Rocky Mountain “Dusters”: Lessons Learned and Opportunities Created

Title: Learning From Our Mistakes: Rocky Mountain “Dusters”: Lessons Learned and
Opportunities Created

Author: Terri Olson

Publication: The Outcrop, November 2008, p. 7, 11, 13, 16

Introduction:
The RMAG Fall Symposium lived up to its billing and provided numerous opportunities to learn from other people’s mistakes. About 245 participants benefited from presentations on Sept. 22 by some eminent geologists, notably Bill Barrett and Bob Weimer. The list of 10 lessons learned from the school of hard knocks that Barrett presented during his keynote address was considered a highlight of the day by many. Donna Anderson, former RMAG president, called that list alone “worth the price of admission.” (See box page 13)

Bob Cluff kicked off the talks with a review of key learnings from a science well drilled to test a fracture zone “sweet spot” in the Washakie Basin. According to Bob, “the fracture story was not as advertised.” The sweetspot was not fracture-controlled and, inadvertently, tapped into water; permeability in the Almond Formation is mostly related to grain size, sorting, and depositional facies in an Upper Almond bar complex. One outcome of the GRI-funded science well is that operators subsequently have tried to avoid fracture zones because they may be connected to underlying wet Ericson Sandstones.

The Dusters symposium was inspired by a post­-mortem talk a couple of years ago at the Explorers Club on a CBM project in the Albuquerque Basin. T.J. Stark revisited the topic, setting the stage with the tectonic history and previous drilling failure by Shell, who drilled a 25,000-ft well through Tertiary gravels that rested on crystalline basement in the middle of the rift basin. He gave a good summary of the issues encountered (the coals were present and prospective, with high potential storage capacity, but low actual gas content; uplift 4-7 mya probably resulted in loss of methane to the outcrop). He concluded that tectonic setting and kinematic history can be critical to CBM exploration.

In the shale realm, one talk on the Floyd and two on the Bakken provided insight into some areas that need to be better understood to make shale projects into commercial successes. Dick Drozd demonstrated that geochemical risk is low in the Floyd for success as a gas shale, but that other factors such as retention of gas and lateral variation in shale reservoir quality need to be understood. He also brought up one of the common themes of the meeting, that persistence is needed, noting that it took 1 7 years to make the Barnett a success, and 4 years for the Fayetteville.

Steve Sonnenberg gave an overview of the Bakken play in the Williston Basin, focusing on Elm Coulee Field in Montana: history, reservoir characteristics, resources, and some remaining questions. Mike Johnson followed up with the drilling history and some features of Parshall Field, the recent large Bakken discovery by EOG in North Dakota. Significantly, a “dry hole” was drilled in the middle of the current field in 1985. Johnson noted that the mature-immature source rock boundary acts as a trap for Parshall, and characterized that as a new trap type for the Bakken. He also stated that fracturing is the dominant porosity type and illustrated the discontinuous nature of the faults with seismic.

“The Yoda of Rocky Mountain geology” is how Jim Emme, symposium co-chair, introduced Bob Weimer. Dr. Weimer presented the Atokan Sandstone play of SE Colorado, concluding that while reservoir rocks are present, the question is where the Atokan system is generating hydrocarbons, with related issues of migration paths and charge.

Beyond his ten lessons (see box), Bill Barrett had some great stories of disappointment, and perseverance paying off. His first story told of how an unsolicited legal opinion scuttled a big and unique acquisition opportunity. His learning was that he needed an in-house lawyer to protect his interests. Barrett went on to illustrate how “success needs the intersection of timing and opportunity” with the early history of what later became Pinedale Field, which was an exploration success but a failure due to timing and markets 4 decades earlier. In contrast, Madden Field was an example of persistence paying off, where the subsurface data were key and seismic didn’t tell the whole story. With these and other stories, Barrett illustrated that your “reputation is more important than reserves on the books.”

The best talk of the day (determined by participant vote) was by Bill DeMis, on concepts for finding by-passed plays. Using diagnosis of medical conditions as an analogy, DeMis described a few “false negative” results where wells with subtle shows were not tested. Two fields that were not discovered by the initial penetrations because the operator did not understand subtle shows are Elkhorn Ranch Field in the Williston Basin and Hilight Field in the Powder River Basin. He advocates testing all subtle shows, to avoid the catastrophic consequence of missing a discovery.

A play that has attracted a lot of attention over the last few years, in the Columbia River Basin in Washington, was presented by Marv Brittenham. He described EnCana’s view of the play as geopressured cells in basin-center gas conditions under Miocene basalt cover. Encana and partners have drilled 3 recent wells to test Oligocene and Eocene elastic targets. While these wells have provided new data and insights into sub-basalt structure, stratigraphy, and gas potential, Brittenham concluded that such masked plays present opportunities but have challenges, and that technology is not a cure-all. He noted that the team recognized it would take a dozen if not dozens of wells to fully test the area, and looks forward to the results of Delta’s current drilling.

An overseas duster was the basis of a talk by Dietrich Roeder, who described a well drilled in the southern Alps in a thrust belt on the edge of the Po Valley in the l 980’s. Roeder believes there is additional potential in the area, and commented on the choice of drilling locations that “You go after the biggest elephant closest to you, not some shadow in the bushes farther away.”

The concluding talk by Doug Sprinkel covered the history of petroleum exploration in the central Utah thrust belt, with an emphasis on the failures. Regional work has shed light on structure and distribution of favorable reservoir rocks.

