Stale Thoughts and Broken Links

Old entries from my weblog on geophysics and the energy industry.


I just discovered World Oil magazine. I never looked at it before because I had always assumed from its name that it would be too "high level" to interest me. But it actually sports a decent combination of technical and editorial content, at least in the July issue.

The most recent issue includes articles on AVO inversion and using 4C data for predicting lithology and fluid type, as well as a column discussing implications of the Western Geco merger.

In addition to their seismic technology and exploration coverage, they cover drilling, production and offshore.

First Phillips Petroleum buys a Cray. Now Conoco builds a massively parallel supercomputer.


Oil and Gas Journal: Companies bid $167.3 million at US gulf lease sale. "The sale was dominated by independent companies, with Union Oil of California [Unocal], Kerr-McGee, Amerada Hess, and CXY Energy posting $63 million of the $153.6 million in high bids."

High Bids Ranked by Bid Amount.

Lease Sale Map. Blocks receiving bids are color coded by number of bids. I count 29 blocks receiving multiple bids. A lot of activity in the Garden Banks area.

MMS: Homepage for the Western Gulf of Mexico Lease Sale 177.


Oil Online: Offshore Industry anticipates successful Western Gulf Lease Sale. Tommorrow.

"The Gulf of Mexico region is the birthplace of the offshore oil and gas industry and remains its most active arena."

Rick von Flatern (who?): Impaled on a pogo stick.

"There is no denying the oil industry has been caught cheating the federal treasury and by extension the American people. It is the kind of revelation that does nothing to help an industry anxious to change an image Apache Oil headman Ray Plank once compared to that of condom and cigarette manufacturers."

This von Flatern guy really nails it. The oil industry's biggest problem in this country is its image, and I think a lot of the bad PR is unjustified. But it's pretty easy to demonize an industry that cheats Uncle Sam and Native Americans out of a billion dollars.


With all the focus in the news on OPEC, we seem to be giving short shrift to the demand side of the supply and demand equation:

Oil and Gas Journal: "The upstream side of the oil and gas industry should remain strong through next year."

"US consumers and economists both were caught off-guard by the recent surge in domestic demand for oil, stemming from increased automotive travel and the additional fuel consumption of the popular sport-utility vehicles in this country, analysts said."

The analysts were officials of the Magnum Financial Group, a New York-based financial advisory firm.

Remember, the U.S., with 1/20th of the world's population, accounts for 25% of the world's oil consumption!


The Unocal patent story is finally getting some attention.

WSJ: A Patent Fracas Pits Unocal Against Big U.S. Oil Producers.

"Rather than prescribing specific ingredients, such as fuel stocks or additives, as more ordinary oil-industry patents had done, the Unocal patent called for certain properties that could be achieved with a variety of combinations of ingredients. In effect, the patent would cover numerous methods of making gas that had the specified properties. Unocal filed its unusual application with the U.S. Patent and Trademark Office in Washington in December 1990.

"Over the next year, as the patent-application process unfolded, Unocal continued to participate in talks with both the oil-and-auto consortium and the California air board. In more than two dozen meetings with regulators, Unocal argued for various concessions, as other companies did, recalls Jananne Sharpless, then the board's chairwoman. But Unocal never mentioned its business before the patent office.

"Board staff members, including Dean Simeroth, the lead fuel-specifications technician, say that, in retrospect, they believe that Unocal tried to encourage the panel to adopt clean-fuel requirements consistent with the company's pending patent application."


Oil and Gas Journal: Refiners petition US Supreme Court for review of Unocal patent case.

"Attorneys for ExxonMobil Corp. and four other refiners petitioned the US Supreme Court Tuesday to review a lower court decision that would force them to pay royalties to Unocal Corp. for its gasoline reformulation process.

"[Gene Renna, senior vice-president of ExxonMobil, said in a written statement,] 'We contend that the trial and appellate courts committed errors in their judgments in this case and that those errors have serious implications, not just for gasoline refiners and consumers, but for how we make environmental rules in the US.'

"Opponents claim Unocal misused the patent system. 'Unocal participated in regulatory proceedings while secretly filing and then amending patent claims to closely resemble the regulatory outcome,' said Renna. 'Our brief points out the inequity of effectively levying a fine against producers who are required by law to make this clean-burning gasoline.'"


