Discovery Thinking: Strategies for the Next Decade

American Association of Petroleum Geologists (AAPG)

Deep water and tight rocks.

These terms define most new discovery trends taking place across the globe today, according to Bob Fryklund, chief strategist for upstream at IHS Markit.

Fryklund spends his time working on industry and clients’ “big questions” – studying the future of upstream and exploration and what business models will be the most successful. He also helps companies with portfolio restructuring, leadership mentoring, valuation and deciding where to go next.

He noted how most frontier new ventures today come from deepwater conventional exploration projects, particularly in the Atlantic. At the same time, unconventional tight rocks are gaining ground, offering projects with a shorter business cycle.

Business Models

Fryklund said the current exploration reality means companies must be careful about the business models they will pursue.

“There is a flight to lower cost barrels and barrels whose margin can be expanded with technology or lowering cost via efficiencies,” he said. “So the question is, where does exploration fit in a world focused on short cycle, low cost barrels?”

Fryklund noted that options for exploration have grown, so companies must determine their preferred mix of new venture exploration versus tight rocks and decide how much they will rely on field growth versus organic growth.

The emergence of “super basins” like the Permian leave companies trying to decide what role proven basins play as compared to frontier basins, he said.

Cycles and Strategies

Fryklund divides exploration discovery cycles into “mega trends” and “mini trends.”

Mega trends result from major new hydrocarbon province discoveries like the Brazilian pre-salt, East African deep-water plays and Egyptian carbonate build-ups.

Mini trends occur when geology and available space cap production at five billion BBOE per basin. Examples of mini basins include the Kwanza pre-salt play, Bay du Nord in Canada, Albertine graben in the East African Rift System, Sergipe Alagoas and the Gulf of Mexico Shenandoah play.

Fryklund said companies involved in frontier new venture exploration need to deal with the “mini basin dilemma.”

“Due to (the basins’) limitations, companies exploring frontier mini basins, need to re-think strategy,” Fryklund said, “Go in big and early or pay more to acquire after the basin/plays have been de-risked.”

Over the last twenty years the number of giant fields discovered has waned significantly and the majority of volumes discovered are from gas prone fields. Conventional oil discoveries in 2015-16 might be the worst since 1952.
Over the last twenty years the number of giant fields discovered has waned significantly and the majority of volumes discovered are from gas prone fields. Conventional oil discoveries in 2015-16 might be the worst since 1952.
 

Fryklund said he has seen discovery strategies change over the past two years.

“More companies are rethinking old geologic paradigms,” he said, “How they explore and for what. They are reexamining areas like the South Atlantic margin south of the Walvis ridge, large carbonate build ups and what role proven basins will play.”

These new strategies and business models will shape how industry will operate in the next 10 years.

Sharing Strategies

Fryklund will highlight his finds in “The Future of Exploration – The Next Decade,” a talk at the Discovery Thinking Forum to be held Monday, April 3 at the AAPG Annual Convention and Exhibition (ACE) in Houston.

Discovery Thinking consists of nine talks delivered in two sessions: “New Discoveries in the Western Hemisphere and Gulf of Mexico” and “Significant Global Discoveries.”

The event starts with “Lessons in Exploration Creativity from a Decade of Discovery Thinking Forums,” delivered by Charles Sternbach, AAPG president-elect and forum chair, who started the Discovery Thinking series 10 years ago.

Fryklund said he agreed to participate in Discovery Thinking for two main reasons.

“It fits into my world of ‘What will be the future of exploration?’ and second, as an explorer involved in multiple discoveries including one super giant, it’s good to share with others some insight just as folks did with me during my career,” he said.

AAPG Past President Paul Weimer, Discovery Thinking co-chair, said sharing insight is precisely the point of the forum.

“Exploration geology is a science that, in part, is done by analogy,” he said. “Seeing what other geoscientists are doing in recent exploration can be extremely important in terms of how they might apply their own work. We can never place a value on an idea or what a talk might spark for someone in the audience.”

The Forum

The opportunity to meet and mentor new explorers is what motivates Sternbach and Weimer to organize the forum every year.

“These Discovery Thinking forums are always among the best attended technical sessions at every ACE and ICE,” Weimer said. “Members vote with their feet, meaning there is a clear demand for continuing to organize these sessions because Membership values them.”

They keep a running list of potential talks, speak with people across the world and monitor exploration activities and emerging trends and try to assemble a diverse number of topics for each session.

“Some of the talks have been on our radar screen for a few years, and we have to wait until the companies are in a position to present information,” Weimer said.

That was the case for several of the 2017 talks, which highlight projects in Bolivia, Australia, the Colorado mineral belt, the Utica shale, Africa and Australia.

Fryklund said he hopes his presentation will challenge participants to think differently and challenge old paradigms.

“I would like to stimulate the industry to increase its challenge of old concepts and to take a look at basins as a whole,” he said.

He added that industry’s focus on future science and business models should include a focus on future generations who will make the projects possible.

“We need to become better at selling our role to young people and the importance of the societies and face-to-face networking,” he said. “And we need to encourage the younger generation to ask ‘Why?’ more often.”

The Discovery Thinking Forum will be held at the George R. Brown Convention Center Monday, April 3, starting at 8:25 am.

Slides and videos from previous Discovery Thinking sessions are available online at AAPG Discovery Thinking.

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