Dave Waters - Senior Geoscientist, Paetoro Consulting UK Ltd

Cutting some slack

The management of oil and gas data in the UK has taken a lot of criticism over the years – if I’ve heard “Why can’t they do it like the NPD” once, I’ve heard it a hundred times. Of course, we have much to learn from our esteemed Norwegian cousins – always. Not just them, but Denmark, the Netherlands, Ireland, Germany, all the countries promoting HC exploration in their waters, that have different approaches.

I suspect though that DTI, BERR, DECC, OGA, and all the various manifestations over the years, deserve to be cut a bit of slack. There are some differences with other countries that have made things harder. The sheer scale of data & the earliness with which it began are two factors. Another big factor, and I suspect the biggest one - is simply the number of huge multinational corporations with big global or regional HQ’s in London, that have employed great numbers of people in multiple interconnected industries - within our large country of 64 million people. There has been a much wider and stronger and more complicated web of interests constantly lobbying Westminster. These companies over the years have been able to exert pressure to protect their own data sets in a way that has powerful clout. That is not a criticism – these companies exist to make money for their investors, not to become public libraries. It is however a big force to battle for government organisations like DECC & OGA.  

They have done OK. Some of the initiatives over the years have been good ones. Promote licences worked well. Today though is a different era. Encouraging exploration in the UKCS needs a re-think. To everyone’s credit a lot of that re-thinking is going on, and it needs to continue.

Frontier follies?

I don’t want to dismiss efforts to awaken frontier basin exploration in the UK, and of course "Bravo!" to anyone willing to explore these areas - but we do need to ask ourselves whether the 29th Round exercise using taxpayer money has been successful. Only Shell and Esso have taken any acreage in the much-trumpeted Atlantic Margin frontier areas, and they are precisely the type of companies (global portfolios, unphased by high risk, and needing big finds to replace reserves) that would have considered it anyway without any taxpayer investments. The areas they have picked up are not hugely frontier, and next door to historical exploration efforts. The really frontier areas of the Rockall remain untouched.  

Is this really such a surprise? Companies have been struggling to monetise assets in the West of Shetland (WoS) area for many years – mainly due to infrastructure issues. Some with big enough assets and access to infrastructure have managed – but they are the exception. The problem is not necessarily lack of hydrocarbons, it is often the various commercial and infrastructure issues lengthening the time to first production. What hope has the Rockall if the WoS is struggling? It would take something huge to set it in motion. Maybe it’s out there, but even if it is, it’s not going to happen overnight. Witness Corrib in Ireland - only recently currently coming on-stream, after decades of effort. In the current investor climate, if time to first cash-flow is more than five years, then the exploration might as well be in the hydrocarbon oceans of Saturn’s moon Titan. 

Frontier exploration has an important role to play, but the companies with the pockets and stamina deep enough to do it, probably already are.

Ssssssshhhhh! Don’t mention those!

Another tendency these days is to proclaim the vast number of stranded discoveries in the UKCS as if this is some great thing. Let’s think about it though – these are instances where partnerships have spent multi-millions already, have found hydrocarbons, and despite best efforts & much head banging - have not been able to make them work – again often for commercial and infrastructure reasons as well as geological ones. There are of course some opportunities with stranded discoveries, involving the discovery of missed pay, using new technology or new ideas, changes in costs over the years, novel infrastructure approaches, or simplifying deals commercially. It remains a fact though, that a lot of clever people before you have failed with these discoveries, and it’s going to take something paradigm-changing to make them work. You need to be confident you have that. Most stranded discoveries are likely to stay that way.

I would argue that drill ready prospects are the currency of exploration, and this is what is required right now. 

Relinquishment write-up 

In this context, relinquishment reports are a fantastic resource. These are reports that operators are obliged to write when they let go a licence – explaining why they are letting it go. The UK taxpayer has given the operator the privilege of exploring in UK waters over a period of years, and this is where operators get the chance to explain to the UK taxpayer why they have failed, and what possible potential remains. 

Initial failure is a disappointment, but not an indication of incompetence per se – it must happen lots of times for success to occur – and it is in understanding these failures that critical learnings are made. It is what gives a significant “leg-up” to the next operator occupying the block, and ensures that learnings are not lost and costly mistakes not repeated. That is why the UK taxpayer should insist adamantly on a good quality of report, and why the OGA today should work to make these as accessible and comprehensive as possible.

Navigating the maze

Finding them on the OGA website is currently an exercise in itself. 

https://www.ogauthority.co.uk/licensing-consents/licensing-system/licence-relinquishment/ is where you need to get to first – it takes quite a few meandering clicks to get there, and then what you have to do is find the little link at the bottom of the page that says View the relinquishment reports submitted by operators for specific blocks . It takes you to:

https://itportal.decc.gov.uk/web_files/relinqs/relinqs.htm

The listing is by licence number which has no relation to location. The more helpful block numbers are also given - but not in a format that allows instant numerical sorting by quadrant and/or block number. As usual, copying and transporting them into excel means you have to change the formats of some blocks that are ambiguous as dates (e.g. 30/8 = 30th August) in such a way that Microsoft isn’t confused. 21st century software from one of the world’s biggest companies still can’t distinguish & preserve licence blocks and dates appropriately. Hey-ho. 

