The following open letter to Nancy Pelosi, speaker
of the U.S. House of Representatives; Steny Hoyer, majority leader of
the U.S. House; and John Boehner, minority leader of the U.S. House came
across my desk, and would seem to be of interest to many:
“Given the on-going debate about access and leasing
activity on federal onshore lands and the Outer Continental Shelf, I
would like to offer some perspective, on behalf of the American
Association of Petroleum Geologists (AAPG), on the science and process
of finding oil and natural gas.
AAPG, an international geoscience organization, is
the world’s largest professional geological society representing over
33,000 members. The purpose of AAPG is to advance the science of
geology, foster scientific research, promote technology and advance the
well-being of its members. With members in 116 countries, more than
two-thirds of whom work and reside in the United States, AAPG serves as
a voice for the shared interests of energy geologists and geophysicists
in our profession worldwide.
AAPG strives to increase public awareness of the
crucial role that the geosciences, and particularly petroleum and
energy-related geology, play in our society. Finding and developing oil
and natural gas blends science, engineering, and economics. It has
distinct phases: exploration, development, and production. And it is
risky, because finding oil and natural gas traps, places where oil and
natural gas migrate and concentrate, buried under thousands of feet of
rock is like finding the proverbial needle in a haystack. Talent and
technology increase our chances of a discovery, but there are no
What is exploration? Well, the grid pattern on a
block map makes it tempting to think of exploration as a process of
simply drilling a well in each grid block to determine whether it
contains oil. But because of the natural variation in regional geology,
one cannot assume oil and natural gas are evenly distributed across a
given lease or region. Rather, exploration is about unraveling the
geologic history of the rock underneath that grid block, trying to
understand where oil or natural gas may have formed and where it
migrated. If the geology isn’t right, you won’t find oil or natural gas.
Legendary geologist Wallace Pratt once observed,
“Where oil is first found is in the minds of men.” When preparing a
lease bid, geologists use their knowledge to identify the specific areas
in a region that they believe have the highest likelihood of containing
oil and natural gas traps. Successful exploration begins with an idea--a
hypothesis of where oil may be found.
Since exploration is about developing and testing
ideas, some acreage available for leasing is never leased. That is
because no one develops a compelling idea of why oil or natural gas
should be there. Similarly, some acreage is leased and drilled
repeatedly with no success. Then, one day, a geologist develops an idea
that works, resulting in new oil or natural gas production from the same
land that others dismissed as barren.
Once a lease is awarded, geologists begin an
intensive assessment. They collect new geological, geophysical, and
geochemical data to better understand the geology in their lease area.
They use this data to construct a geological model that best explains
where they think oil and natural gas were generated, where it may have
been trapped, and whether the trap is big enough to warrant drilling. If
there is no evidence of a suitable trap, the explorer will relinquish
the lease and walk away. If they see a trap that looks interesting, they
schedule a drill rig to find out if they are right.
Drilling is the true test of the geologists’ model,
and it isn’t a decision to be made lightly. Drilling costs for a single
well can range from $0.5 million for shallow onshore wells to over $25
million for tests in deep water offshore. As the well is drilling,
geologists continually collect and evaluate data to see whether it
conforms to their expectations based on the geological model.
Eventually, they reach the rock layer where they think the trap is
If there is no oil or natural gas when the drill
reaches the trap they were targeting, they’ve drilled a dry hole. At
this point the explorers will evaluate why the hole is dry: was there
never oil and gas here; how was the geological model wrong; and can it
be improved based on what they know from the drilled well? Depending on
the results of this analysis, they may tweak the exploration idea and
drill another well or decide the idea failed and relinquish the lease.
If there is oil and/or natural gas, they’ve drilled
a discovery. Typically, they will test the well to see what volumes of
oil and/or natural gas flow from it. Sometimes the flow rates do not
justify further expenditures and the well is abandoned. If the results
are promising, they will usually drill several additional wells to
better define the size and shape of the trap. All of this data improves
the geological model.
Based on this revised geological model, engineers
plan how to develop the new field (e.g., number of production wells to
drill, construction of oil field facilities and pipelines). Using
complex economic tools, they must decide whether the revenue from the
oil and natural gas sales will exceed the past and continuing expenses
to decide whether it is a commercial discovery.
The process of leasing, evaluating, drilling, and
developing an oil or natural gas field typically takes five to ten
years. Some fields come online sooner. Others are delayed by permitting
or regulatory delays or constraints in the availability of data
acquisition and drilling equipment and crews. Large projects and those
in deep water may require a decade or more to ramp up to full
As you can see, oil and natural gas exploration is
not simple and it is not easy. It requires geological ingenuity,
advanced technologies, and the time to do the job right. It also
requires access to areas where exploration ideas can be tested--the
greater the number of areas available for exploration, the higher the
chance of finding oil and natural gas traps.
U.S. consumers are burdened by high crude oil
prices. Conservation and efficiency improvements are necessary
responses, but equally important is increasing long-term supply from
stable parts of the world, such as our very own federal lands and Outer
Continental Shelf. As Congress considers measures to deal with high
crude oil prices, I urge caution. Policies that increase exploration
costs, decrease the available time to properly evaluate leases, and
restrict access to federal lands and the Outer Continental Shelf do not
provide the American people with short-term relief from high prices and
undermine the goal of increasing stable long-term supplies. I am happy
to further discuss these ideas.
Willard R. (Will) Green, President, AAPG”