that private investors may demand recovery of their capital in, say, 25 years, but that the electrical output from the barrage for the next century or two of its life would be virtually gratis: and they argue that ‘there must remain a role for public funding if private capital will only initiate short- term ventures’, reinforcing their case with a quotation from Adam Smith’s The hearth of patios.’

They want the government to re- search and develop renewable energy technologies in line with a long-term national energy policy, and to survey all the country’s on- and off-shore renewable energy resources. They also want removai of institutional bar- riers, especially biased taxes and elec- tricity prices. They call fdr legislation to clarify the ownership of renewable resources, and ‘gentle legislative pressure’ through building practices and codes to encourage passive utiIiza- tion of solar energy.

They desire government interven-

tion, not only in the funding of large public sector projects, but also in sup- port of manufacturers developing re- newable energy plant and equipment (‘taking note of comparable govern- ment support elsewhere’). Moreover, they advocate protection for vulner- able embryonic technologies ‘in a market-place dominated by the big utility companies and in which there is an overcapacity’. Finally, they ask the government to rectify its lamentable neglect of Scotland’s rich renewable energy resources.

Arthur Conway Harrow, M~ddlesex

“The sovereign (government) has the duty of erecting and maintaining certain public works which it can never be for the interest of any small number of individuals to erect and maintain; because the profit could never repay the expense to any small num- bers of individuals though it may frequent- ly do much more than repay it to a great society.’

Estimation of undiscovered oil and gas

OIL AND GAS FORECASTING: Reflections of a Petroleum Geologist

by Lawrence J. Drew

Oxford University Press, 1991, pp 252, E40

Statistical analysis and its application to the oil and gas industry is gently introduced through a personal view of the early work experiences of Lawr- ence Drew. Interesting characterisa- tions and asides illustrate his points. An early ambition of the author was to work for the US Geological Survey and much of the material follows from his career there.

The principal theme is the predic- tion of undiscovered hydrocarbon volumes. A number of exhaustive re- search studies in statistical analysis of discovered and predicted oif and gas volumes are presented. The studies take account of wildcat and explora- tion well drilling rates, time, discovery rates and volumes and fluid types. A

UTILITIES POLICY July 1991

detailed account of the assumptions made and the data controls and man- ipulation is well documented for each study. The text is full of snippets of information concluded from the analy- sis which could easily be lost to the cursory reader. Data utilized for the studies is from US domestic opera- tions and in one case is specific to onshore lease conditions. Sections of the work presented were completed some years previously, however, this does not detract from their value. A comprehensive chronology of refer- ences to other published work which has contributed to the development of the author’s ideas abound throughout.

Early industry methodology is pre- sented for the future prediction of US crude oil production by year. Also the prediction of discovery rate from the forward extrapolation of historical successes v cumulative drilled explora- tory footage. Following the introduc- tion of the computer, the options were expanded to include the development and use of assessment techniques that

Book reviews

employed detailed geological data and statistical and mathematical analysis. These analyses explicitly modelled the relation between field discovery, ex- ploratory drilling and the order in which discoveries were made. The dis- tribution of field sizes became a critic- al consideration in many of the analy- ses.

Development of the ideas governing discovery field size v maturity of a basin are expanded. Results confirm that large fields discovered early in the life of a basin are likely to contain a large part of the reserves of that basin.

The behaviour of wildcat drilling and the discovery rates within explora- tion plays were examined. The discov- ery process model is favoured which, within specified field size classes, is shown to indicate that future discover- ies will follow a declining exponential function of the number of wildcat wells drilled. An interesting study of the Powder River Basin illustrating discovery volatility during ‘ambient’ and ‘cyclical’ drilling phases is given. Once refined, interesting conclusions relating to US domestic onshore lease operations are drawn from the model.

The concepts of economics, we11 cost and oil price are introduced and applied to the discovery process mod- el. The goal was to produce a whole new type of oil and gas resource assessment in which the disciplines of geology, petroleum engineering and economics would meet and contribute to the production of a balanced pro- duct. This discovery process model was used to study a mature basin, a partially developed basin and a fron- tier region.

The first of these studies was ap- plied to the mature Permian basin for the purpose of forecasting the future rates of oil and gas discovery in this very large region of the USA. The study concluded that a large number of oil and gas fields remained to be discovered in the Permian basin and estimates by field size and depth are documented. This forecast was used to develop a suite of marginal cost curves which express the consequences of price movements on the quantity of a resource that is economically avail- able, given an estimate of the size distribution of undiscovered fields and certain cost conditions. The model

355

Book reviews

was used to consider the two ques- tions: What price and rate of return would be required to stimulate a cer- tain level of exploration to find a given amount of oil and gas? And second, what amount of oil and gas can be anticipated from the Permian basin at the present or some future price and rate of return? Output from the model is presented and examined in terms of associated dissolved gas, non- associated gas and oil resulting from various price levels and rates of re- turn.

