Hello, my name is Susan Cunningham. Some of you will know me. Some of you
don't. I'm going to talk about myself in a little bit. But I wanted to, first
of all, start by thanking the AAPG for giving me this opportunity to share some
of the knowledge, some of the things that I've been learning through my 35
years in the oil and gas industry. I'm at that stage where I've just learned so
much. And I really want to help you to-- and see if there aren't some nuggets
that I can share that will be helpful for you as your career continues.
So a little bit about me-- who am I? For those who don't know me, I'm the
middle child of five. I was an alien, an immigrant to the United States from
Canada. So I had some fun with my boys. I have two young boys. Well, they're not
young anymore. But I have two boys. And when they were young, I would show
their friends and them and tell them your mother's an alien. And that, you can
imagine, got all sorts of great response.
Anyway, so I've been in the United States for quite a long time, most of my
career. I've had the real fortune to work in projects and companies around the
world. So there's a couple of pictures that show me in East Africa, where I did
some fieldwork fairly early on in my career, many pounds lighter.
I've also had the opportunity to interact with leaders of countries, connect
with people, and lead, which I love. You're going to hear more about what I've
learned about leadership. And now, of course, I'm really enjoying mentoring and
helping people out to share again what I've learned. And of course, I'm only
talking about the good stuff. There's bad stuff in there. But I'm not going to
talk about it.
So why be in this oil and gas industry? I always start at the top. That's
just the way I work. I want to start with the largest perspective first, and
then I go down into the specifics. So for me, it's always been about-- the oil
and gas industry has been an awesome industry and will continue to be an
awesome industry because it provides reliable, affordable energy to people
around the world.
It makes a difference. It's improved infant mortality, life expectancy, our
health. It's all impacted by what's made possible from having reliable and
affordable energy. So with that rooting, it's also fun.
And I want to talk about what I've learned over my time and my career about
exploration specifically. But this is applicable. These are principles that
I've learned that have made the biggest difference when I had my time with
Noble Energy. I was there for 16 years and learned a lot from what I'd had
before but really was able to contribute in a different way when I was at Noble
in exploration as well as in innovation, many operations, and many other
things. But the point is these principles built and learned through my 35 years
make a difference in innovation.
Innovation is more important, I think, now than ever. The pace of innovation
is accelerating. And so being able to understand how we can harness that and
purposely create an opportunity for us to be receptive to innovation so that
our companies, ourselves, our societies, our communities can really benefit and
So I really wanted to start with-- I've got seven different criteria that I
talk about that I've learned are critical for success. And I'm going to take a
little pieces and tell some stories about different aspects of them. So we're
going to delve deeply into each one. But you can see, it's about technical
excellence. It's about having the right processes so that you can quantify what
your possibility is.
It's about having a relentless focus on learning and really training your
own intuition. And I'll get into that. It's about having an amazing group of
smart people and getting the best out of them and hearing what they have to
offer and therefore the sum of the parts being much better, much greater than
It's about having a deep understanding of how you actually can make money,
how you can make something profitable so that it provides the opportunity and
the wealth and the energy and the products for society. It's about having
alignment with your leaders, with the CEO, with the board, so that everybody
understands what we're about. And then making sure that we have the right
leadership and that we make really good decisions knowing that as human beings,
we're not perfect. We're fallible. But we're learning more about how our brains
work, which we can use to make better decisions.
So I'm going to start really simply, excellent technical work. I think most
of you who are watching are students or recently have been students. Certainly,
as geoscientists, we started with a technical training. And so having that core
technical training is really, really important, having excellent technical
work. But what I've learned through my career is that-- just a couple of
thoughts-- and that is, our maps and the way we look at data are kind of from
the top down. And we look down.
But I have put myself in the opposite, because it's all based on physics.
And it's all based on what happens with a molecule. So I always imagine myself
as the molecule. I am now in the basin and the source rock. Or I'm the water
that's coming in from the surface or coming in from other areas with pressure
changes. I'm that molecule of gas.
