PETEX 2021 – Still standing with headwinds and looking to the future

The PETEX 2021 conference was held on November 23 to 25th 2021. The conference like so many other events was postponed from last year and like all the attendees I was delighted that it was held at all. I would like to thank Maria Harrison, Lydia Dumont and the rest of the PESGB team and the organising committee for putting on a great show under challenging circumstances. It was great to meet up with people I had not seen in two years and also great to meet folks I had only met on zoom.

The mood was obviously a bit shell shocked but looking to the future to change, grow and evolve as the petroleum industry always has. A theme was how do we integrate with European societies expectation of lower carbon going to net -zero with meeting a continuing demand of hydrocarbons in a responsible way.

Keynote Talks – coping and thriving in a carbon limited world

A unifying theme in the keynote talks was working in a new era of constrained carbon. This is demanded by western governments, much of civic society and starting to be demanded by western financial institutions. There is also a need to meet the energy hunger of the developing world in a responsible way.

Tim Eggar, the chairman of the Oil and Gas Authority (OGA) spoke about the importance of responsible oil and gas production in the UK to meet remaining needs for hydrocarbons – speech transcript here - https://www.ogauthority.co.uk/news-publications/speeches-presentations/2021/oga-chairman-tim-eggar-insists-continuing-north-sea-exploration-is-vital/

Phil Kirk (CEO Europe Harbour Energy) spoke about the need to quantify and reduce scope 1 and scope 2 emissions (emissions that are directly and indirectly due to HC extraction activities). Phil mentioned that governments are now more aware for the need for responsible hydrocarbons as oil and gas will still be needed even in a net zero world. Numerous actions are underway including flaring reduction (please see my video on why this is important - https://www.youtube.com/watch?v=4565x9nNARE&t=1s) , reducing fugitive methane and platform electrification. Many of the easy wins have already been done in the North Sea and the next stage will more challenging but there are also many significant business opportunities in CCUS, Hydrogen and also in developing skills technology in reducing the environmental impacts of oil and gas extraction which can be a significant export earner. Phil discussed several new energy clusters for example eastern Scotland and Humberside which will be linked to a CCUS project to allow heavy industries to provide jobs and income in a low carbon world. Phil talked about his experience at the recent COP26 conference where policy makers are starting to look at responsible hydrocarbons in a more positive way.

Emmanuelle Garinet the VP exploration for Africa at Total Energies spoke about Total’s future exploration strategy. ?Exploration fits into Total’s overall strategy focussing on more responsible hydrocarbons where any new projects would need to have a carbon intensity less than the average in the Total portfolio. Total’s themes were more energy, fewer emissions and more sustainability. Total aim to keep oil production flat in the next decade while increasing gas and greatly increasing renewables which each project needing to meet stringent financial and environmental thresholds. Total will aim to drill between 15 and 18 exploration wells each year (compared to 40 wells a year before 2014) and look to projects with a fast path to development.

Sophie Zurquiyah the CEO of CGG delivered a keynote on a contractor’s perspective

The contractors have been hit hard by the oil downturn and seismic contractors even more so. Oil operator CAPEX has halved since 2014 and exploration spend is 1/3 of what was spent before the oil price crash. While oil demand has now effectively recovered to pre- Covid levels spending has not yet done so. ?There is a need to keep exploring to replace production, a need to develop resources in a cleverer manner and exploit opportunities in producing fields and new seismic data with higher resolution as well as reprocessing exiting data with new algorithms can help to meet these demands. ?Cloud computing has enabled advances in data processing and more effective data storage and access.

Carbon intensity in seismic operations has now also come under scrutiny and CGG aims to be Caron neutral by 2050. There are also new opportunities in proving geoscience services to new energies such as geothermal and geotechnical services to the wind industry as well as CCUS and support for the mining industry.

Highlight Talks

My former colleague, Jason Canning, now at RPS gave a great talk about how emissions are measured and reported. Western financial institutions are now requiring that emissions are reported in annual statements for listed companies and banks now need to know about the carbon impact of new projects which they make loans for. Jason explained the various standards used for reporting emissions which will be used to monitor and work in reducing our impacts.