Let’s put these relinquishment reports bang-up front prominently on the OGA website. Let’s have an interactive map showing where they are. Let’s have a sort-able list. Let’s list the plays targeted. Lets make bulk-download of all reports by quadrant easy. Let’s make it easy for people to find and view this data. It wouldn’t be hard at all. I’m a little bit flummoxed that this hasn’t happened already – it would have been my “day one” when the OGA came into existence. But hey, they’ve been busy I guess. I am doing it myself in GIS for what it’s worth, because I know it’s what I need to help work-up North Sea prospectivity. 

Apples and apple peel

An additional issue is the variability in quality of relinquishment reports supplied by operators. It is a bit of a lottery – a raffle. Everyone in the industry is worked off their feet, and so without judging, the tendency will be for companies to supply the minimum relinquishment report requirement. I think that this minimum requirement needs raising, whatever the protestations, and failure to meet it should mean enforced prohibition from further rounds. 

The taxpayer deserves to see an explanation. If companies can put effort into the acreage bid, they can put effort in to summarising what they did on the block. It is in fact in their own interest to do so. The exercise in looking back at the end is a valuable one. It improves understanding, it improves workflows, and it prevents repetition of mistakes. It also ensures some continuity of knowledge during any subsequent personnel changes.

There are some very full relinquishment reports available. My own effort, one for Idemitsu on P1800 (pictured) is not one I’m not trumpeting as a particularly good example, but if nothing else it illustrates that undrilled drill-ready prospects exist within this relinquishment report data set. They are not without risk, but they exist. Some other favourites – very full informative reports, include some supplied by JX Nippon (P1465), Shell (P012), and Venture (P012-P277), to name just a few. There are other reports however, that are very minimal and say next to nothing. OGA has an important role to play, given the current stage of basin maturity – to ensure that this is no longer acceptable. 

Working the detail

Simply mapping the relinquishment reports and where they exist, and the prospectivity they describe is not enough. We have all seen regional reviews and “blob maps” that just collate everything unthinkingly. They aren’t worth much. There aren’t many parts of the North Sea that don’t fall under someone’s lead or prospect. The time for big regional reviews is arguably gone now. It's been done many times previous. It’s now about mucking into the data detail with subjective analysis and viable prospect rankings. The relinquishment reports are a first gateway into that detail, but they need to be reviewed and ranked. The prospects that still “have legs” can then be extracted. 

Everyone will have different views on that – and that’s a good thing. It is that varied subjective prospect analysis – originating from a wide selection of professionals, which needs to get out into the market to stir interest. Not the frontiers that will take a decade or more to commercialise. Not so much the stranded discoveries that operators have failed time and time again to make work despite best efforts. The prospects. Get them out there. Get them out there quickly.

Opportunity rich, when you get the data

There is never any guarantee that working any one area in this way will deliver success, yet the process of starting somewhere and getting stuck in always leads to new learning and new leads, and consolidated views of where further potential exists. In my own experience working the North Sea, as long as you stick within proven source maturity constraints, it is a very rare area that doesn’t provide something interesting on closer inspection. At risk of exploration heresy, it almost doesn’t matter which part of the (source rock mature) basin you start with, just start somewhere. Will all leads be successful, will they all be commercial – of course not, but the point is that the basin is not opportunity poor. Pick somewhere to start, your highest ranked half-quad, and hunt. 

The need then - is to empower this engine of prospectivity analysis as widely as possible. Currently the basic scanned well data is not free. Well data providers need to make a profit, and we should not begrudge them trying to do so. However, one area we can learn from some of our our Scandinavian counterparts is in making the basic scanned summary well reports free, to allow analysis by a wide range of professionals globally. The digital data can come at cost and data agents can make money there – but it is with this initial free provision of basic scanned well data that the first interest is generated. To withhold this in the North Sea today doesn’t make sense for anyone involved. An important subset of idea-generating smaller companies are not undertaking UK exploration - simply because they can't access good, free, well data sets to set the process rolling. Other countries give them that lift, so why shouldn't they focus there?

Making it easier - can we afford not to?

There are companies out there right now, who are recognising the wealth of opportunity that can be accessed by detailed analysis of existing data, combined with the best new seismic they can afford. Let’s make it easier for more companies to do this. 

Working and improving the relinquishment report database is an integral part of that. I will be doing it myself in focus areas, at my own pace given other priorities, but there is a whole lot of low hanging data-fruit that I am surprised isn’t being plucked. It could be re-packaged and re-presented very quickly, to generate interest for the 30th Round and thereafter. In so-doing, it would help everyone involved in UKCS exploration - data providers, explorers, government tax coffers, and the UK taxpayer whose acreage it is in the first place. There are no guarantees going forward, but there are a lot of very simple things that can be done to ensure the chances are maximised, and not all of them have been done yet.

KeyFacts Energy Industry Directory: Paetoro Consulting