More thoughts on the "Ten Habits"

Our popular April 2012 blog entry, "The Ten Habits of Highly Successful Oil Finders" has received some positive press lately.  As the basis of a talk, the habits were presented at the AAPG Playmaker Forum in Houston this past January, and were also covered in the Houston Chronicle. Now, we are honored to report that the habits, as conceived by Dan Tearpock and colleague Bob Shoup, are featured in the March 2013 edition of the AAPG Explorer.

In the article, SCA Founder and Chairman Emeritus Dan Tearpock delves further into the value and importance of what is also referred to as a "philosophical doctrine" guiding his and his company's professional activities.  We invite you to review some excerpts (please see the full article here):

"Developing a successful product, i.e. good prospect, is only part of the value of the 10 habits; they can be used in both directions. 

'If you drill a dry hole, the company asks what went wrong and they may hire an expert to come in and reverse engineer the prospect, tear it apart to find where the mistakes were to cause a dry hole,' Tearpock noted.'We call this step forensic geology. 

'They may find you didn’t use the 10 habits correctly, so you made a mistake in interpretation and drilled a dry hole. 

'That’s the marvelous aspect of this philosophical doctrine and the habits in it,” he said. “It can be used both ways. 

'What some people do is when they drill successful wells, they tear them apart and see what the team did to drill this successful well,” Tearpock said. 'They use the habits again to go in and see what they did and then find they pretty much followed a philosophy similar to these habits – and that’s why they had success.'

Tearpock is quick to note that this philosophical doctrine is not exclusive to SCA. 

'Some people have come up with these habits on their own,” he said, “and I don’t know how many.'

He also cites a real-world example from his own experience leading SCA:

"SCA sent out three teams for four months and evaluated a hundred proposed prospects, along with some of the dry holes from earlier. They determined what the explorationists were doing wrong. 

'For the most part they weren’t using the habits at all, except for the European division working the North Sea, which was running at an 85 percent success rate on exploration prospects,” Tearpock said. 

'This group had a 150-page manual that was literally like taking our 10 habits and expanding on them to a great degree. 

'We found that the VP of exploration and several other explorationists there had come from the company that originally conducted the study of why certain people and teams are more successful than others,' he said. 

'They brought that knowledge with them to their new company, put it into practice and showed the success it can provide' Tearpock noted."

We are pleased that the Ten Habits continue to inspire discussion. Are there examples you can share of when the application of the habits or philosophical doctrine has contributed to exploration success in your professional life? Or alternatively, when neglecting the habits has resulted in dry holes or less successful results?

Resume Content for Oil and Gas Professionals - What Makes the Cut?

This is the second of a series on effective resume preparation by SCA's upstream oil and gas recruiter, Mark Connor. This and other timely articles pertinent to upstream professionals may be found in the latest issue of SCA's 4th Qtr GeoLOGIC newsletter. 

Mark Connor

Resumes have evolved significantly over the past 20 years, due in large part to the arrival of the Computer Age and, more recently, the social media revolution. Gone are the days when a resume would be printed on parchment quality paper and “snail mailed” to a prospective employer. In today’s job market, a resume is a digital document, formatted as a Word or .pdf file and attached to a “cover letter” email. In all probability, the resume itself will soon be a thing of the past as companies begin to explore the potential of “Profile Pages” offered by websites such as Linkedin, and even video resumes, giving applicants a chance to sell themselves and their backgrounds in a short video clip.

But, for the time being, the resume still has its place in the hiring process and the information it contains needs to be more concise and accessible than ever before. As discussed in our previous article, it is important to keep in mind that your resume is likely to be screened by several people before any interview is arranged, so information should a resume include?