Graeme Bagley of Westwood Group gave an excellent overview of the state of exploration between 2016 and 2021. Westwood produce a report on high impact exploration wells (large potential volumes or play openers) Since 2014 about 70 HI wells have been drilled each year with a spike to 80 wells in 2019. 60 H/I wells were drilled in 2020 under challenging conditions and about 70 will be drilled by the end of 2021. Most H/I wells have been drilled in deep water continuing the trends of the early part of this century. During 2019-20 the largest volumes were in Russia and Iran, two countries that have traditionally done relatively little exploration in the recent past. There was a 53% decline in discovered volumes without Russia and Iran.?Other countries with significant successful activity included onshore Mexico (Pemex), Guyana (Exxon) and Cote d’Ivoire (ENI). Other areas have disappointed for example play extensions in the Mexican GOM and In Senegal / Gambia.

Is there an appetite for exploration? – yes, but it is limited. About 70 H/I wells are anticipated in 2020 but the more distant future is less certain. Frontier exploration has a 7% commercial success rate with a median 10 year time lag to production, a hard sell when compared to infrastructure led exploration with a much higher success rate and faster time to payback. The corporate landscape has also reduced, many large companies are pulling back to heartlands which they know. The middle companies are getting squeezed and NOC’s and Russians are only dipping toes in the water. The smaller companies which tend to be the innovative risk takers are finding it harder to get capital.

There were an interesting set of talks on the emerging Permian Zechstein play in the Southern North Sea. My former colleague, Neil Hurst, now at ION spoke about the new seismic data that ION have acquired over the area which has significant improvements in resolution and where full waveform inversion has allowed estimation of rock properties in the dolomite reservoir. Phil Mollicone spoke about how detailed seismic interpretation can avoid misconceptions about topography influencing carbonate platform deposition where incisions in the underlying carboniferous can be mistaken for spur and grove reefs. Peter Browning-Stamp of Horizon Energy spoke about their acreage in this play which has had one discovery to date and numerous shows on non-sulphurous oil. Peter also spoke about working with wind energy developers who are installing wind turbines in the area. Geotechnical surveys for wind turbines have found oil seeps and it will be possible to operate a drilling rig in the middle of a wind farms (including safe helicopter supply)

Kirstie Wright of North Sea Core – spoke about the activities of this dedicated group of people who rescue potentially valuable core rock samples which are about to be disposed of – please read about their activities at their website - https://www.northseacore.co.uk/

Two Interesting talks on South Africa and Namibia – a new emerging petroleum province.?William G Canning of Total Energies spoke about their recent Brulpadda and Luiperd discoveries in South Africa. Building upon regional geology and amplitude analysis on 2D data and rapidly following up with 3D seismic and an appraisal programme. ?The drilling operations were done safely during the pandemic in a very challenging deep water met ocean environment (wind, waves and the Agulhas current) a truly outstanding achievement. These significant gas discoveries will change the energy landscape of coal dependent South Africa and Total are working on market development for the gas.

Tony Younis of Impact Oil and gas gave a fascinating talk on the Venus prospect in Namibia. Regional geological work together with geophysical amplitude interpretation and basin modelling has unveiled a high potential prospect that may transform Namibia if successful.

Other interesting talks included Bob Harrison on appropriate data gathering for CCS. Karyna Rodriguez on getting more out of old seismic by reconditioning the data and storing it in an accessible cloud solution and of course Neil Hodgson’s fascinating talk on the Geology of Mars (perspectives from the Perseverance rover) where a 3.5 billion year old river delta with very nice clinoforms has been found. Great reservoir potential but where is the source rock? and the top seal looks challenging.

There were numerous other talks which ran simultaneously and will be available to conference attendees online.

The exhibition stands were busy with most of the main contractors present and it was good to catch up with what they had been up to. There were also side talks on careers (future of work by Zoe Suren) ?and the special interest groups of the PESGB particularly those focussing on the energy transition, with geoscientists talking about their experiences in a new world.

Overall, about 600 people were delighted to see each other in person. 2020 and 2021 have been challenging for all of us in many ways but we are looking to the future?