Exploration Activity in the Oil & Gas Upstream Cycle
Jonathan Craig – Senior Vice President, Exploration
Eni, San Donato Milanese (Italy)
Varenna, July 23rd 2019
Eni…in brief
Founded in 1953 by Enrico Mattei, Eni (Ente Nazionale Idrocarburi) is a supermajor
multinational energy company with a worldwide presence
Operating in all energy sector areas, from its traditional Oil and Gas business to renewables
through its subsidiaries and associated companies. Significant investments in Research and
Development (over 200 R&D Projects at present)
Continuous growth oriented towards the sustainable development of energy resources
(low-carbon sources: mix of natural gas and renewables, such as photovoltaic, waste
recycling, bio-refineries, green chemistry, etc). Investments in CCS (Carbon Capture
Sequestration) and CSP (Concentrated Solar Power) and Magnetic-onfinement fusion (with
MIT)
Core activities of Oil & Gas sector cover the entire Oil and Natural Gas supply chain as well
the production and marketing of electricity and chemical products
2
Oil & Gas Cycle: Eni covering the entire chain
BASIN EVALUATION
Regional Studies in order to identify areas with Hydrocarbon potential
EXPLORATION
Licenses Acquisition, Geological Studies, Seismic Acquisition & Drilling
DEVELOPMENT
Development Plan and Drilling
Facilities and Infrastructure Construction
PRODUCTION
Management, Work-Over, Abandonment
OIL NATURAL GAS
Tankers LNG
Oil Pipes Gas Pipes
Chemicals Gas Market
Refinary
Marketing Electricity
3
Eni in the world (Upstream Activity)
46 Countries
Exploration only Exploration & Production
Argentina Algeria
Canada Angola
Cyprus Australia
Gabon China
Greenland Congo
India Ecuador
Ivory Coast Egypt
Ireland Ghana
Kenya Kazakhstan
Lebanon Indonesia
Mexico Iraq
Montenegro Italy
Morocco Libya
Mozambique Nigeria
Myanmar Norway
Oman Pakistan
Portugal Tunisia
Russia Turkmenistan
Somalia UAE
South Africa UK
Taiwan (FM) USA
Timor Leste Exploration & Production
Venezuela
Ukraine Exploration
Vietnam
No current activity
updated @ Dec. 31st, 2018
4
Oil & Gas Activity: Upstream
PRODUCTION
BASIN EVALUATION Reservoir Management, Work-Over,
Regional Studies in order to identify areas with Abandonment
Hydrocarbon potential
EXPLORATION
Licenses Acquisition, Geological Studies, Seismic
Acquisition & Drilling
Development
DEVELOPMENT
Development Plan and Drilling
5 Facilities and Infrastructure Construction
Upstream Activity Cycle
BASIN EVALUATION
LICENCING EXPLORATION APPRAISAL DEVELOPMENT PRODUCTION ABANDONEMENT
ACQUISITION
Regional Studies Seismic Appraisal Development Plan Production Well dismission
acquisition & Drilling Development Management Facilities
Geological Model
interpretation Reservoir Wells Drilling & Reservoir Dismission
Exploration Potential
Prospect Modelling Completion Management Enviromental
Definition Feasibility Surface facilities Reservoir Recovery
NFW Drilling Studies and infrastructure Modelling
LICENCING construction
Subsurface Work Over
• Bid Round Geology Studies
• Direct negotiation
Production Test
• Farm in
• Merge / Acquisition
(4%) (15%) (5%) (12%) (60%) (4%)
PROJECT
LIFE CYCLE
(2%) (8%) (5%) (50%) (30%) (5%)
PROJECT
COST
+
License Awarding Discovery Start Production (First Oil)
Time to Discovery Time to Market
CUMULATIVE
CASH FLOW
Time
-
6
What does “Exploration” mean?
“Exploration” is a set of coordinated activities from different integrated
disciplines, sciences and technologies - not only geology/geophysics –
aiming at discovering new oil and gas volumes that could be exploited
in a “reasonable” future with an economic return
To explore, one needs to understand and carefully map the present day
subsurface structure of an area, understand its evolution in time, locate
the areas where HC’s may be generated, locate and accurately map the
structures in which they may be preserved, estimate their volumes,
evaluate the chances that our prediction have to be correct…
To achieve such a target in the most efficient way, high level skills and
know-how have to be employed together through a powerful digitally
integrated approach and along the support of dedicated R&D projects
7
Exploration Activity : Exploration Team
Exploration
Mngr
Economist
Engineer
Geophisycist Dev/Prod
Sedimentologist
Negoti
ator
Driller
Geologists
8
Where do we “explore” to find Hydrocarbons?