Traditionally, a resume can contain information that is unnecessary and even detrimental to your chances of being selected for interview. Information such as marital status, names and ages of your children, religious or political groups, your hobbies or even the current status of your health are facts that you may feel proud to disclose, but are of little interest to a Recruiter trying to determine your technical abilities. Personal statements can also be a minefield – your own opinion regarding your work ethic, mentioning the fact you always give 110% and that you are “equally capable of working alone or as part of a team” does little to separate you from other applicants making the same claims. For consulting positions in the Geology, Geophysics and Reservoir Engineering community, there are only three key pieces of information that Recruiters are looking for:

•  What are your areas of specialization with your technical discipline?
• What areas of the world have you worked?
• What software are you capable of operating

When companies request a consultant, they typically have a specific problem that needs to be resolved. It is likely to be project specific and have defined technical deliverables with the tasks performed on whichever software the company uses. No learning curves, no training - Hiring Managers need a fully qualified and uniquely experienced expert to “hit the ground running." Managers approach specialist consulting companies to identify the right person because they know that the Consultant will be screened, vetted, interviewed, and referenced before a resume even reaches the hiring managers desk.

A good resume containing the right information will allow a Recruiter (and, later, a Hiring Manager) to identify your suitability for a specific assignment almost immediately, so focus as much of your resume as you can on the three key areas above. Keep it factual, objective and detailed enough to supply sufficient evidence that you can provide the solution to the company's problem.  Recruiters want to place consultants just as much as consultants want to be placed, so make sure the information is easy to access and Recruiters and Hiring Managers will be able to match you to your next consulting assignment time and time again. 

Exploring the Ten Habits - Habit Two: Knowing the Tectonic and Depositional Environment

by Bob Shoup

In SCA’s ongoing blog series highlighting, "The Ten Habits of Highly Successful Oil Finders" we are now featuring Habit Two:

Successful oil finders have a strong background in geology, and have a thorough knowledge of the tectonic and depositional environments for the area in which they are working.

Just as a strong foundation is essential to a good house, a strong background in geology is essential to being a successful oil finder. For most geoscientists, that foundation is set in school and augmented in the early stages of their career with corporate training. Unfortunately, for all too many in the industry, this is the extent of their geologic training.  

Just as a well built house requires periodic maintenance to stay structurally sound, a long-term successful career as an oil finder requires continuing education. Our industry is rapidly evolving, and it is essential to stay in the know on new trends and technology. After all, how much did the majority of us know about the potential for developing hydrocarbons from shale when first starting out? Additionally, continuing education is critical when moving from one geologic setting to another.

Take for example the case of an experienced geophysicist, who shall remain unnamed. He had almost 20 years experience exploring in and mapping growth fault-related plays and prospects in the Gulf of Mexico. He was known to be a successful oil finder. But then he was transferred to a position in the North American fold and thrust belt. His first assignment was to explore in a complex thrust belt known to have fault propagation folds as the main structural style. This geophysicist had little if any training in fold and thrust belts, but being known as an oil finder, he was expected to succeed in his new assignment. 

In this assignment, the geophysicist analyzed the geology not from a fold and thrust perspective, but from the extensional perspective he was familiar with. He mapped the key faults with listric geometry with hanging wall rollovers that have insufficient normal displacement from the structure (Figure 1A). The vertical separation is too small to make a rollover with that much structural relief.  In addition, the downthrown side is higher than the upthrown side.

Also note that the faults associated with this fold belt are fault propagation folds. Kinematically, they propagate upward from a decollement, causing the beds at the front of the fault tip to bend or kink forward. The fault has more of a planar shape ramping upwards, often from the flat of another major fault surface (Figure 1B).

Due to using an inappropriate structural model, the interpretation was incorrect and the prospective structures were in the wrong position: dry holes waiting to happen. His colleagues challenged the resulting interpretation and maps. An audit found over 100 mistakes and mis-ties.

These career-jeopardizing mistakes could have been avoided if the geophysicist had obtained additional training. Who should have been responsible: management or the geophysicist? One could argue that the company should have seen to it that their employees had the appropriate structural training for the area in which they were assigned. However, successful oil finders should take it upon themselves to ensure that they have the appropriate knowledge of the tectonic and depositional environments for the area in which they are working. This may require several additional training courses, as well as some applied mentoring before the geoscientist goes off on his or her own.

