By LOUISE S. DURHAM
Sanchez Has ‘To-Do' List for Government
"This country faces an ongoing threat
of an energy crisis that will only get worse if we don't take steps
soon to shore up the domestic energy inventory."
No, this is not a statement made
by a veteran geologist but one delivered by Texas democratic gubernatorial
candidate Tony Sanchez in his "Power Lunch" presentation at the
recent APPEX in Houston.
With myriad business ventures to
his credit, Sanchez drew heavily from his experiences as an oilman
to beat the drum for the oil and gas industry.
"The whole vision of the future assumes
we will continue to enjoy the benefits of plentiful energy supplies,"
he said, "but despite industry's efforts, our new discoveries and
reserves are not keeping up with actual demand."
About 25 percent of domestic oil
and gas comes from offshore production in just six states, Sanchez
noted: Alabama, Alaska, California, Louisiana, Mississippi and Texas.
Reliable estimates peg about 60 percent of the remaining U.S. domestic
hydrocarbon resources as offshore.
"Unfortunately, 600 million acres
have been locked out of exploration even though we've learned how
to discover and develop these reserves with little or no environmental
impact, and to do so safely." Sanchez said. "In fact, offshore safety
records are three times better than U.S. workers in general."
So, you ask, what is the solution
to jump-start the domestic industry toward an era of increased drilling
For starters, Sanchez has a "to-do"
list for government:
- Provide incentives to generate new prospects
to find hydrocarbons by encouraging greater use of technology
in evaluating leads and prospects.
- Revisit and strengthen incentives such as tight
- Do not hinder small companies with rules designed
for large companies.
- Establish common sense environmental rules.
- States should offer a stable climate for tax
and government spending so companies can plan ahead accordingly.
"If we are to predict the future,"
Sanchez noted, "we must create it."
-- LOUISE S. DURHAM
the domestic rig count plunged from a high of about 4,500 in 1981
to about 700 in 1986, it never really recovered," noted Dan Smith,
AAPG president, during the APPEX "Power Lunch" presentation in Houston.
"Clearly, we must do something about this."
He presented three key questions that must be addressed
by industry as it strives to meet the exploration challenge it faces
to revitalize domestic drilling activity:
- Who is going to be looking for new reserves 10-20 years from
- What do we do now to have the tools for successful future exploration?
- Where is the money going to come from?
"We must figure out how to do a better job with exploration
to attract the money to find new reserves," Smith said.
"Even at fairly high prices like $30 per barrel and
$2.60 or so per Mcf, most of the money is going for buying and selling
existing production and not exploration," he said. "To increase
the money going to exploration, we must lower the risk."
Now, perhaps more than ever before, "risk" is a four-letter
word of another sort for many financiers who may have capital to
invest because it's been pulled out of the ailing stock market.
Not surprisingly, these and other risk-adverse folks who invest
in oil and gas projects are seeking a safe haven for their dollars
-- read: production.
Smith proposed two solutions to assist the industry
in the quest to lower exploration risk:
- Use the best technology available coupled with basic geological
principals of hydrocarbon accumulation.
- Speed and access to information.
"We're doing a good job of getting better technology
all the time, but there's a reduction in using basic geological
principles such as structure and stratigraphy to interpret where
the good rocks will be," Smith said. "We need to get back to the
There's also a compelling need for better, faster
access to geological data, and the AAPG GIS Initiative for data
management via GIS is tackling this issue head-on.
"We're taking data from all the publications of AAPG,
affiliated societies and government agencies and digitizing them
to use with the click of a mouse," Smith said. "And we're now mining
the data to put them into useable form.
"For instance, we're categorizing the information
into data bases such as fields, burial history, seismic lines, reservoirs,
traps, source rocks, seals and others," he said, "and then we're
georeferencing the data into data bases so someone can access all
the data available for any one locale on the earth."
The sedimentary provinces of the world are color
coded to show the areas with fields digitized to date (500), which
ones contain burial history case studies (700) and available seismic
lines (2,200). A user can click on any area and see what data are
available for a particular field.
To demonstrate, Smith displayed the data base for
Eugene Island Block 330 field in the Gulf of Mexico, which contained
an array of available information. For instance, the burial history
can be pulled up instantly as well as the seismic lines, and users
can even remove the colors to perform their own interpretations.
The GIS Initiative is a partnership of AAPG and corporate
sponsors, according to Smith, who noted the entire industry is realizing
this is an innovative mechanism to provide a faster way to be effective
in finding new reserves.