A Busy Year Gives Way to New Possibilities

Welcome to 2014, where here at AAPG we look forward to a new year of advancing the world of petroleum geosciences.

As you can see from this issue of EXPLORER, focused on world developments, there is a lot happening in the oil and natural gas sectors. And that is notwithstanding the announcements by several companies late last year that they would be curtailing investment activity in 2014.

Global demand for oil remains strong.

The International Energy Agency, in fact, increased its demand forecasts for 2013 to 91.2 million barrels per day in its December monthly market report. And it forecast an additional increase in demand of 1.2 million barrels per day in 2014.

The new annual energy outlook published by ExxonMobil last month also projects significant demand growth in coming decades, driven by increased urbanization and a burgeoning middle class particularly in the developing world.

“By 2040, the proportion of people living in urban settings in non-OECD [i.e., less developed] countries is projected to rise to about 60 percent, up from 45 percent in 2010 and 30 percent in 1980,” according to the ExxonMobil report. “OECD [developed country] urbanization rates are likely to rise to 85 percent, from about 75 percent.”

The demand growth isn’t unchecked, though. In fact, ExxonMobil reports that while total demand is increasing, the growth in demand is actually slowing down. Energy efficiency is a key driver of this trend. And as societies develop and become richer, such as the OECD and now happening in China, the rate of demand growth flattens and stabilizes.

Developing and developed economies alike need energy from all different sources, but oil remains the backbone of transportation and natural gas demand for electricity generation continues to accelerate – it is expected to nearly double between 2010 and 2040, according to ExxonMobil’s report.


It’s not all smooth sailing, of course.

Industry leaders are concerned about accelerating costs, both offshore and onshore. I’ve recently been in conversation with several senior executives who are concerned with the industry’s return on equity – the amount of profit the industry is able to generate, in percentage terms, with the money invested by shareholders.

The oil and natural gas industry always has been capital-intensive, but pushing into ever-deeper waters and fully developing new unconventional plays requires a lot of investment. And delivering a return on that investment is essential to attracting additional capital.

Global geopolitics always plays a role in our industry. And developments – both positive and negative – can quickly affect oil markets and the operating environment:

  • The on-going civil war in Syria continues to destabilize the eastern Mediterranean.
  • Negotiations with Iran about its nuclear program could result in the lifting of some (or all) of the sanctions currently in place against this oil and gas producer, or …
  • The talks may collapse and raise tensions in oil markets.

There are other policy forces at work that could affect oil and natural gas prices. As a Washington Post article on the ExxonMobil forecast indicates:

“Exxon expects governments to impose costs on fossil fuel consumption and subsidize renewable energy in an effort to reduce emissions of gases that scientists say are causing climate change. Exxon expects those costs to be roughly $80 per ton of carbon dioxide – a price that may be explicit in the form of a carbon tax or baked in to the cost of new technology and equipment needed to meet stricter emissions limits.”

Such additional costs are not assured everywhere, but “in one way or another governments will put in place policy that will increase the cost of hydrocarbons, whether it’s on supply or consumption,” says Ken Cohen, ExxonMobil’s vice president of public and government affairs, in the Washington Post article.


These are just a few of the headwinds that our industry may experience in 2014. And without a doubt there will be other, unforeseen issues that emerge in the year ahead and challenge oil and gas operators around the globe – this is not a business for the timid.

But bear in mind this fundamental truth: The world needs the energy that we find and produce.

“Energy is a critical part of boosting prosperity and eradicating poverty,” says World Bank President Jim Yong Kim in the ExxonMobil forecast.

Billions of people around the world need this energy to raise their standard of living. And this demand for energy, particularly oil and natural gas, will be supplied – it will, by someone.

“Wow, it really snowed last night! Isn’t it wonderful?

Everything familiar has disappeared! The world looks brand-new!

A New Year…a fresh, clean start!
It’s like having a big white sheet of paper to draw on! A day full of possibilities!

It’s a magical world, Hobbes ol’ buddy … let’s go exploring!”
– Calvin and Hobbes (Dec. 31, 1995)

It’s time to pull out those maps, sharpen those colored pencils and let’s get busy supplying that demand.

Best wishes for happy and successful exploring in 2014!

Comments (0)

 

Director's Corner

Director's Corner - David Curtiss

David Curtiss is an AAPG member and was named AAPG Executive Director in August 2011. He was previously Director of the AAPG GEO-DC Office in Washington D.C.

The Director's Corner covers Association news and industry events from the worldview perspective of the AAPG Executive Director.