Are you seeking to learn more about specific geographic regions or deepwater reservoirs? Do you need to refine your knowledge of seismic sequence stratigraphy or structural styles? SCA has an exciting training line-up featuring short courses tailored to the requirements of upstream professionals.  Review our training calendar and take the next step towards ensuring your oil finding career is a successful one for many years to come.

The Resume as Glorified Business Card: Tips to Upstream Professionals on Landing an Interview

At SCA, we not only provide consulting and training services to the upstream oil and gas industry, we also assist in screening and recruiting direct hire candidates. Recruiter Mark Connor has put together some tips for prospective candidates on landing an interview with your employer of choice.  In this first installment of a two-part series, he describes the essence of an effective resume and the different audiences with whom you must be prepared to communicate. This article and more can be found in the latest GeoLOGIC Newsletter, now available for download here. 

SCA's Mark Connor

Drilling Engineers have a tendency to get straight to the point, and it was a Drilling Engineer who summarized the essence of a resume to me in four words – “A Glorified Business Card”. A business card is a few square inches of space in which a professional is required to sum themselves up as concisely as possible, so what information makes it on there? Your name, job title, company and contact details. Nothing else makes the cut. A resume is intended to relate the same core information, albeit in a little more detail - but where a business card is an effective tool to use when making a new business contact, what is the real purpose of a resume?

One vital misconception regarding the role of a resume is that a resume will get you a job. In reality, your goal when writing a resume should be to get an INTERVIEW. Your success in a job search will hinge on your interview and a well written resume will get you that interview. With that in mind, resumes should contain enough information to catch attention and get you in front of a decision maker.

A second misconception regarding the resume is that it WILL be evaluated by the hiring manager. In reality, the resume will more than likely be assessed by at least three other people before it reaches the decision maker, and those other people are unlikely to be from a technical background. Consider the following scenarios.

•        You are acquainted with the hiring manager and you send your resume directly to that person. In this case, the likelihood is that the manager will already be aware your abilities and the resume acts merely as a formality.

•         You deal with a specialized Recruiting/Consulting firm. These companies deal with Hiring Managers day in, day out and they have a deep understanding of the technical areas they deal with. A Professional Recruiter may not be from a technical background, but they are able to look past “key words” and understand the nuances of your technical abilities and how they relate to their client’s needs. A recommendation from a specialist Recruiter can be extremely effective in gaining an interview.

•          You deal with a generalist staffing company that has international clientele but no true specialization. These companies often have access to every vacancy that their client has open, so they work on many unrelated job openings every day. The key word search becomes a factor in resume selection and an understanding of technical suitability becomes limited.

•          You “apply online”. Regularly described as “black holes”, web portals do an excellent job of tracking applications but it is extremely difficult to influence the selection process.

So, considering the above scenarios, how should you approach resume preparation? It needs to appeal to different audiences. A resume should contain easily identifiable key words and a sufficiently simplistic breakdown of your job role to be understood by a Recruiter. However, it also needs to be detailed enough to inform a Hiring Manager that you are capable of performing the duties required. It requires a delicate balance but in order to be successful in a job search, your resume will need to convince more than just the Hiring Manager that you are the right person to call in for an interview.

SCA Welcomes Bob Shoup

(From left to right) Dan Tearpock & Bob Shoup
in Thailand, 2009

Subsurface Consultants & Associates, LLC (SCA) welcomes Robert “Bob” Shoup to its consulting division, in addition to his existing role as a member of SCA's training faculty. Bob is a Board Certified Petroleum Geologist with over 30 years experience in basin analysis, regional studies, new play generation, prospect evaluation, field studies and development planning, drilling operations, and project management.

  
Bob and SCA’s CEO Dan Tearpock, longtime friends and colleagues, plan to leverage their combined expertise and Bob’s extensive network in Southeast Asia to grow SCA’s presence in that region.