Sedimentary Basin are regions of the earth of long term subsidence creating space for infilling by sediments
For Hydrocarbon Exploration deep sedimentary basins are needed (usually over 2500m of sediment thickness)
9
Within a Sedimentary Basin: the 5 Elements of the “Petroleum System”
Trap
Accumulation Geometrical configuration of the Reservoir
and Seal couplet allowing accumulation
Migration Seal
Sediments (usually) with no permeability
Capable to create a barrier above and
Expulsion around the reservoir
Generation Reservoir
Sediments (usually) with porosity and
Permeability capable to contain and flow
HCs during production
Carrier
Permeable sediments and/or significant rock fractures (Faults)
allowing buoyancy flowing from Source Rock into Reservoir
Source Rock
Sediments rich in Organic Matter (shales, marls, carbonates coals)
capable to generate HCs during thermal evolution (if deep enough to
crack organic matter to HCs). Oil vs Gas generation depends on quality
of Source Rock and/or its thermal evolution. Exception: bio-gas (no need
of thermal alteration)
Presence of the 5 Elements of the Petroleum System is necessary but not sufficient:
10 precise timing occurrence of each elements/phase is necessary
In the Outcrops…
Source Rock Reservoir
Seal Trap
11
Theory is Ok, but…where to drill and…at which depth???
?
?
?
?
?
12
Geological Field Trip Data Analyses and Studies
13
Remote Sensing: LandSat7 and ASTER* Study: Landcover and Lithotype
Processed image Interpretation
Code Linear elements
1 Roads, tracks
2 Uadi
3 Linear dunes
LandSat7: 15m resolution
4 Rock veins
Areal classification
1 Urban areas
2 Cropland and oasis
3 Natural vegetation
4 Surface waters
5 Bare land (or with poor vegetation)
6 Rock outcrops
7 Sandy desert (Erg)
8 Rocky desert (Reg)
9 Dry riverbed (Uadi)
10 Evaporitic deposit (Sebkha)
14 * Advance Space-born Thermal Emission and Reflection Radiometer (2m resolution)
Grav-Mag Acquisition and Studies
Bouguer anomaly Total Magnetic Intensity
Bouguer anomaly
RTE
GGT*– Tzz (vertical) Component
(*Gravity Gradient Tensor) Reduced to the Equator
Magnetic Basement
C. I. 500 m
Dyke
Total Magnetic Intensity
RTE
Reduced to the equator
Sill C.I. 2 nT
●
Sill Dyke
15
Oil Slicks
Slicks:
Slicks are ‘flat’ parts of the sea surface in mm-cm amplitudes similar to the wavelength of the radar
Small amounts of oil create slicks by suppressing mm-cm amplitude waves
Smooth areas (slicks) result in no return to the radar
ERS, Radarsat & Envisat wavelength: 5.6 cm
This is perfect for mapping the wind-generated capillary waves that are ‘damped’ by oil
20 km
Smooth surface Slightly surface Very rough surface
Oil not detectable Oil detectable Oil not detectable
16
Seismics
Seismic is the most important and most used exploration tool
It allows visualizing and describing the subsurface in 3 dimensions
Acquired seismic signals require complex mathematical processing (months-long) before they can
be displayed in an “understandable” way and used by geologist for interpretation
«Migration» is referred to the processing step that allows reflections’ origins to be correctly
located and displayed in a way that mimics a geological profile on a two-way-time scale
Energy source
Array
17
What Is a Seismic Volume?