Whatever it is, it's basic physics. I'm wanting to go up if I'm a
hydrocarbon. And so I think of myself in the bottom, in the source rock, to
start with that petroleum system and thinking, OK, I'm the molecule. And I'm
looking up. Where am I going to go? Think-- just try it. It really can give you
some different insights.
And another thing with our technical work is multiple hypotheses. This is
really proven to be important because we-- even though we're scientists and we
like to think we know, it's really important to realize that we actually don't know
and that it's our best interpretation, our best assessment, of how the data
comes together is how we create hypotheses.
But it's really important, since we don't know, that we actually understand
that and accept it and therefore look at multiple hypotheses with the data.
It's true to it. Don't get too anchored on one. And that's a hard thing to do.
Our brains really want to do that.
And I'm going to tell a story about after I go through these criteria of
where we actually-- a prospect that I was working on, that my teams that were
working on, this could have really bogged us down. And we could've missed the
largest gas discovery in that year.
So the other thing is the process is to quantify risk. Because we need to
understand what the size and the possibility is as well as the risk of it being
right or wrong with these multiple hypotheses. Most people are pretty familiar
with probabilistic estimations, the Rose approach. And so I just wanted to work
through a couple of the pros and cons about these different things that I've
learned through my career.
When it first started, it was all about gut feel. And it was your
experience. And of course, what ended up happening is that frequently over
time, gut feel is you're more likely to destroy value than create value than if
you're learning, unless you're really learning from everything that you say.
And you think about it. But most people-- most companies didn't. And so the
Rose approach said, OK, let's really be objective. And people were creating
their own processes to be objective in our scientific estimations and our
assessments of risk and opportunity.
And so that's really, really helped. It means that your probability of being
successful in a risked manner is you're going to be more consistent and that
you also have some lows, and you'll have some highs. But if you're rigorously
learning and you're having that objective approach, that's going to serve you
well, both the companies and as a person.
But then one of the things I learned-- and I'm going to digress with a
story-- was that maybe the best is if we can get experienced people to
actually-- they've trained their intuition-- and I'm going to talk about that--
and now contribute how they feel about something, so taking the best of that
gut feel, that experience, as well as that objective process.
So the story is that I was at Noble Energy. And we would look back at our
exploration discoveries and failures. And we would look at them and be very
rigorous about our learnings. We had done the analysis. We were bringing
everybody in. What did we learn? What do we want to do differently? And we did
it on an annual basis. And we did it on a three-year basis.
And when we were looking at the three wet years of wells, I made a comment
that there was a dry hole that I really didn't like. And I said, I really
didn't like that prospect. Now, all the objective processes said it should be
drilled. It fit in with the criteria. It fit in with the portfolio of what we
are trying to achieve. And so we drill it.
And I had not expressed my dislike, because we tend to dismiss these things,
like it's not objective. It's the scientific process. This should be drilled.
But when I reflected, I realized I didn't like it. And I made that comment. And
some of the other people said, you know, I didn't like this one or that. I
said, wait. Let's just hold off. Let's just look back, write down all the
prospects, the wells that were drilled, the successes and the failures.
Obviously, this is on the failures.
Before we reinvent history, let's look back and say, which of these wells--
were there any wells in here that each of us individually didn't like? And so
we did. And we found there were a couple. And so we really talked about it and
ended up realizing that what we had done is-- we did some research on all of
this-- is we had trained intuition. We'd seen so many wells, the prediction and
the results, that we really had been learning and training through this
rigorous look-back process about our brains, about what were the right ingredients
and such that it had become emotional. And that's how our brains work.
And so what we ended up doing was saying, OK, we're now going to not just
look at the objective processes. For our most experienced people that have
trained their intuition and their learnings, we're now going to look back and
say, how does it feel?