Bob began his career at Shell Oil in 1980, followed by four years working for private oil companies before becoming an independent consultant in 2003; consulting in Thailand, Malaysia, Vietnam, and New Zealand. Bob is a proven oil finder with a 46% exploration success rate and over 100 MMBOE discovered resources.

Bob is a recognized expert in clastic depositional environments, rift basins, and syndepositional structural systems. He has served in leadership capacities and on numerous committees with the AAPG and is a past president of the Division of Professional Affairs, organizations from which he has also received multiple awards and professional distinctions. Not only does he excel in the oil and gas industry, he is also a recognized author: in 1994 Bob was a nominee for the Pulitzer Prize in drama for his play, Second Alarm.

In March, Bob presented SCA’s first ever “Applied Problems in Interpreting Clastic Depositional Systems” course to much success at SCA's Houston, TX training facility. The course is scheduled to be repeated in Perth, Australia this coming December 10-14, and is available to bring in-house on demand. Bob is also slated to teach upcoming sessions of one of SCA’s most popular courses: Applied Subsurface Geological Mapping. See SCA's 2012 Training Calendar for more details. 

Dan Tearpock honored with DPA Heritage Award

Daniel J. Tearpock, Chairman/CEO of Subsurface Consultants & Associates, LLC (SCA), was recently honored by the AAPG Division of Professional Affairs as the latest recipient of the Heritage Award.  The announcement was made at an awards luncheon on February 29, 2012 at Del Frisco’s Restaurant in Houston, Texas.  The DPA Heritage Award honors an individual in the oil and gas industry who is generally known for substantial industry contributions, including significant discoveries, business accomplishments, and/or work in academia and publishing. Award recipients are selected based on having built a reputation for success in the industry, and having taken a proactive role in passing on their knowledge and experiences to the next generation.

The Heritage Award was first given to Michael T. Halbouty (deceased) in 2004. Other past recipients include such industry luminaries as Robert D. Gunn (2005), William L. Fisher (2006), M. Ray Thomasson (2008), and John J. Amoruso (2009). This year’s award was based in large part on the achievements of the company founded by Mr. Tearpock in 1988, Subsurface Consultants & Associates, LLC (SCA). SCA’s record of industry success includes consulting assignments with over 350 companies across the world resulting in the discovery and/or development of over six billion barrels of oil equivalent. SCA has also trained tens of thousands of students in a wide variety of upstream course offerings. Further signaling his commitment to training and education, Mr. Tearpock’s numerous articles and published works, including Applied Subsurface Geological Mapping (1991), Applied Subsurface Geological Mapping with Structural Methods (2003), and Quick Look Techniques for Prospect Evaluation (1994), are widely-used and respected industry references.

From left to right: Daniel J. Tearpock and Marty Hewitt

Upon bestowing the 2012 Heritage Award, current DPA President Marty Hewitt remarked, “Your business not only with SCA, but your leadership with the DPA and AAPG has taken this award to a whole new level.”

Reflecting on this honor, Mr. Tearpock commented to the assembly, “One of my goals was to do something significant for the world.  At first I thought I could find that billion barrel field, or find some new energy technology to help people…It ended up being training and consulting.  We’re now at over 23,000 people that we’ve trained, and the people we’ve trained are all over the world finding oil and gas.  Our consulting company has helped people find and develop over 6 billion barrels of oil equivalent.  So in a roundabout way, I was able to accomplish what I set out to accomplish in life…I could not find a better group of friends and associates than I have found working in the oil and gas industry.”

More about Daniel J. Tearpock:

As a working geoscientist, Mr. Tearpock has generated numerous exploration and exploitation prospects, either as the sole generator or as part of an organized multidisciplinary team. Mr. Tearpock was a finalist in 1996 and 1998 for the Ernst & Young Entrepreneur of the Year program and in 1998 received the Distinguished Service Award from Bloomsburg University, Bloomsburg, PA. He holds a Bachelor’s degree in Geology from Bloomsburg University, 1970; and a Masters in Geology from Temple University, 1977. He is a (AAPG/DPA) Certified Petroleum Geologist No. 4114, State of Texas Licensed Geologist No. 2660 and (SIPES) Certified Earth Scientist No. 3015.