The partially developed basin study was applied to the offshore Gulf of Mexico. Additional elements intro- duced into the analysis in this case were necessary due to the offshore trend to explore in increasingly deeper water depths with time. The changeover from exploring for crude oil to that for natural gas also was cited as an additional factor which had to be accounted for.

The concept that the parent popula- tion of oil and gas fields is log- geometric is introduced. The effects of economic truncation of the data set of the parent population of oil and gas fields was investigated. Evidence as found that in certain cases, the major-

ity of oil and gas fields remaining to be discovered in a partially explored area could have sizes in the vicinity of, or below, the mode of the observed size distribution for the fields already disc- overed. This led to the conclusions that the mode of the observed field size distribution was linked directly to the cost of drilling a wildcat well. It was recognized that in a cross section of exploration plays, basins and coun- tries the mode of the observed dis- tribution migrated towards the smaller sizes as the cost of drilling falls. These ideas developed into the concept of economic truncation which was ap- plied to the Gulf of Mexico model to successfully produce a set of marginal cost curves.

In this third study the concepts de- veloped earlier of the application of discovery process modelling have been used to investigate the exhaus- tion of the population of oil and gas fields by the exploration process. Fu- ture discoveries have been categorized and examples used for illustration. Economic aspects and changes in the objectives have been considered.

A concluding section turns to quan- titative mineral resource assessment. The objective being to develop proce-

dures to estimate the number of undis- covered mineral deposits in a similar fashion to that used for oil and gas discoveries. A discussion of descrip- tive mineral deposit models leads on to one of grade and tonnage models and then to some idea on how to estimate the numbers of undiscovered deposits that occur in a region. The results of the estimates of undisco- vered metal endowment within the study area are presented.

An in-depth insight is given into discovery process modelling as applied to oil and gas fields. The ability to unmask the effect of an economic overprint placed on an observed field size distribution by the economic con- ditions that prevail in any particular region is invaluable. Unmasking this effect is a most important element in the scheme used in the text to estimate the number of oil and gas fields re- maining to be discovered. The techni- ques used have been able to compen- sate for the somewhat different man- ner in which onshore and offshore oil and gas plays exhibit economic trunca- tion of field size distribution.

AlIan Spencer Guil&3rd, Surrey

UK

When the worst-case happens

PIPER ALPHA - Lessons for Life Cycle Safety Management

Proceeding of a symposium organized by the Institution of Chemical En- gineers, September 1990

The Institution of Chemical Engineers, 1991

This collection of 14 papers will be of interest to all those with technical responsibilities for oil rigs, oil and gas processing and safety. The papers are ordered into five section:

1. Causation. 2. Escalation/Assessment. 3. Procedures and Practice. 4. Emergency Planning and Com- munication. 5. Cost of the lessons.

356

The cost of the Piper Alpha disaster amounted to billions of US dollars. This collection of technical papers therefore warrants a wider readership than its uninspired title might attract.

The accident record associated with UK North Sea operations, which is listed annually in the Brown Book, is useful to place the symposium pro- ceedings in context.

In the symposium preface, F. Craw- ley, the Chairman, states ‘It is unfor- tunate that society seems to need major events to remind it of its duty and the continuing need for attention to safety. Whilst fully accepting this statement, the statistics show that in five years 10 or more people have been killed.

Taking these accident statistics together with an autobiographical account of life on a North Sea oil rig,’

major accidents seem inevitable. Robert Orrefl’s book, Blow Our, is compulsory reading for those who re- quire an insight into North Sea safety regulations in theory and what hap- pens in practice.

Readers of Piper Alpha - Lessons for Life Cycle basely management, may be divided into two groups. There will be those who consider that the two-day symposium and the wide- spread dissemination of its proceed- ings may have an appreciable influ- ence on North Sea safety standards. There will be a second group which may dwell on the W.S. Atkins paper; in particular on the following quota- tion:

It is worth recalling the consequences of the primary event on Piper Alpha at 10.00 pm on 6 July 1988. The escalation of the event leading to the massive fireball that engulfed the platform some twenty two minutes later has one terrible parallel with the Manchester air disaster: The time avail- able should have been sufficient for all the

UTILITIES POLICY July 1991