October 6, 2012
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Home / Issue Archive / 2012 / July - August #7 / EAGE Promotes Basins Approach to Evaluate Offshore Reserves, Insure Sustainability

№ 7 (July - August 2012)

EAGE Promotes Basins Approach to Evaluate Offshore Reserves, Insure Sustainability

   In recent years, the quality of data gathered on Russia's shelf deposits is being regularly questioned. And given the country's dependency on oil and gas exports, the proper evaluation of future reserve, particularly those offshore, is a serious concern.

By Nikolai Amelin, Evgeny Petrov

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   Regional Geophysical Studies is representing a "basin oriented approach" to offshore geological investigation that envisions countries sharing information.  
This "Geology Without Limits" program, for which EAGE has provided information support to its membership,  makes sense considering that offshore fields often cross international borders. For Russia, political demarcation has been an issue in the Barents, Black, Bering and Caspian Seas. And while countries eventually agree political borders, sharing information to better understand the reality underground, could insure sustainability of the resource base to the benefit of all stakeholders -- governments and private companies.

Geological Exploration – Step by Step

   Subsoil exploration to discover new fields and their preparation for extraction can be divided into several stages of geological exploration activities. They differ in terms of scale, objects of study, objectives and expected results (see Fig. 1). This differentiation is primarily needed to determine a rational sequence of issues of different levels to solve, to evaluate performance and the quality of work at each exploration stage and to plan next stages. Each subsequent stage is dependent from the results of the previous one. International experience reveals that a certain order of exploration shortens the time and lowers the costs of finding, evaluating and preparing production fields with a long-term potential.
International practice shows that the average exploration cycle on the shelf lasts 20 to 30 years, which means that all offshore fields needed at least 15 years to complete regional geologic and geophysical work and start test extraction. The opposite is true as well: if some company starts exploring a part of the shelf now, production can start in at least 20 years.
   In some developed countries (leaders of offshore exploration: the U.S., Norway), the exploration cycle is reduced to 10 years due to a wide range of highly advanced technologies.
   The exploration cycle was described in 1935 by Vladimir Kreiter, who was the first geoscientist to develop the procedure for field studies. The suggested exploration order served as the basis for developing a sequence of search and exploration activities in sediment basins. Today, exploration stages look significantly different due to wide variance in characteristics of the sediment basin; major oil companies have their own exploration schemes.
After the adoption of the new Subsoil Law, as well as  of the Statute Concerning the Procedure for the Licensing of the Use of Subsurface Resources and some other new documents regulating exploration work, the existing Regulations  on the Phases and Stages of Geological Exploration Work were revised. The exploration cycle in Russia includes three stages: the regional, the search and evaluation and the exploration and operation stages (Fig. 1).
Each exploration stage gives a more precise localization of reserves, decreases geological and economic risks and increases the possibility of finding an economically beneficial field.
   The completion of all exploration stages allows to meet the minimal requirements for the quality of geological and geophysical information and to decrease drilling risks two and a half to three times. The higher the quality of each exploration stage completion is the lower is the possibility of an error at the next stage.
   The cost of investments at each subsequent exploration stage increases significantly (Fig. 1). For this reason, it is vital to minimize geological risks in order to minimize investment risks.

Investment Issues
   The government’s vital task is to complete the initial exploration stages, because these stages allow to determine the basic approaches to assessing an area’s potential and the expediency of further exploration.
According to the IEA, global demand for energy will be growing by 1.6 percent annually until 2030. To meet it, $1 trillion should be invested into exploration by 2030 ($10 billion per year).
   The leading oil producing countries invest 6 to 8 percent of the value of production into exploration ($5 to $14 billion a year). In recent years, Russia has invested 0.2 to 0.25 percent into exploration and reserves restoration, in offshore as well as in onshore fields.
   In most developed countries, the state participates in the initial exploration stages, i.e. the regional and the search and evaluation stages, together with commercial companies, creating a unified geological databank, which is used by the state to develop the soil usage strategies and by oil companies and specialized institutions to study sediment basins.
   However, in Russia the current legislation grants only the state the right to complete the regional and the search and evaluation exploration stages. Over the last decades, exploration volumes decreased, and current investments into exploration in Russia are not sufficient to duly perform regional shelf studies (Fig. 2).

Perfect Teamplay
   Another effective measure in international practice is to allow commercial companies to perform exploration offshore by licensing geoscience surveys. This allows the state to cut exploration financing while maintaining control; however, currently the Russian legislation does not stipulate any mechanism of issuing licenses to conduct exploration on off-budget funds.
   In addition to regulatory issues, geologic research institutions which have been studying the Russian shelf and waters for many years and know the specifics of the Russian and global waters, are not duly involved in the process. Nowadays, the participation of geologic institutions in the state exploration strategy is zero or very limited, which affects the quality and the amount of information gathered through exploration.
   Having the largest continental shelf, Russia should know exactly on which areas the initial exploration should be focus, have the information about the size and parameters of objects of study and know the aim, the type and the expected results of each activity to be performed. Geologic expediency and ways to achieve the maximum efficiency should be also taken into consideration.
Over decades, specialized geologic institutions have collected large databases and scientific resources related to the Russian waters and world’s oceans and seas.
   Subsoil users participate in exploration as well. Due to insufficient or low-quality regional geologic information, oil companies have to perform the initial exploration themselves, being restricted with licensing barriers. The lack of information about the structure of the sediment basin increases investment risks and amounts.
   In some cases, oil companies and research organizations encounter political barriers. Currently, almost all the world’s oceans and seas are divided between several countries where exploration regulations are very different, which significantly restricts sediment basin investigation in general.

Geology Without Limits
   Shelf exploration should not be limited to one coastal country or to one geologic structure. A basin’s area should be covered by a net of regional geologic profiles; only this kind of research can provide a basis for understanding the basin’s structure and history.
In the authors’ opinion, regional exploration should not be restricted by any boundaries. In the process of scientific research, geographical, political or technical “barriers” have to be disregarded (see Table 1). This will make possible a full-scale basin studies rather than studies of separate geologic objects.
   The Geology Without Limits program unites Russian and international state institutions and organizations whose knowledge and experience are used for the development of offshore exploration projects. The program’s objective is to facilitate international marine research projects aimed at studying and understanding the geologic structure of the world’s basins and the major geologic elements of the crust.
   Based on the analysis of international regional offshore activities, main factors that limit exploration have been defined (see Table 1).
   The result of such investigations serve as a basis for further joint exploration by institutions and organizations from each of the participating coastal countries and help revise the geologic development concept and re-evaluate a basin’s oil and gas potential. Geologic authorities of the coastal countries use the obtained information within their countries’ borders to update, correct and revise their offshore exploration strategies and to consider the licensing of new areas.
Large-scale investigations at the regional level lay the foundation for the increase of oil and gas potential. And in 10 to 15 years these efforts will bear fruit.
   All potential basins are divided between several counties, so investigation would be very limited if every country did it separately. That is why international programs that involve geologic organizations from all coastal countries and study the world’s ocean are the upcoming trend.
   In addition to the practical usefulness of information on the world’s basins, Russia will get a significant advantage in understanding the potential of certain regions. This knowledge will enable the country to plan ahead within the next 15 to 20 years.

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