Mr. Tearpock is a member of numerous associations including the AAPG, SPE, SIPES, SEG, GSA, HGS, EAGE, NOGS, LGS, IPA, SEAPEX & PESGB. He is the past President of the AAPG’s Division of Professional Affairs (2011-2012). He is a founding member and current Chairman (2011-2012) of the intersociety “Joint Committee on Reserves Evaluator Training” (JCORET). The member societies represented on JCORET include the AAPG, SPE, SPEE, SEG and WPC.

About SCA

Subsurface Consultants & Associates, LLC (SCA) provides superior upstream consulting, direct hire recruitment, and geoscience and engineering training to stakeholders in the oil and gas industry.   Find out more at www.scacompanies.com

To view a video of the DPA Heritage award presentation, please visit SCA’s Upstream Petroleum YouTube Channel. 

Some perspective on the relative cost of gas

As reports on the rising cost of gas once again capture news headlines and ignite debate, it's a good time to take a closer look at gas price relative to other products in common use.  Even if prices reach $4 a gallon, gas is a bargain compared to most other consumer products.  See the graphic below for a powerful visual.   What other products do you think it would be fun or interesting to compare?

Hat tip to The Big Picture and Flowing Data.

It's People, Not Workstations

The following article by Daniel J. Tearpock was initially published in the GeoLOGIC, a quarterly publication of Subsurface Consultants and Associates, LLC.

We invite you to give it a read, and then return to these questions: What steps does your organization take to mitigate the risks of relying too heavily on workstation technology? How do you bring freshly graduated geoscientists and engineers up to speed on tried and true best practices?

“IT'S PEOPLE NOT WORKSTATIONS” 

It is a known fact that “People – Not Workstations” find oil and gas. However, there is no doubt that  today's workstations and computers are powerful tools for use in our quest for finding and developing oil and gas resources. Workstation technology allows: 

1. Effective integration and analysis of available data;
2. Fast application of alternate ideas;
3. Global or remote site integration;
4. Multidisciplinary integration.  

While acknowledging the benefits of workstation technology, do not overlook the danger of relying too heavily on these tools. In the hands of an interpreter inadequately trained in the fundamentals of geoscience and engineering, who is unfamiliar with the application of long-standing industry accepted practices, one can arrive at a wrong and very costly conclusion at the push of a button, resulting in another dry hole or even worse. 

Have we learned from the past? A successful oil and gas exploration and development program cannot exist in the long-term on luck and serendipity. There are many factors that underlie success. However, I don't think there would be too much disagreement that long-term success is the result of the application of sound geoscience principles by knowledgeable, well trained interpreters. Interpreters must have a sound background in structural geology, stratigraphy, sedimentology and other related disciplines for the tectonic setting being worked. After all, the interpreter must know when a computer-generated map makes geologic sense and when the result is garbage!!!

The Great Crew Change in the Oil and Gas Industry

The following post is taken from an article by Subsurface Consultants & Associates' Senior V.P. of Operations, Hal Miller. It was originally published in The Correlator, a publication of the Division of Professional Affairs of the American Association of Petroleum Geologists, and later in SCA's GeoLOGIC Q3 2011 newsletter.

With recent reports that the economy is back on the upswing, how do you see that affecting both the availability of experienced, senior-level geoscientists and the demand for their consulting services?

How is your business preparing for the Great Crew Change?

Changing Crews in the Middle of the Global Recession
By Hal Miller

The oil and gas industry has been fretting about the imminent loss of oil finding and producing talent for years now. The generally acknowledged passage of the baby boom demographic bubble, those of us born from 1945 to 1964, into the retirement window is impacting all industries but is especially exaggerated in the oil and gas business due to slow hiring in the 1990s. The resulting dearth of mid-career, up-and-comers available to replace the retiring management teams and to ease the loss of oil finding experience is a continuing source of conversation and concern. Geoscience and engineering consulting service providers are well positioned to be a “finger-on-the-pulse” of the demand for and supply of these skills. Indications are that the current environment has softened the blow that could have occurred had the mass exodus of experience actually occurred as predicted.