It looks like a 3D echography,
but at a different scale (resolution: dam vs. mm)
Define Subsurface
Outcrops vs Subsurface through Seismics
Massiccio Sella – Passo Gardena
Supergiant Gas Field (Zohr)
20
Seismic Process
SEISMIC ACQUISITION SEISMIC SUBSURFACE
DATA IMAGE
SEISMIC
PROCESSING
&
IMAGING
21
Eni Technology Roadmap: Digital Simplification of Geo Complexity
Computing Power Accuracy Reduction of turnaround times
0,5 PFlops 2012 8 months
5,1 PFlops 6 months
2014
2 months
22,4 PFlops
2018
Eni Green Data Centre
(hosting HPC3 & HPC4)
1000 PFlops Next 1 wk
22
3D Visualization: Structural vs Sedimentary Facies Rendering
Structure and sand distribution
may not be linked
23
3D Structural Map
G&G Studies: Biostratigraphy
Integrated High resolution biostratigraphy Paleoecology & Paleoenvironmental Reconstruction
Foraminifera
Occurrence & Microfacies
of marker
taxa
Nannofossils
High resolution bio- Palynology
chronostratigraphy
5
G&G Studies: Structural Characterization
SW NE
Relay Ramps Extentional Normal Faults
26
G&G Studies: Clastic and Carbonate Sedimentology
Stratigraphic and sedimentological
Integrated exploration and reservoir scale studies modelling
Clastic and carbonate Sedimentology
petrography and
diagenetical study
6
G&G Studies: Sedimentology
Meandering River
(Google Map)
CONTINUITY
Thicker channel axis (older system)
Well-1
+ Sand filled channel belt (older system)
Channel axis (youngermost system)
1 km
10 Hz
20 Hz 40 Hz
Confined overbanks
(youngermost system)
Overbank Sheets
Meander terraces
G&G Studies: Petroleum System Modeling
The PSM methodology considers all the variables and associated uncertainties
that define the possible hydrocarbon distribution, reducing the exploration risks
Basin Temperature Source Rock Generation & Migration Exploration
Geometry & Pressure Geochemistry Expulsion & Trapping Risk Evaluation
High Resolution PSM Biogenic gas Secondary Migration
Expelled Gases
10x vertical
exaggeration
Eni Award 2008
Expelled Gases HR detail
G&G Studies: Seismic AVO (Amplitude versus Offset)
30
What does “Exploration” mean?
“Exploration” is a set of coordinated activities from different integrated
disciplines, sciences and technologies - not only geology/geophysics – aiming
at discovering new oil and gas volumes that could be exploited in a
“reasonable” future with an economic return
To explore, one needs to understand and carefully map the present day
subsurface structure of an area, understand its evolution in time, locate the
areas where HC’s may be generated, locate and accurately map the structures
in which they may be preserved, estimate their volumes, evaluate the chances
that our prediction have to be correct (PoS, Probability of Success)
To achieve such a target in the most efficient way, high level skills and know-
how have to be employed together through a powerful digitally integrated
approach and along the support of dedicated R&D projects
31
Rigs vs Water Depth
32
Rotary Drilling
Rotary drilling is the most commonly
used because it is faster and cheaper
A «bit» is attached to the end of a string
of steel pipes (rods) and is made to spin
(rotate) by an engine located at the
surface or at the bottom end of the string
Hard steel or diamond dents on the bit
grind the rocks and the string
progressively sinks in the bore driven by
its weight and rotation
The string is extended by screwing in
more and more rods
Bits wear out and must be periodically
changed by lifting the whole string to the
surface
33
Official Flow Results
Perla-1X Preliminary Petrophysical Zonation On 09 Oct 2009 the well flowed on 36/64" choke
for Official Flow:
Gamma Ray Resistivity • FWHP : 3051 psi
• Qgas : 20,7 MMScf/d = 586000 scm/d
• Qoil : 442 bbl/d
8889’ = 2709 m (MD) Zone 1 8889’ ÷ 8929’ = 40’ (12.20 m) • Qw : 12,7 bbl/d
N/G = 73% • GOR : 47000 Scf/bbl
Avg. Φ = 21.20% Avg. Sw = 14% • Gas SG : 0,660
• Oil density : 47,5 °API @ 60 °F
9000’ • W. Salinity : 150 ppm Cl-
Zone 2 • H2S : 0 ppm
Gross Hydrocarbon Column at well:
8929’ ÷ 9278’ = 349’ (106.40 m) • CO2 : 2%
Tested Interval
N/G = 100%
535’ Avg. Φ = 24.90%
=
Avg. Sw = 5%
163 m WHOLE RESERVOIR
8889’ ÷ 9681’ (MD)
792’ 792’ (241.40 m)
=
241 m N/G = 97%
Avg. Φ = 21%
Zone 3
Avg. Sw = 10%
9278’ ÷ 9513’ = 235’ (71.60 m)
N/G = 100%
Avg. Φ = 18.50%
Avg. Sw = 11%
9500’
Zone 4 9513’ ÷ 9611’ = 98’ (29.90 m)
N/G = 100%
Avg. Φ = 17.50% Avg. Sw = 16%
Zone 5 9611’ ÷ 9681’ = 70’ (21.30 m)
