Captain's Quarters -

API Live Blog II: Seismic & Geophysics

This session focuses on geophysics and seismic science. Barney Issen is speaking in this session, and now we're using the panoramic displays, which are quite impressive. We're going to get a remedial lesson in seismic science, and we should have some good questions on this.

2:07 - Geological analysis was always limited in the oil industry by the limitations of drilling. Computers drive the analysis now; it takes enormous horsepower to do the seismic imaging that we need to find deposits.

2:11 - The first 3-D surveys were "puny things" that took pallets of tapes, which had data that would fit easily into an i-Pod. Now they take pallets of hard drives from the boats doing the seismic readings. Those original 3-D surveys took 3 CPU-months on a Cray to complete the analysis.

2:17 - I'm also recording these in digital format. I may not stream them later, but I may have a link for some highlights depending on whether I have time to edit them down.

2:20 - The cost of a dry hole in subsea conditions? $80 million per hole. It takes 2-3 years to build a rig, and it requires a five-year lease. Most of these portable drilling rigs are outsourced; Chevron and other oil companies lease them under long-term contracts. A failure to produce turns into a very big loss. That's something to keep in mind when talking about investments -- and since they have a 45% success rate.

2:30 - Barney is currently working on a model of 6,000 square feet of salt canopy, which will take him about six weeks to complete. However, his efforts will knit together 40 subordinate models of the area, each of which took between one and four months to create. This takes a hell of a lot of computing power -- and it's critical, because the salt canopy can distort the analysis of what lies beneath it.

2:54 - Most of this section is too academic to blog, but there was an interesting section on how leases create poker games within poker games. I may try to podcast that today or tomorrow.

I'm hearing in the comments that I've posted the disclosure often enough now. I'll leave it off subsequent posts.

API has underwritten Edward Morrissey’s travel expenses to attend the Chevron location tour in Houston and Corpus Christi, Texas. Edward is not required to blog about API initiatives. The only requirement as a condition of underwriting these expenses was to include this disclosure of this relationship on his blog.

API Live Blog I: Overview Session

We have arrived at the Chevron headquarters in Houston for the start of our two-day briefing on oil technology and energy policy. The building, interestingly enough, used to be the headquarters for Enron until a few years ago; the trading floor that manipulated energy prices was here. Right now, we've already started the first session, which gives an overview of the whole industry. I'll pick it up from about 10 minutes in.

1:41 pm CT - We have been tipped to read NPC's industry analysis. It's a must read.

1:42 - Recommended non-industry publications: Wired and MIT's Technology Review.

1:44 - Chevron believes that the odds of building a new refinery in the US is "very slim". They have to rely on increasing efficiency and capacity at existing refineries. The environmental concerns will keep them from ever building a completely new facility.

1:45 - Their success rate on new exploration is 45%. That seems pretty good, and technology has made it better.

1:51 - Geek moment: their Technical Computing group deals with "petabytes" of information. That came as part of the explanation of their structure as an energy technology company. They also stress that they work on three different levels: proprietary, focused collaboration, and broad collaboration. Chevron feels that they cannot do everything in house and relies on alliances to meet all of their needs.

1:58 - In talking more about their alliances, they mentioned one of their partners is Los Alamos, which came up with a potential solution for dealing with extremely hot temperatures in drilling. Some of the fields they drill can be very, very hot, and it creates problems with the drilling equipment, which expands in the heat. Los Alamos came up with a unique composite material that shrinks in heat, and Chevron has begun working with it to see whether it will allow for more efficient extraction.

2:01 - R&D spending for market capitalization - Shell spends the most, but Chevron hits about in the middle of the industry.

2:02 - The speaker told us that he expected a younger crowd when he heard bloggers would be visiting.

API has underwritten Edward Morrissey’s travel expenses to attend the Chevron location tour in Houston and Corpus Christi, Texas. Edward is not required to blog about API initiatives. The only requirement as a condition of underwriting these expenses was to include this disclosure of this relationship on his blog.