So that relentless training and training your intuition, there's a couple of
other things that I've learned that are helpful. And that is that we actually
have biases, cognitive biases, that impact our decision making. And one of the
most important, actually, is that we like the status quo. You can see this play
out in so many different aspects. But I'll focus on what we're talking about
here. But it plays out in society. And we do it. I know I can tell when I do
We think that the way things are now are the best, usually. Or least that's
the way it's supposed to be. So if you're going to be creative and if you're
going to change and if you're going to see possibilities, you actually have to
recognize that that can hold you back. And therefore purposely knowing that,
how do I open myself up to other possibilities? So this is one of the things in
training your intuition that is worthwhile to look at-- learn from that. When
did you open up? When did you see some other possibilities?
We also were very fearful of failure. And so that if there's something new,
new thinking, new possibilities that come into a prospect and opportunity, that
we see the downside more than we see the upside. That's the natural place to
go. And so again, being aware, just stepping back and saying, OK, what is the
possibility? And having each other help each other out with that is also part
of the process and the learning part.
So going a bit deeper into that, I want to talk a little bit about creativity.
One of the main things is that multi-discipline teams-- we all know this is a
complicated business. And finding prospects, developing them, this is not just
about exploration. It works for development of discoveries. It works for
everything, negotiations, so many different aspects. Bringing different
thinking in is really important to being successful and, let's face it, being
better than everybody else-- the company that you're in, being the best.
So I want to talk a little bit about what that takes. There were some
studies that were done in looking at musical Broadway, Broadway productions in
New York. And this is all from a book, by the way, by Jonah Lehrer called
Imagine. If you're really interested in where this goes, I really encourage you
to read it. And these studies that were done looked at these plays, these
musicals from the 1800s through to the '70s or '80s, I believe. And I may have
some of the details wrong. But the basics are here.
And they looked at what was the success of the-- why were some more
successful than others? And one of the things they saw was that the group that
were making up-- that were involved in this production-- it's multi-discipline,
just like in oil and gas. It's complex. It's all focused on figuring something out
and trying to be successful on it. There's risk to it. There's lots of
different aspects. That if a group came together for the first time, they
didn't have much success at all.
And what they found out is, as they studied this, another group that had been
very successful, that had worked together, and then they would think, this is
the incumbent group. This is the successful. They've got a formula. Let's do it
again. I've been through this myself in my career, this thinking. And they
found that fairly soon, that group didn't have the kind of success, either.
And what they learned is that the interactions that people have, it's this
density of connections and these interpersonal social intimacy became really
important. In a group that hadn't worked together, they didn't have it. It was
too chaotic. In a group that had worked together, they had lots of social
intimacy and they worked hard together. They knew how to do that. But they
didn't have any new thinking. It became that status quo.
And so bringing in new people, new perspectives, people that had come in,
therefore, with different experiences, because that's what we're all made up
of, brought in-- and then knowing how to listen and integrate that thinking is
to always be improving, that was the Goldilocks zone, having some new people
in, some new experiences and backgrounds, and then listening and building on it
and involving it.
So that interaction quotient or Q, as Jonah Lehrer likes to call it, becomes
really something to think about, that having 15%, 30%-- those are my numbers
from just my experience in looking at it. But it's more than 10% and definitely
less than 50% is where you want to have the right mix of processes that work
and new thinking.
So I'm also now going to delve a little bit deeper into creativity from
another perspective. And this is with those thoughts in mind about Q. There
were some studies that were done on looking at cities. And what was their
creativity? How did that change over time? And these were cities all around the
world through time. And what they found was that creativity as measured by
patents did change as a city grew. And it grew by a ratio of 1.15.
So per capita growth of creativity, you're getting more out of each person
as the city grows to 1.15. And the reason for this, of course, is that it's
dense. People are interacting. You've got some of that Q coming in. You're
getting different thinking from people that you don't normally work with in
terms of your business that aren't focused on your expertise, and what you
know. And so ideas germinate and grow.
