With better seismic and more well control, we now think we understand what is going on down there in the dark depths of the subsurface and can dress up the dog to look like an elephant, or at least, maybe, a hippopotamus.

When teaching students about risk, I like to use the analogy of crossing a busy road: Twenty years ago we might have looked at the traffic on the road and 'guesstimated' that there was, say, a 60:40 chance of getting across if we ran quickly enough. Now, 20 years later, we have at our disposal a whole wealth of statistics on how many people have been run over crossing similar roads, we can measure the speed of each individual car to ten decimal places, and we can calculate the time gap between each car to the nearest millisecond. So, we must now have a better chance of making it across the road, right. Maybe 80:20? Certainly, after you!

The point is that the oil industry seems to spend a vast amount of time and money micrometering the watermelon, when what we really need to do is get in there and take a bite. Always keeping at the back of our mind, of course, what happens when a car on a busy road actually hits a watermelon!

While you're contemplating that, why not suck the pips out of these stories?....

Energy Companies
Talking of risk, we all know that hydrocarbon is a finite resource, so when should we look at moving our eggs (or watermelons) in to another basket? While many companies, local and international, seem certain that we will not be running out any time soon, two of Australia's major oil and gas explorers (Origin Energy and Metasource (Woodside Energy), ) are looking at 'reducing the risk, by investing in the research and development of alternative energy, through major share holdings in Geodynamics Australia P/L. Turn to Page 23 to read how it is going.

Ring of Fire
Geothermal energy is a proven resource for direct heat and power generation in New Zealand (since the late 50s) and currently provides about 7% of the country's total installed capacity for electricity generation. New Zealand is only 20% self sufficient in oil (a drop in 8% over the previous year) so plans are being drawn up to dramatically increase the use of geothermal generated electricity. The report starting on Page 29 takes a look at this.

Australia's Stranded Gas and GTL Research
Australia is expected to drop to 45% petroleum self sufficient by 2010 and needs to find alternative transport fuels. CSIRO's Gas-to-Liquids research team, led by Professor David Trimm, is developing new and novel technologies for the exploitation of Australia's substantial stranded gas and coal reserves. See Page 27.

Space: The Next Business Frontier

Can't seem to get out of the office these days? Well perhaps you should consider booking a 'get-away-package' space flight. In this edition, Paul Bouloudas reviews the book Space: The Next Business Frontier by Lou Dobbs with H. P. Newquist. They predicted (back in 2001) that flights would be available by the end of 2005.