Many geoscientists who have recently taken advantage of retirement opportunities remain in the workforce, some entering the consulting ranks for the first time. One could argue that in some respects the global recession came at a good time, as the dramatic shrinkage of retirement accounts has caused many geoscientists to alter or postpone their retirement plans. The reality of full or even semi-retirement at age 55 or 60 does not seem like such a good idea for many when there is a reasonable probability that their suddenly diminished retirement nest-egg will need to last for another 25 years or more. Perhaps those of us now facing the prospect of having to work a little longer should have saved (or lived) a little harder, but from an industry perspective this appears to be a good thing. Beyond the revised retirement plan factor, most geoscientists with oil finding in their blood are not happy sitting on the sidelines for long, especially when the demand for their skills and experience remains reasonably strong. Not as strong as it was in 2006 perhaps but companies are still hiring more than firing. Even the demand for entry level staff appears to continue at a moderate pace; hopefully a sign that the industry and academia are finally approaching the steady state equilibrium that allows geoscience departments to provide an optimal pool of new grads to supply the industry’s needs. At the very least it appears that employment prospects for oil and gas geoscientists are more optimistic than for the US national workforce in general.

In the consulting business, demand for senior geoscientists with specific skills and geographic experience to supplement in-house teams and mentor new employees has remained steady. The positive oil price environment is attracting large amounts of investment funding from within and outside the US, stimulating development of many new start ups and expansion of existing players, all in need of experienced staff. Seasoned consultants who have seen the globe and know where and where not to find hydrocarbons fit nicely into roles with these companies. Many of the majors and large independents significantly reduced or eliminated their consulting staff during 2009-2010 while attempting to preserve and reallocate their internal geoscience resources. The continuing regulatory uncertainties surrounding deepwater exploration in the Gulf of Mexico has resulted in many deepwater exploration teams being sidelined or redirected. But indications are surfacing of resurgence in 2011 as even large companies find the need to plug gaps in their skill base, caused in many cases buy ongoing retirements and repatriations. Additionally, there are clear indications of growth in many non-US companies trying to build their national staff organizations as governments around the world encourage the search for and securing of energy resources for their growing economies (a novel concept!). These companies often have experienced staff concentrated in the management ranks, and an abundance of bright and capable geoscientists in the earlier stages of their careers needing senior, hands-on geoscience consultants for technical guidance and mentoring.

It also appears that the unconventional revolution is having a significant impact on geoscience careers. As advances in horizontal drilling and multi-stage frac technology enhance our ability to make reservoirs out of what were once seals, virtually every source rock in basins around the world is now a candidate for exploration and development. Success has impacted the supply and suppressed the price on the gas side, but the hunt for these plays continues to be aggressive with an emphasis on finding the “sweet spots” and reducing costs to enhance the economics.

All of these factors—heavy investment funding, new company growth, expansion of international players outside the US, bottoming out of large company hiring slumps, and growth of the unconventional resource plays—have steadied the demand for late career geoscientists. The good news for companies large and small is that the supply of well qualified and experienced geoscientists is relatively high. The opportunity to work for a more diverse spectrum of companies, in an expanding array of plays and geographic areas, and under more flexible working arrangements (plus the need to reinforce retirement portfolios) is motivating many to work longer. A large pool of broadly experienced consultants means that companies can find specific skills and knowledge of plays or even specific fields to supplement their internal knowledge bases. There is increasing flexibility in the working relationships between individuals and companies, ranging from short term “quick hit” assignments to long term consulting relationships with the potential to evolve into full time employment. This model is well suited to the handoff from the baby boomers to subsequent generations of oil finders with less likelihood of any significant fumbles. The great crew change is developing into a more traditional transition from one generation to the next. 