And so as the city grows, that creativity grows. That denseness happens,
that connectivity, that other thinking. Now, of course, not a big surprise,
when they look at companies-- when the companies grow, the creativity goes
down. It actually becomes negative. 0.9 is the ratio of creativity per capita
as it grows. And this is because it's a controlled environment. There's a
hierarchy. There's functions that work together, walls. So you just don't get
this mix of different thinking coming in. You're all focused on one thing.
So then the challenge is, OK, how do you actually create some chaos and
bring some of that thinking in to a company so that it can constantly reinvent
itself? Companies have a lifespan, average lifespan of 45 years plus or minus,
whereas cities, they live a long time. They constantly reinvent themselves. And
that's because they have access to all this creative juice that's out there.
Pixar has done a lot of work on looking at this in terms of creating an
environment and all the attributes so that you have continual creativity and
innovation and reinvention. So if you're interested in that, I also recommend
you read that book because Jonah talks about it. So that's the creative piece.
Now, creativity, as I mentioned, interacts with everything. But you gotta
understand the financials, the regulatory, the environment you're in, the
culture that you're in. To really be successful, you take all that creative
juice from finding the prospects, bringing it all in. You've got to put it in
the business environment. And then you have-- it's like those musical
productions. And then you have your successful outcome, and add value.
So I'm going to just talk briefly from a very simple place. It's the value equation
that you can see. Because we're talking about risk and reward, it's all about
minimizing, understanding, or managing the risk that is inherent as well as
minimizing the failure costs and maximizing that potential reward. So the
reward, when it comes to exploration, is about running room-- I'm going to talk
about Tamar and offshore Israel-- having running room so that if you're
successful with one prospect and you have a discovery, what can you take --
learnings -- and now apply it so that you can have more.
Of course, bringing in more Q, more other ideas in the process and learning.
It's about-- your costs, of course, are seismic and drilling on the exploration
side and then all the development costs that it takes to actually get money to
flow, meaning the hydrocarbons and then the money to flow. And then minimizing
those failures, because you will have some failures along the way. And so you
want to make sure you're working at that.
So looking at how can I be creative? How can I bring these different things
into all aspects of the business? There's a lot that you could do in that
Now, one of the things that we've learned about innovation and creativity in
the oil and gas industry-- what's happened since 2014 when the price crashed.
Unconventionals had taken off. Lots of money poured in. Lots of capital came
into the system. More companies actually were created. And actually, financial
returns, believe it or not, were worse. The higher the price, the worse the
financial, once it gets to a certain point. Returns can be when it gets this
hot, as it was prior to 2014.
Everything crashed. And you can see the break-even costs. It's something
that we started to talk about, the diagram on the right. They came down by
year. As you can see, they've improved from 2014 and on down. And then we've
gotten more nuanced. And this is, of course-- the break-even price is at what
price can you actually make money with the systems and the costs that you have?
So it's a moment in time. And so that's why the break-even price, of course,
reduces by year as we got more inventive and more innovative and really focused
on making it profitable at a lower price.
And then, of course, we got more nuanced in looking at understanding that
unconventionals-- there are different geology in those basins and with the
current technologies and where we see things going, that depending on the
price, you're going to be able to produce different parts of it. So it became
more nuanced as we learned. This is all about innovation that gets us there.
Costs have come down. Another thing I've learned as I've been in my career--
I've seen several ups and downs and crashes. And I've learned on the offshore
side of things. I've been through enough of these cycles to recognize it takes
four to five years before the innovation and the costs and everything, the
changing the models of how we think improves. And it takes about a five-year
lag. And the onshore unconventional, that actually became about six months to a
year that people-- and you could see those prices coming down, break-even
So now we're about five years after everything kind of crashed. And now the
offshore has become very competitive with the onshore opportunities. And so
we're in this great competitive space. A lot of innovation has happened. And
now what can we do to continue and go on from there?
Also in the whole financial side of things, another couple of things that
I've learned that usually isn't talked about-- we tend to think that the supply
demand is what it's all about that drives price. Couple of other things to
think about. Actually, that graph on the left shows there's actually a direct
inverse correlation of oil price with the strength of the US dollar. So if you
see the US dollar going up or down in strength, that's going to tell you
something about where prices are likely to go, as well as interest rates.
