EDS Presentation March 9, 2012 So just how do “they” find all that oil?

Where does oil come from? How did it get there? Agenda Introduction Where does oil come from? How did it get there? How do we explore for and produce oil? Gulf of Mexico Geology Deep Water Play Geology Sub Salt Play Geology Ultra Deep near shore play Geology Discovery Horizon Oil Spill- what happened? Goals:

Amoco Production Company/BP Air Force Dependent 19 years- California, Illinois, Ohio, Canada, Florida, Illinois, Al, Libya, Italy USA- BS Geology Ole Miss-MS Geology Amoco Production Company/BP 20 yrs Petroleum Geologist Natural Gas Marketer Business owner GS for nearly 15 yrs, coaching, environmental outreach, politics Not from here but got here as quick as I could. Diverse upbringing. “Blessed” to have seen so much in my life. Bus major 2.5 years then Geology. Geology course requirements. Choice after undergraduate school. What does Geologist do? Petroleum Geology. Career at Amoco then moved to the beach. I love coastal sedimentary environments!

Married to Deborah for 35 years Two children- Mike and Kim Hatfield Family Married to Deborah for 35 years Two children- Mike and Kim As you can see from these pictures I am the normal one in the family. Deborah and I have been married for 35 years. Mike has degree from Spring Hill and works in energy bus. in Chicago, Kim is working on a Math degree at UAB.

What is “oil”? Crude oil is composed of hydrocarbon chains, the “short chains” are gaseous, and the “long chains” are liquids and can even be solids Higher Carbon, and heat content Two phases DH oil Heat and $ value decrease as go up on this chart. DH oil was rich in asphalts, light liquids and gas.

It is not uncommon to find a range of hydrocarbons segregated within a petroleum trap. The gas “cap” in this trap consists of light, short chain gases methane, ethane, butane, propane. The liquid oil “leg” in this reservoir consist of PAH’s, asphalts, gasoline, kerosene, jet fuel

Where did it come from? Dinosaurs? Not!

Most crude oil is generated from organic rich sedimentary rocks containing a high percentage (2-20%) of lipid rich fossil algae!

How does nature make oil? It needs a highly productive, restricted circulation (rift) basin, anoxic setting essential for organic mater preservation

Black Sea is modern day analog Black Sea is modern day analog. Highly productive/high biomass, restricted circulation, anaerobic bottom conditions. Sediments contain 20% total organic carbon, lipid rich, precursor to world class source rock

Bury, heat and pressurize that 20% TOC source rock and you get…….

Expel the oil and gas from the shale source rock into a porous rock like sandstone or limestone

“Put a roof over it”

Types of traps

Petroleum System Elements

Lets Find some oil in the Gulf of Mexico Mississippi Embayment

How do we know it is a pull apart or rift basin? New Madrid region is the most seismically active area in the US

A gravity survey tells us true oceanic crust exists in the rift

Hmmm, a big pile of sedimentary rocks (sands shales), a rift basin (source rocks, heat), evidence of salt tectonics…..let’s shoot some seismic

Processing and geologic interpretation

Further geologic evaluation

Prospect generation, “bright spot”

Prospect generation sub-salt With advances in Geological understanding and seismic technology we can “see” unexplored sedimentary formations beneath salt

Deepwater Subsalt Prospect

More Geology- Identification of deep water sub salt play

Significant relatively un-explored potential exists beneath salt

Deep water and sub salt discoveries approach “world class” 1 well can cost $100MM, a platform/production facility can cost several billion dollars and 1 well can flow at 50,000 BBLS/D oil That’s $5,000,000 /Day!

Mad Dog- 4 billion barrels in place, 5,000’ WD That’s $400 Billion dollars worth of oil

Mad Dog- thrust faulting and repeat section

Thunder Horse- another several hundred billion $$

Thunder Horse- 3-d Model

Macondo Discovery- AKA Deepwater Horizon Oil Spill

Macondo wire line log- 1 Billion Barrels?

Bad cement job- the beginning of the end

Bad decision- divert oil and gas to rig floor

“Snips” or shear ram BOP did not work

50,000 BBLS/D of oil out of control, rig listing, about to sink

Deepwater Horizon blow out killed 11, injured 17, resulted in rig loss, 5 MM BBL spill

Drill two “relief wells”- 1st one successful