Oil & Gas Deals and the Risk/Reward Trade-Off

When evaluating an oil and gas opportunity, what key factors should be reviewed and understood prior to making the deal? Consider that a niche-oriented, smaller consulting company can provide a  thorough, specialized, and hands-on assessment that results in a better informed decision versus going through a large investment house.


The following is taken from the Q3 2011 issue of SCA's GeoLOGIC newsletter. For access to downloadable back issues of GeoLOGIC, click here. Subscribe to the Upstream Petroleum Blog to receive links to future editions and other unique industry news and perspectives.


Oil and Gas Opportunities (Deals)
by Jeff Lund and Daniel Tearpock

Oil and gas “opportunities" or "deals” are the heartbeat of the upstream industry. Almost every well that is drilled, almost every acreage block that is leased, almost every oil or gas field that produces, has or has had a history of ownership change and often phases of technology application. It's common to hear the terms “brown field” projects and “green field” projects referring to old projects being renovated or receiving a new round of activity (“brown”) and new or start up ( “green”) projects.

Deals involve individuals, small companies, huge companies, independent and so-called major companies, national companies, foreign governments, naive investors and thieves. They can range from exploratory prospects looking for undiscovered resources, development of discovered but incompletely exploited fields, application of new technologies (water flooding for example) to force out additional oil and simply reselling of producing properties as companies rebalance investment portfolios or have differing opinions of the future of commodity prices.

There are many opportunities that are done, not through large“brand name” investment houses, but through individuals and small consulting companies having sound personal contacts from decades of working in the industry. They can identify and evaluate some of the best opportunities. The key ingredients are: 1) personal contacts; 2) extensive industry experience; 3) the technical ability to separate the wheat from the chaff (to be able to define what is of good quality over what is of poor or lower quality) and 4) to find these opportunities often without the potential buyers having to go through competitive bidding processes.

Small entrepreneurial consulting companies often have the edge over the larger investment houses due to their ability to personally identify and evaluate opportunities including the financial, economic and perhaps the most important part of the equation, the technical merits of the opportunity (the geology, geophysics, petroleum engineering, and other technical areas behind the discounted cash flow numbers). Opportunities span a huge range of values. We at SCA have seen investments ranging from a few ten's of thousands to several billion dollars.

There is also a large range of risk and reward available in the oil and gas deal market place. The graph below shows a relationship of increasing risk of economic failure (such as drilling dry holes) to potential reward. The general rule is that increasing reward almost always involves being exposed to greater risk. The various types of oil and gas deals ranging from buying proven producing properties up to frontier or high risk exploration, systematically expose the investor to greater potential reward but also greater chance of failure. One issue on which many companies and individuals need advice is quantifying this trade off.

Sometimes an enthusiastic seller has become so excited about the deal he is proposing he forgets to explain the risk element to buyers. That's one good example where expert technical advice is critical. 

 *****

Interested in reading some examples of real-life prospect evaluations?  See SCA's collection of case studies.  In addition, if you're looking to develop your knowledge in this area, SCA offers training courses specific to economic evaluation of petroleum opportunities.  Click here to find out more. 

The Demise of the Age of Petroleum: Fact v. Fiction

The following is excerpted from SCA's quarterly newsletter, the GeoLOGIC. For access to the full publication, please click here.

We're interested in your comments. How do you see the petroleum industry evolving over the next 20 years? Is it realistic to think that existing alternatives can replace petroleum?

"The Age of Petroleum is Over!"
Dan J. Tearpock, Chairman/CEO of Subsurface Consultants & Associates, LLC

HEADLINE NEWS

"In the past 6 months over 25% of the giant oil fields that provide the world with significant volumes of crude oil and gas have begun to rapidly deplete. Oil futures have soared to over $250 dollars per barrel, around the world; the stock markets are crashing and life as we have known it is coming to an end.”