One of the reasons why we had so much money and the prices rose and so many
companies were involved was also because we had low interest rates, so there
was a lot of capital available of people wanting to create more value and get
some more higher return from the onshore shorter cycle opportunities that they
saw in North America.
And then I'm going to move on now to the strategic alignment and leadership.
Now, this is really important, because being in a situation, leading your
group, being in a team, being in a company that has alignment of where you're
going is also important. And that challenge of meeting demand-- this is a graph
that you can see by Woodmack, of what the growing demand is, so demand for
hydrocarbons, certainly energy. And it will be hydrocarbons in the shorter
term. And who knows how that's going to work out?
But right now, we are going to need more hydrocarbons. There's been less
capital invested over the last four years. And so now we really need to bring
those creative juices, create big goals, and challenge the status quo about how
we can meet the demand.
Tamar, Leviathan, offshore Israel-- there are so many lessons. I'm going to
use this as an example of these different criteria, these different aspects
about successful exploration and being successful and ultimately, therefore,
making money and growing the opportunity for people is it took several
different aspects. First of all, was setting a big goal. That goal-- I've
talked about it before. Some of you have probably heard about it. But it was
quite a long time ago. I really wanted to grow exploration at Noble. And I
wanted to set a big goal to see what we could do. Because if you're going to do
anything, you might as well do it big and bold or why bother.
So I decided to set a big goal for the company to find a billion barrels of
oil equivalent in five years net to the company. And at the time, we were
finding 35 million plus or minus, so this was huge. It scared the hell out of
me. I did not know how we were going to do it. But that was the point. Because
by doing something big and bold and setting it out there, you've got to get
people's thinking involved in it. You've got to listen. You've got to bring
involvement in and help each other figure out and change the status quo
thinking and see the possibilities and not just go into the downside and those
cognitive biases. So many aspects that goal gets in alignment on something.
In the end, we actually found two billion. But that's not what the story is
about. But I'm going to talk about offshore Israel because we would never have
had the success that we had there, Israel would not have cleaner air there if
we had not set up this goal and decided to do things differently.
And so we saw an opportunity in Israel. And it was one prospect called
Tamar. Now, Tamar was a prospect that had been figured out by British Gas, BG,
and Delek, an Israeli partner that they had. They couldn't get anybody to farm
in. BG wanted to get out for a variety of reasons. And Delek wanted to get it
drilled. They went and asked a lot of people, a lot of different companies.
Nobody was interested in it for a variety of reasons.
And then Noble Energy, some people that worked for me, saw the opportunity.
Now, they decided-- initially, when they looked at it, were already in Israel
with one Tcf field-- that it was highly unlikely to be as good as it looked.
And this is kind of that status quo fear of the unknown, fear that it's going
to go negative. And so they basically said, no, this is a volcano. This is
not-- remember, I talked about multiple hypotheses. They thought this bump was
likely to be a volcano, not an anticline.
And so they were concerned that it wouldn't be-- it was going to be too
risky. And it wasn't going to be successful. So with some trained intuition of
some other people that had seen lots of things around the world through their
careers, the opportunity came to some others, and they saw it. I saw it and
said, oh, my gosh. This is something we've really got to take a hard look at.
So knowing that we've got to bring different thinking in and not knowing it
was Q at the time, I brought in some people that had worked on it, knew the
area, and then some others that had not worked in Israel, weren't familiar with
the thinking in this area at all and weren't involved prior, and got them
together to assess what the possibility was and what the risk and the reward
going through an objective process would be.
So we had to overcome some of these cognitive biases of the status quo and
confirmation, because there was a lot of concern still that, OK, this could be
an anticline, multiple hypotheses. But it's high risk. It couldn't possibly be
a low-risk prospect. Lot of stories behind of all of those. We're not going to
talk about it right now. But in the end, bringing different thinking in,
challenging our thinking, realizing that we tend to put higher risk on the
possibility than it was, because of this anchoring, we finally came to a place
that said, OK, this is something we want to participate in.
