Past Messages


Jory A. Pacht, Winter 2004

pachtI close my eyes and imagine that it's 1980 again. I'm younger, fitter, and a lot better looking. And like today, I'm planning on going to the GCAGS convention. There's going to be several thousand people there. Hotels in Lafayette have been booked solid for months. Once I arrive at the convention I'm going to be besieged by contractors offering me free drinks, free dinner, and jobs that promise to make me rich. By the time I come back from the convention my company will have given me another raise. Oil is going to be $50.00 dollars a barrel and life is good.

Fast forward to today, I'm older, fatter and the only one who thinks I'm good looking is me. The major company I worked for 24 years ago no longer exists and at GCAGS I'm going to have to use my own nickels to pay for dinner and drinks. Although I expect the GCAGS at San Antonio to be a great success, there will be far fewer attendees than were at Lafayette 24 years ago and the headhunters are now shopping for computer programmers in Bangalore India. Oil is $50.00 a barrel.

So what does $50.00 oil mean for us? After almost 25 years in this business I'm a lot less sure of the answer than I was when I went to my first GCAGS convention all those years ago. Most everybody in the oil industry will tell you it's not real. They may be right. Terrorism, continuing war in Iraq, a recall vote in Venezuela, tax cheats in Russia and commodity traders all have served to drive up the price.

But what was true in 1980 is not true today. Large reserves of oil and gas remained to be found in the Gulf of Mexico, the North Sea, offshore West Africa, offshore Brazil and many other provinces. There were many unexplored deep-water basins. Most importantly, all Saudi Arabia had to do was turn up the tap. Large untapped reserves still exist in onshore Siberia (Russia), Iran and Iraq. But Russia and Iran have severe infrastructure problems that are not going to be fixed overnight. And, for obvious reasons, I don't think we are going to see a significant increase in deliverability from Iraq anytime soon. Meanwhile China, India, and many other third world countries are undergoing rapid industrialization programs and as a result there is a rapidly rising demand for petroleum product from these countries. Although the NYMEX traders don't expect oil to be fifty dollars a barrel in three years they are willing to sell you a futures contract that states that they will guarantee you a price in the mid-thirties for oil to be delivered in 2007. That means they are betting that it's going to be higher.

I don't believe that $50.00 dollar oil is here to stay. But I do believe that high oil prices, even temporary ones, will accelerate the inevitable - increased demand for experienced geoscientists! There were relatively few petroleum geoscientists hired during the past 20 years and those hired in the seventies and eighties are beginning to retire. Although demand during past years has been reduced by computerization, industry consolidation and the mantra of "doing more with less", the pool of experienced oil finders is getting pretty small. "Sooner" rather than later, there simply are not going to be enough geoscientists to handle the workload. An engineering V.P. with a supermajor noted in a talk that in order to meet their internal demand for petroleum engineers in the next ten years they would have to hire every graduate from every petroleum engineering department in the country. Geology cannot be far behind. A major increase in activity is already occurring in the independent sector In contrast to previous years; a lot of prospect generators left NAPE this year with happy faces and sold deals. APPEX promises to be even better. Workover rigs are already in short supply as personnel in many companies are studying old logs and finding previously uneconomic PDNP reserves. Development geologists are having a field day.

What does this mean for GCSSEPM? Like every other organization in the oil biz, we have a demographics problem. The average age of an AAPG member is around 50 and I suspect the average age in GCSSEPM is probably about the same. Companies are beginning to hire recent geology graduates but the training programs that were in place in most companies when we joined up are long gone.

At the risk of sounding patronizing…. A lot of those new hires are going to need mentors.

And at the risk of sounding downright insulting….. A lot of us are at the "mentor" stage of our careers.

Many new-hires are coming out of schools with a solid background in computer skills and for them the workstation is already an old friend. But knowing how to use the workstation and knowing how to find oil and gas are two very different things. Although there are excellent training programs given by many private contractors, many of their classes focus on scientific skills, as opposed to using these skills to find oil and gas.

As an organization we too have focused on scientific excellence. We have been hugely successful at this and every year we put on a Research Conference that is universally considered to be world class. The upcoming one on Salt Tectonics will be no exception to this. However, in addition to the Research Conferences, perhaps we should think about workshops we can put together as well that mesh the applied with the academic. Paul Weimer led the way on this with his wildly popular "Deep-Water Core Workshop", sponsored by GCSSEPM. Perhaps other members can propose similar workshops, which we can help to support.

Meanwhile, I'm looking forward to GCAGS. The organizers, led by our GCSSEPM Vice President, Bonnie Weiss, and longtime member Tom Ewing, have done a fantastic job and it's going to be a great convention—even if I have to buy my own drinks.