New Mexico State Geologist and prominent AAPG member Pete Scholle recently took a group of state lawmakers out to visit an active drill rig with the laudable objective of educating them on the expense and difficulty of finding oil and gas. After looking at the bubbling mud pits, the rotating drill string, and the array of expensive heavy equipment, one member of the delegation asked how much oil would be found by this well.
Silly question, of course, and on being told that the answer was “we won’t really know until we get there,” he apparently replied, with some puzzlement “What kind of a business model is that?” What kind indeed? Such uncertainty in a model is unacceptable to most professions, yet industry geologists deal with it all the time.
Our industry, like many others, uses various types of models – business models, reservoir-engineering models, and geologic models – and although they are important, they should not be confused with reality. The lawmaker’s comment brought to mind Wallace Pratt’s 1952 paper “Toward a philosophy of oil-finding,”* recommended to me not long ago by Ted Beaumont, former AAPG Science Director, AAPG Secretary, and all around gentleman.
Pratt’s thesis was that exploration geologists need to create and use conceptual models that account for the unknown. This sounds hokey but Pratt had an intriguing and valid point. The belief that being knowledgeable will account for all facets and parameters of a problem can obscure significant possibilities. By way of example, Pratt pointed out that the conceptual models used to calculate oil reserves during the early part of the 20th century consistently gave estimates that were significantly below reality because the then-current geologic knowledge and models were not recognized as woefully incomplete.
An interesting facet of modeling is the disparity between the imprecise nature of geologic data and the discrete input requirements for most models. For example, natural-fracture populations typically consist of fractures with wide ranges of heights, apertures, spacings, and lengths, whereas most reservoir engineering models require uniform input values for these parameters. I used to make excuses for such variability until I finally realized that geologic measurements are reality, and that the inability of a given model to accommodate reality is a limitation of the model, not a geologic deficiency.
As an organization, AAPG uses a mixed model consisting of paid-staff and volunteers. This means, among other things, that as much as I would like to, even as president I can’t tell anyone, especially the volunteers, what to do. Moreover we use a not-for-profit conceptual model, yet the reality is that we cannot operate at a loss. We try to plan AAPG programs and activities such as education and publications to at least break even. The AAPG Education Department has worked with several models over the years, and we have managed to irk different people no matter what we do. Should we strive for inexpensive, affordable classes, allowing as many members to participate as possible, or do we hire expensive instructors with polished materials and charge students accordingly? Given that two-thirds of our members are either consultants or work for companies with less than 200 employees, the former model makes sense. On the other hand, as measured by the number of very capable companies making a living providing high-end education and training, geologists working for the larger oil companies provide a continuing demand for this service.
The AAPG Publications Department also uses an interesting model. AAPG publications do not have to turn a profit in the commercial sense, thus they can be priced relatively inexpensively, especially when corporate donations help defray publications costs. We try to price AAPG publications so they are affordable to members but also so that the returns from sales cover the cost of publication within a few years. The Publications Department is a designated “profit center” within AAPG, but that only means, if and when the cost of a book is amortized, that profits from sales are used to cover other AAPG programs. No one is driving a Porsche as a result of profits made from the AAPG education or publications programs.
Models are useful because they provide an outline, a standard by which to measure activities, progress, and concepts. But one must always be aware that they are only a representation of reality.