Wow, what a headline. But don't worry, YET! It is not real, but someday such a headline may be real and with it will come an end to life as we have known it on planet Earth for the past 100 years. Nearly every day we see various radical groups protesting and demanding an end to the use of petroleum or crude oil and a push to turn to green products like ethanol, made from corn, to replace petroleum.

Have you ever wondered just how much does the average person on the street understand about the story of petroleum and petroleum products and its importance to our daily lives? A survey quickly indicates that most people relate petroleum to a few important products, namely gasoline, diesel, jet fuel, engine oil, home heating oil and maybe a few other products. But in reality the population depends on petroleum for thousands of products that we use each and every day in our modern world.

Petroleum is feedstock for just about everything under the sun. Petroleum, also called crude oil, is refined into numerous chemical parts and separated into gasoline, lubricants, asphalt, yep –asphalt and into so many other products, it could take weeks to discuss them all.

One 42-gallon barrel of oil creates only 19.4 gallons of gasoline; 49% of the barrel of oil becomes gasoline. The remainder of the crude oil, slightly over half, is turned into over 6,000 different items. I'll bet your jaw just hit the floor – 6,000 different items!!!! Before you read this article any further, see if you can name 25 different petroleum based items that are in common use on a daily basis?

Once petroleum is produced from reservoirs several thousand feet below the earth's surface, at a cost of millions of dollars, it is refined into thousands of different products. I am confident that most of you never realized how much of your everyday life depends on that dirty, polluting product known as crude oil. Yes, most of us relate crude oil to the gasoline that we use to fuel our automobiles, but that is only part, a very small part of the petroleum story. Without crude oil our world, as we know it, simply would not exist.

One of the major products made from crude oil is “Plastic”. In fact, based on the amount of plastic we use, we could say that we live in the “Age of Plastic” as well as the “Age of Petroleum”. In 1951 Phillips Petroleum research chemicals radically changed the world by revolutionizing the world of plastics. Prior to their discovery, plastic was made in small quantities and came from gutta-percha, shellac and the horns of animals, yes, the horns of animals. Then came the first synthetic plastic made from the plant material cellulose. Plastic was considered cheap and was used to make a lot of toys, eyeglass frames, combs, buttons, dentures, etc.

With the discovery of polypropylene and polyethylene, the two plastics discovered by Phillips Petroleum, the world of plastic exploded. And the source of today's worldwide use of plastics is "Crude oil or petroleum”; you know that dirty, polluting hydrocarbon that some people want banned from use.

We could talk about a number of stories of the importance of crude oil in today's world, but for simplicity, let's just stick with one product– plastic. Imagine what our world would be like without the plastic we use each and every day. If we could go back 100 years we would immediately realize what that world would be like. There would be no cars, telephones, televisions, computers, airplanes and literally thousands of other items that we are accustomed to using every day would not exist.

What about the thousands of other products you and I depend on each day to live in this modern world? How would you go about your day without such items as cell phones, dresses, CD players,shampoo, tires, paint, sweaters, cortisones, antihistamines, food preservatives, dishwashers, vitamin capsules, electricians tape, epoxy glue, insect repellent and literally thousands of other products used every day?

Let us not forget about “Fashion and Beauty Products” that are made from guess what? Yep, crude oil. These products include clothing, nylon, polyester, socks, buttons, underwear, jeans, earrings, bracelets, necklaces, sunscreen, body lotion, shampoo, hair conditioner, face powder, lipstick, breath mints, eyeliner, hair gel, perfume, face powder, foundation and even tampons. Wow, what a list, and we have not even gotten warm. Remember, earlier in the article I mentioned that over 6,000 products use crude oil, in one way or another, in their production. See this link for additional listings.

Can you now imagine what our world would be like without petroleum? As the headline in the beginning of this article indicated, we will some day run out of significant volumes of petroleum. We need to be working furiously to identify replacement products. But until then, petroleum is here to stay. I guess that we will have a significant dependency on crude oil for at least the next 100 years. So for the young scientists around the world, there are endless opportunities to work on finding the replacements for the products we use today that are dependent upon crude oil.