N/G = 73%
9681’ = 2951 m (MD)
Avg. Φ = 15.80% Avg. Sw = 31%
Eni Petrophysical Interpretation, 03 Sep. 2009
21
NFW and OUT WellS (example from Perla Field, Venezuela)
OUT (Outpost or Appraisal) NFW (New Field Wildcat)
Well to be drilled on a structure First well to be drilled on a structure
In order to define extension of an in order to prove a HC bearing reservoir
already proven HC bearing reservoir
25% Perla-2x (OUT) Perla-1x (NFW)
21% Near Stack Rephased
18%
16%
11%
Porosity Unit
Color Scale
Transition To Basin W Bank Margin Bank Core EBM Flank
SW PMA = Perla Main Area NE
35
Characteristics and distribution of ‘conventional’ and ‘unconventional’
petroleum systems
Tight Shale Bituminous
Tight Gas Sand/Heavy Oil
Oil Gas
Conventional
Conventional Oil Shale structural oil
structural gas accumulation
accumulation
Coalbed gas Conventional
or stratigraphic gas
Shallow Biogenic accumulation
Methane WATER
WATER
0.6% Ro
Oil Generation
Tight Oil Window
Tight Oil
1.3% Ro
Shale Oil Tight Gas
Gas Generation
Window
Shale Gas
Tight Gas Overpressured
Cell
Tens of miles
36
Conventional vs Unconventional Exploration and Production
Conventional Field
Unconventional Field»
Source Rock
Conventional
Source Rock
Unconventional
Unconventional Fields
Development of Unconventional Fields needs much more production wells compared to Conventinal development (high costs)
It requests huge quantities of water (competition with drinking water supplies, agriculture, industry)
High Environmental Impact (visival, noise)
Induces seismicity
Unconventional Oil Fields Conventional Oil Fields
Permian Basin (Midland TX – USA) Val d’Agri – Italia
10 km
Global ‘Unconventional’ Plays
Estimated technically recoverable gas reserves of 6,622 Tcf (48 shale basins in 32 countries)
U.S. Energy Information Administration
39
Eni Strategy
Unconventional and M&A play an important role in reserves replacement for most majors
Eni has a unique strategy entirely based on conventional exploration
Competitors Resources Accretion Strategy @ 2018
100
90
80
Resource accretion approach %
70
60
50
40
30
20
10
0
Eni Statoil Total Exxon Shell Chevron CoP BP
Mobil
40 Conventional Exploration Unconventional Exploration M&A
Why still Oil & Gas ? Primary Energy Demand
Hydrocarbons
Gas
Liquids
BP Energy Outlook, 2018
41
Alternative Scenarios
BP Energy Outlook, 2018
42
New discoveries are required to fill the future global needs of Liquid Fuels
Peak liquid demand in 2032
(WoodMac scenario)
EXPLORATION
IS NEEDED!
YET-TO-FIND 15 mboe/d !
PROBABLE DEVELOPMENT
ONSTREAM
Forecast of Sources of Energy required to meet World Energy Demand to 2100
Hydroelectric
Projected Demands Careers in
Oil & Gas
Billion Barrels of Oil Equivalent per Year (GBOE) Remain Important
New Technologies
100
Solar Wind
Geothermal
80
Nuclear Electric
World Energy Demand Coal
60
Natural
Gas
40
Fossil Fuels
Decreasing
Crude Oil
20
1900 1920 1940 1960 1980 2000 2020 2040 2060 2080 2100
44
Shortage of Geoscientists in the U.S. by 2021 (American Geosciences Institute prediction, 2016)
262,627 geoscience jobs in the United States in 2016
130,000 geoscientists expected to retire by 2021
72,000 new geoscience jobs by 2021
15,000 new graduates (M.Sc. or Ph.D.) or 45,000 new
graduates, if also hiring B.Sc. and B.A.
Net shortage of over 150,000 geoscientists in
the United States by 2021
45
The Public Perception of today’s E&P Industry
The shale-gas fracking debate Arctic drilling and climate change
Groundwater
Contamination
The Macondo Disaster
46
But we should be proud of our industry – it has fuelled huge improvements in the
quality of life for billions of people around the world*
Abundant and affordable energy has underpinned huge progress in the human condition Life expectancy has surged
Global Human Development Index vs oil & gas consumption (global average, years at birth)
0.85 180
Human development index (life expectancy / education / per capita income)
52 72
Global oil & gas consumption
160
1960 2015
Global fossil fuel consumption (mmboe/d)
0.70
140
Global hunger is in decline (% pop.
malnourished in developing countries)
Human Development Index
120
0.55
100 35%
13%
80 1970 2015
0.40
60 Infant mortality has plummeted
(global average infant deaths per 1000 births)
40
0.25
20
185
42.5
0.15 0 1960 2015
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 Today
47
*After Lambert Energy Advisory
The ingredients in the mixer…………
48
