Predictions are a mug’s game.
Predictions are a mug’s game. It seems especially futile to guess with any accuracy what 2022 may have in store. Specifically for the geoscience and engineering community, there are so many factors involved that may affect its business and operations almost all out of its control. The shortlist would include ongoing impact of the pandemic, oil supply and demand and the price machinations of global hydrocarbon producers, pace of energy transition developments in numerous industry sectors, oil company appetite for E&P spending, economic health of main providers of geoscience services, potential for technology breakthroughs, etc, etc.
To help us reflect upon if not cope with exercises in futility, history and legend have handed down some memorable analogies. Current favourite in the Crosstalk canon is ‘The hardest thing of all is to find a black cat in a dark room, especially if there is no cat’, controversially attributed by some to the Chinese philosopher Confucius. This conundrum worthy of Monty Python has recently gained some contemporary notoriety from its use by Russian authorities to explain away inconvenient accusations against the state. In one case, Dmitry Peskov, spokesman for President Putin, used the ‘black cat’ obfuscation when asked about the conclusion of the Mueller investigation into alleged Russian ‘collusion’ in helping President Trump’s winning election campaign in 2016. Separately Dmitry Polyanskiy, Russia’s representative to the United Nations, referred to the ‘black cat’ saying of a Chinese philosopher in denying involvement in Russian aggression against Ukraine in 2014 and the poisoning in the UK in 2018 of a former Russian spy Sergei Skripal and his daughter.
Unfortunately no science can enlighten what awaits us in 2022, and the past is not a reliable guide to the future. This is a topic that has vexed historians and those who make history. British author and philosopher Aldous Huxley, author of the 1930s classic Brave New World, was especially dismissive – ‘That men do not learn very much from the lessons of history is the most important of all the lessons of history’
Napoleon famously stated that history is a myth (set of lies, in some translations,) that men agree to believe. In other words we turn the past into the narrative we want it to be. The renowned Dutch historian Pieter Geyl in Napoleon: For and Against (1948) and later in Use and Abuse of History (1955) argued that historians base their interpretation of the past influenced by the present. Geyl noted that in France’s imperial days in the 19th century French historians admired Napoleon as a patriotic hero, but in the 20th century his dictatorial tendencies and harmful impact on France were being highlighted reflecting contemporary events in the era of Stalin and Hitler. Although a respecter of history, Winston Churchill, Britain’s Second World War prime minister and subsequent chronicler of the war, did somewhat give the game away when remarking ‘History will be kind to me for I intend to write it’.
Perhaps we should therefore settle for ‘history is just one damn thing after another’ usually attributed (out of context) to the historian Arnold Toynbee. That is certainly what the last couple of years feel like. And now, here we go again. Just as the world was coming to terms with the Covid-19 virus and looking ahead to a recovery in the global economy, possibly quite rapid, the emergence of the fast spreading Omicron variant looks like dampening expectations. Those analysts intrepid enough to hazard a guess about the 2022 global energy market are wisely cautioning that the unknowable impact of Omicron could undermine their calculations.
In fact the whole energy prediction has become such a crap-shoot that the research teams from major international agencies and oil companies have taken to offering a range of scenarios. The process involves first identifying key factors involved in shaping our energy future. This in itself is quite speculative in that it can only cover what we know today. The second stage is to test various combinations to come up with some credible future energy picture. The number of ‘ifs’ that have to be juggled varies in proportion to how far ahead you want to look.
And, back to the earlier point, sitting here in early 2022, we can only envisage the type of world we live in today. The accepted deadline for capping global warming at 1.5% is generally agreed to be 2050, over a quarter of a century from now. A lot can happen to our way of life in that time. Put it another way, think back 25 years ago and the changes since then. Notably the smart phone, Google (founded in 1998) and just about everything online was not part of our lives then, although it was in the works for those in the know. If you attended the opening keynote address at the EAGE 1999 Conference & Exhibition you would have heard a top gun from the Finnish telecommunications company Nokia lay out most of the features that are offered on modern smart phones. It seemed somewhat futuristic at the time. Unluckily for Nokia, it was unable to capitalise on its vision in the years that followed, overtaken by Apple and others.
Trawling through the musings of reputable energy analysts like the International Energy Agency, Deloitte, Barclays, Rystad Energy, WoodMac, IHS Markit, etc, you can at least get a sense of the current energy and other variables in play for 2022, and wow, it’s complicated.
Take the prospects for the service sector of the oil and gas industry as a case study of one variable amongst the many. The big question is obviously how much business it can expect. In October at the EAGE Annual Meeting, unscientific polling of participants was optimistic, that is to say, oil companies would continue to be stringent but budgets were not expected to be cut and indeed there was some sentiment that more seismic work could be commissioned particularly in the latter quarters of the year. This broadly mirrors statements by CEOs of the major seismic players.
Yet if you unpack this forecast, you realise we have no way of knowing which way oil companies are going to jump with regard to their E&P spend, even those which have published their likely budgets. If the future price of oil is the indicator of the likely scale of expenditure, good luck with that. Oil companies have been raking in the cash as prices have risen to $70-80 per barrel. But they have chosen to use the money to reward stakeholders, buy in their own shares invest in renewables, etc. E&P initiatives have been modest. This may be fear that OPEC+ and the US shale business can rapidly change the market dynamics. It may be that conspicuous new oil development post COP26 does not go down well, case in point Shell’s withdrawal from the proposed UK Cambo oil field project west of Shetland. There is also the point that any new rather than incremental project requires a long-term commitment and uncertain return on investment in a changing energy resource environment.
Any new projects are thought likely to continue the survey formats developed in response to the ceaseless demand for more cost effective marine seismic operations (where new E&P money is likely to be spent). Multi-client is now the norm for many projects providing economies for oil company clients, never mind the extra risk, permitting hassles, etc borne by the service sector.
Probably the most obvious operational shift is the increase in hybrid surveys harnessing the established imaging benefits of ocean bottom node (OBN) seismic alongside conventional towed streamer acquisition. These surveys are now part of the playbook of all the leading actors, e.g., Shearwater, PGS, BGP and PXGEO. The hybrid option provides oil operators with a very attractive proposition at nearly two for the price of one. Surveys can typically be sparse or dense grids as required. For contractors, existing technology has proved easily adaptable although improvements in node delivery and retrieval systems can be expected.
The market for pure OBN surveys has not turned into the boom once promised. On the face of it, this is odd given that oil companies are concentrating on maximising production from existing and near field reservoirs, thus ideally suited for imaging with seabed seismic acquisition. Yet, it seems oil companies often have to be convinced that the benefits justify the extra cost and logistical challenges compared with the latest towed-streamer alternatives. Improvements in source technology in particular are making a significant difference to the clarity of reservoir imaging possible with streamer vessels. One day, heavily robotic nodal systems, conceptually the ultimate solution, may surface but there is no immediate sign of any breakthrough in this regard.
The pace of seismic technology evolution is likely to be tempered by service company financial constraints. The immediate concern for Shearwater and PGS at least is to increase their revenues to escape from the substantial deficits they are currently carrying. R&D may therefore be a lesser priority. In this context oil companies have been talking technology cooperation with the service sector. The reasoning is simple. As ever, they are looking for the most cost-effective solutions possible, but also these days for increasingly environmentally friendly surveys. The service sector on its own may not be able to deliver on the timescale required by oil companies. A helping hand is therefore needed.
The possibilities are so endless that a wonderfully puzzling Chinese proverb comes to mind: If you do not change direction, you may end up where you are heading.
‘Unfortunately no science can enlighten what awaits us in 2022’
‘The big question is obviously how much business the service sector can expect’