I've got 3 of 5 sections of my overview of seismic exploration on-line now.

Actually, I'm a little self-conscience about it, now that I'm working at the same company as the great Oz Yilmaz author of two books on the subject.


Today I'm starting a new job at Paradigm Geophysical. As soon as I find out anything about it, I'll post more.


Schlumberger took advantage of the annual SEG meeting last week to announce new seismic acquisition systems: Q-Marine and Q-Borehole.

God bless the seismic contractors. They are single-handedly supporting any and all seismic technology development for the energy industry.

This is particularly true in the area of marine multicomponent acquisition. I am personally certain that by the end of this decade, maybe within five years, most seismic industry activity will be the acquisition of multicomponent "4-C" seismic data for production monitoring. And judging by the actions of the seismic contractors, I don't think I'm alone in believing this. Over the last three years, the contractors have done a fantastic job devoting resources to developing ocean-bottom 4-C acquisition systems. I have been absolutely amazed at the data these systems have produced in some surveys.

Unfortunately, so far this development work has amounted to unrewarded altruistic behavior. The response of the industry has been tepid, and I suspect that the contractors offering 4-C acquisition have only recovered a small fraction of their development costs.

Of course, the application of 4-C seismic for reservoir characterization and monitoring is still mostly an unproven technology. In fact, I think a lot of research needs to be conducted before anyone will truly have a clue how to properly process, interpret and utilize 4-C seismic data for production purposes. But guess what? The contractors can't conduct the type of research I'm describing without the participation of the rest of the energy industry. The oil and gas companies, particularly the majors, need to *lead* the next phase of the R&D effort.

Thanks for listening. :-\


Phillips Petroleum buys a Cray.


Oil and Gas Journal: GOP platform calls for strong US energy policy.

"[The platform states,] 'Foreign oil now accounts for one third of our total trade deficit. Meanwhile, domestic oil production has fallen 17% over the last 8 years, as vast areas of the continental US have been put off-limits to energy leasing -- although we depend on oil and natural gas for 65% of our energy supply.... 36 oil refineries have closed in just the last 8 years, while not a single new refinery has been built in this country in the last quarter-century.'

"The platform said the US needs a national energy strategy to increase domestic supplies of coal, oil, and natural gas."

I'm not a fan of the Republicans, their policies, and especially their politics. On the subject of energy policy, however, I have to admit that the Republicans are a lot closer to a reasonable policy position than the Democrats.

One position that I have to disagree with is the relentless attacks on the Kyoto Protocol on global warming. The Republicans insist on claiming that we need to do more research before we take any action. While I certainly agree that the subject deserves a lot more research, I think it is imprudent to argue that any action would be premature.

Houston Chronicle: Gulf leases in demand as auction approaches .

"Oil companies flush with cash from high oil and gas prices are expected to bid on increasingly deeper tracts in the western Gulf of Mexico at the federal offshore lease auction later this month.

"The deepwater Gulf is as active now as it has ever been. The number of rigs drilling in the deep water, 1,000 feet or deeper, has risen to a record of 34, according to a recent report by the Minerals Management Services. The government agency that manages federal offshore oil and gas leases said there were 26 rigs drilling in the deep water at this time last year.

"Companies such as Marathon Oil and Conoco are drilling in waters greater that 5,000 feet, some of the deepest ever in the Gulf."


Houston Chronicle: Operating profits are up at Baker.

"The seismic portion of Baker Hughes has been the slowest to recover, which is the case throughout the industry. Revenues at Western Geophysical declined 24 percent from the comparable quarter a year earlier, while all other divisions gained.

"However, the geophysical unit returned to profitability during the quarter because of cost cutting. Additional good news was that the quarterly evaluation of its library of seismic surveys resulted in a gain of $15.6 million.

"Officials explained that one large survey, on the continental shelf in the Gulf of Mexico, is in such demand that it more than compensated for surveys whose book value had declined.

"While there has been an improvement in the seismic business on land, particularly in North America, the marine contracting part of the business is "quite dismal" on a global basis, said Szescila. [Andy Szescila, president of Baker Hughes' oil field operations group.]

"Baker Hughes is in the process of combining Western Geophysical with Schlumberger's Geco Prakla. The two companies are trying to put together a definitive agreement."

Walter Kessinger

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