Now, we also wanted to have running room, because that big goal-- if there
were more things like that in the area, we also knew we wanted to get more
acreage before we drilled it so that we could see if there was something more
from there. So the leadership and the decision making of how we approached it
strategically became very important.
What ended up happening was Tamar was drilled. It was a discovery in 2009,
10 Tcf, the largest gas field in the world that year. And then the next year,
we drilled one of those follow-up running room prospects, which was called
Leviathan, which is 22 Tcf and I think still has the possibility potentially to
be bigger. But that's just me. That's not the official number. And that was the
largest gas field in a decade. 12 exploration appraisal wells were drilled, no
dry holes, and 40 Tcf of natural gas were found.
This has transformed the country of Israel. It will continue not only their
air to be cleaner because they were using coal and diesel fuel for their power
plants, but it's also-- they're exporting. They just got approval to export--
Noble did-- to Egypt and to Jordan. There's been exporting. So it's now, for
the first time, a totally different-- they have a totally different way of
thinking about themselves as a country. So again, wow, the things that we do
and the impact it has that we have no idea.
Tamar started flowing four years after discovery in 2013. It currently supplies
60% of Israel's power generation. And it's clean. It also uses the longest
subsea tieback in the world, 90 miles. These are all examples of innovative
thinking to get to these points. So it's not just about exploration. It's also
Leviathan is on target to be-- from everything I've read-- is on target to
start production at the end of 2019 with the ability to flow 1.2 Bcf a day.
Tamar is flowing 900 MMcf per day. And it will be able to double that fairly
soon if they do another upgrade.
So what did this take? It took innovative thinking. Some more lessons from
Tamar and from Leviathan-- at the time, before we decided to drill it, we
didn't know, as I mentioned, what the structure was. Was it an anticline? Was
it a carbonate buildup? Was it a volcano? We didn't have enough data to know.
We had seismic-- not as good as you'll see there, but we had seismic that's
The reservoir-- there was no reservoir that had been penetrated in that
area. So we didn't know what that was. We brought in analogs from the Gulf of
Mexico. The petroleum system-- we had no idea what the petroleum system was. We
had to think about the molecules. Where could the gas be coming from? And you
know, that looking up. So the country really didn't have a regulatory system.
They weren't used to this sort of thing at all. So we had to be innovative and
think about how do we interact with this very different culture and this very
And we made some mistakes. And we made some great things along the way-- we,
being Noble Energy. I'm talking like when I was there. And then of course the
development plan and bringing it to market, all of this took great thinking,
great people committed to doing something and making a difference and being
So in conclusion, I just want to kind of bring it back. Those different
ingredients-- and this is true for innovation, being open to innovation in your
companies. So I don't want it to be just about exploration. Geoscientists that
are watching this, you are creative. This is the juice that makes a difference
for possibility. Now, others are creative too, obviously. But there's something
about the geosciences. We delve in. We parlay in risk and possibility and
And so being receptive, creating that, being receptive to it, understanding
our cognitive biases, bringing these different attributes of different things
that you can think about in terms of how do we purposely build creativity, how
you continually reinvent, how do you train your intuition, how do you interact
with people. This is what connecting and working with really smart people--
this is what it takes, that whole brain. If you don't have it-- and none of us
really do. Certainly, we could bring in aspects. But bring a team that brings
it together and make a difference and provide energy for the world. And what
could be better than that?
So I'd like to thank, again, AAPG for this great opportunity to share some
of the things that I've learned. And I hope you've gotten a few insights out of
them, some things to think about. And I'd like to thank Noble Energy, even
though I don't work for them anymore. I've used public data. So there's no
issues in that at all. But I had great opportunities working with lovely,
wonderful people. And I want to thank them for that opportunity so I could go
and share what I've learned.