Co-chairs Jim Emme and Mary Carr pulled together an excellent program that was well-received by the local geologic community. They received great support from their volunteer committee, including, Jim Eagan, Debra Higley, Connie Knight and Jim Mullarkey. It is not always easy to discuss past mistakes, especially to learn from them and avoid laying blame. The symposium succeeded in that regard, with valuable shared learnings for those who attended.

Such events cannot happen without sponsorship. RMAG would like to again thank the following companies for their contributions: Devon and Noble (Diamond); EnCana (Platinum); Anadarko, Berry, Delta, Goolsby Brothers, Lockhart Geophysical, NFR, Pason, Questar, and Williams (Gold), and Discovery Group and Lario (Silver).


Ten Lessons from Bill Barrett’s School of Hard Knocks

LESSON #1 – MAXIMIZE LIFE’S EXPERIENCES/NEVER STOP LEARNING.
I believe it might have been Einstein who said experience is more important than knowledge.

PUT YOUR LIFE’S EXPERIENCES TO WORK.
– Maintain a thirst for knowledge and work will become a labor of love.

LESSON #2 – ANTICIPATE AND EMBRACE CHANGE
There is nothing permanent except change. The 21st century has witnessed explosive growth in new knowledge and technological innovation.

UTILIZE TECHNOLOGY. IF NECESSITY IS THE MOTHER OF INVENTION, THEN TECHNOLOGY MIGHT BE THE FATHER.
Nothing has hastened the development of Rockies and U.S. unconventional resources more quickly than technology. UNDERSTAND IT, EMBRACE IT, DEVELOP IT.

LESSON # 3 – EARLY ON IN THE EXPLORATION BUSINESS I LEARNED THAT “EXPOSURE IS THE NAME OF THE GAME”
The late Marvin Davis stated: “Those who drill the most wells find the most oil and gas.” He was right. Improve your odds by making certain you drill high quality prospects.

LESSON #4 – IF YOU DON’T TAKE A SWING AT THE BIG RESERVES YOU ARE NEVER GOING TO HIT IT BIG.
It is a proven formula that has worked in four previous successful companies I have been associated with, leading to the discovery of 8 giant or near giant fields.

As I like to say “HITTING SINGLES IS FOR GUYS NAMED PEEWEE, GUYS NAMED
BABE SWING FOR THE FENCES.” … “CALL ME BABE, I GO FOR THE FENCES”

LESSON #5 – ACQUIRE AND MAINTAIN A DOMINANT OIL AND GAS LEASE POSITION IN HIGH POTENTIAL AREAS.
Land is truly the basis of wealth in the oil and gas industry. Without it you have nothing.

BE A LEADER NOT A FOLLOWER. Get in the play early, before the cost goes up.

LESSON # 6 – IT IS STILL ABOUT THE CREATIVITY AND MOTIVATION OF TALENTED PEOPLE.
It is about “getting the light to come on.” It’s about THINKING OUTSIDE THE BOX. Any success I have had is directly due to the TALENTED PEOPLE I have been fortunate enough to work with. These talented people are Doer’s, Be a DOER. As Henry Ford once said “you can’t build a reputation on what you are going to do” You must do it.

LESSON #7 – THE HARDER YOU WORK THE LUCKIER YOU GET.
Remember it’s the work and not the clock that tells you when it’s quittin’ time.

HERE ARE SEVEN THINGS THAT I HAVE FOUND YOU CAN DO IMPROVE YOUR LUCK:

  • PREPARE RELENTLESSLY. “If you are going to itch to have something, you better be ready to scratch for it”.
  • REMEMBER DETAILS MAKE THE DIFFERENCE. A lot of conventional thinkers overlook details that might lead to an unconventional or previously unrecognized discovery.
  • HAVE PATIENCE, BE PERSISTENT.
  • BE ACCOUNTABLE all of the time.
  • FOCUS ON YOUR AREA OF EXPERTISE. Grass is not always greener on the other side of the street. Don’t spread yourself too thin.
  • LISTEN TO YOUR GUT … TRUST YOUR INSTINCTS
  • BE YOU’RE OWN MAN, believe in your ideas, pound the table for what you believe.

LESSON #8 – UNDERSTAND THE BUSINESS ASPECTS OF E&P
Take a long term view, maintain a conservative fiscal posture, preserve financial flexibility.

  • Have a short and long term business plan. As Boone Pickens will tell you “A fool with a plan can outsmart a genius with no plan any day”
  • Understand all facets of risk.
  • Make certain you have enough insurance.
  • Understand oil and gas price hedging strategy, especial in this cyclic business.
  • Make safety a priority in all facets of your business.
  • Don’t burn any bridges. You might find a need to cross them in the future. It is a small world.

TO SUM UP THE BUSINESS ASPECTS THE LATE CORT DIETLER SAID IT BEST, “YOU WILL NEVER GO BROKE MAKING A PROFIT. DO WHAT YOU SAY, PAY YOUR BILLS AND HONOR YOUR FRIENDS.”

LESSON #9 – CHALLENGE ONEROUS, UNNECESSARY REGULATORY AND ENVIRONMENTAL ROAD BLOCKS.
Become involved in the political process, fight for what is fair and right. “If you don’t handle your politics, someone else will.” This election is the most important, from a public policy perspective, in decades. People are finally talking about energy, and it is up to us to help them understand it. YOU, WE, ALL NEED TO GET INVOLVED.

LESSON #10 – BE A VIP – STRIVE FOR VISION, INTEGRITY AND PERFORMANCE AS VALUES FOR YOURSELF AND YOUR COMPANY.