View column archives

See Also: Book

Desktop /Portals/0/images/_site/AAPG-newlogo-vertical-morepadding.jpg?width=50&h=50&mode=crop&anchor=middlecenter&quality=90amp;encoder=freeimage&progressive=true 4461 Book

See Also: Bulletin Article

Predicting the presence and connectivity of reservoir-quality facies in otherwise mud-prone fluvial overbank successions is important because such sand bodies can potentially provide connectivity between larger neighboring sand bodies. This article addresses minor channelized fluvial elements (crevasse-splay and distributary channels) and attempts to predict the connectivity between such sand bodies in two interseam packages of the Upper Permian Rangal Coal Measures of northeastern Australia. Channel-body percent as measured in well logs was 2% in the upper (Aries-Castor) interseam and 17% in the lower (Castor-Pollux) interseam. Well spacing were too great to allow accurate correlation of channel bodies. The Ob River, Siberia, was used as a modern analog to supply planform geometric measurements of splay and distributary channels so that stochastic modeling of channel bodies was possible. The resulting models demonstrated that (1) channel-body connectivity is more uniform between minor distributary channels than between crevasse-splay channels; (2) relatively good connectivity is seen in proximal positions in splays but decreases distally from the source as channel elements diverge; and (3) connectivity tends to be greater down the axis of splays, with more isolated channel bodies occurring at the margins.
Desktop /Portals/0/PackFlashItemImages/WebReady/prediction-of-channel-connectivity-and-fluvial.jpg?width=50&h=50&mode=crop&anchor=middlecenter&quality=90amp;encoder=freeimage&progressive=true 5768 Bulletin Article

Sequence stratigraphy and coal cycles based on accommodation trends were investigated in the coal-bearing Lower Cretaceous Mannville Group in the Lloydminster heavy oil field, eastern Alberta. The study area is in a low accommodation setting on the cratonic margin of the Western Canada sedimentary basin. Geophysical log correlation of coal seams, shoreface facies, and the identification of incised valleys has produced a sequence-stratigraphic framework for petrographic data from 3 cored and 115 geophysical-logged wells. Maceral analysis, telovitrinite reflectance, and fluorescence measurements were taken from a total of 206 samples. Three terrestrial depositional environments were interpreted from the petrographic data: ombrotrophic mire coal, limnotelmatic mire coal, and carbonaceous shale horizons. Accommodation-based coal (wetting- and drying-upward) cycles represent trends in depositional environment shifts, and these cycles were used to investigate the development and preservation of the coal seams across the study area.

The low-accommodation strata are characterized by a high-frequency occurrence of significant surfaces, coal seam splitting, paleosol, and incised-valley development. Three sequence boundary unconformities are identified in only 20 m (66 ft) of strata. Coal cycle correlations illustrate that each coal seam in this study area was not produced by a single peat-accumulation episode but as an amalgamation of a series of depositional events. Complex relations between the Cummings and Lloydminster coal seams are caused by the lateral fragmentation of strata resulting from the removal of sediment by subaerial erosion or periods of nondeposition. Syndepositional faulting of the underlying basement rock changed local accommodation space and increased the complexity of the coal cycle development.

This study represents a low-accommodation example from a spectrum of stratigraphic studies that have been used to establish a terrestrial sequence-stratigraphic model. The frequency of changes in coal seam quality is an important control on methane distribution within coalbed methane reservoirs and resource calculations in coal mining. A depositional model based on the coal cycle correlations, as shown by this study, can provide coal quality prediction for coalbed methane exploration, reservoir completions, and coal mining.

Desktop /Portals/0/PackFlashItemImages/WebReady/accommodation-based-coal-cycles-and-significant.jpg?width=50&h=50&mode=crop&anchor=middlecenter&quality=90amp;encoder=freeimage&progressive=true 5686 Bulletin Article

See Also: CD DVD

Desktop /Portals/0/images/_site/AAPG-newlogo-vertical-morepadding.jpg?width=50&h=50&mode=crop&anchor=middlecenter&quality=90amp;encoder=freeimage&progressive=true 4364 CD-DVD

See Also: Field Seminar

This trip will visit the breathtaking coastal outcrops of turbidites, carbonate platforms, fluvial sediments and pillow lavas along the cliffs southeast of Melbourne. Come scramble down craggy slopes at Cape Liptrap to view superb outcrop-scale fold and thrust structures in Devonian turbidites, then take a 5 km hike along the adjacent coast where Cambrian ophiolites and exhumed amphibolites, faulted against trilobite-hosting Ordovician marls and Devonian reefal carbonates will be revealed. This will be followed by a trip to a site of Early Cretaceous fluvial rift sediments deposited during the initial separation of Antarctica from Australia to open the Gippsland Basin.

Desktop /Portals/0/PackFlashItemImages/WebReady/FT4-The-Gippsland-Basin-hero.jpg?width=50&h=50&mode=crop&anchor=middlecenter&quality=90amp;encoder=freeimage&progressive=true 18997 Field Seminar