How an Independent is Using 3-D Seismic and CAEX Technology to Reduce Risk

Daniel L. Smith

Three dimensional (3-D) seismic and computer-aided exploration (CAEX) is of growing significance in the oil and gas industry. Independent oil and gas firms who correctly implement this technology are able to earn exceptional rates of return on Investment because of substantially reduced finding costs at reduced levels of risk.

Advanced technology lowers finding costs by condemning prospects before they are drilled (reducing the number of wells drilled), and improving the finding rate (reserves per well) of successful wells. Also, it reduces the number of wells required to develop a discovery, and locates reserves which otherwise would not have been found due to the inadequacies of 2-D technology.

Until recently, the primary users of 3-D were major companies and the primary application was the redevelopment of older fields. Texas Meridian Resources Corp. is an example of an independent that utilizes 3-D and CAEX for all its exploration prospects.

Case studies are presented that illustrate how Texas Meridian Resources aggressively uses modern technology to improve economics. An exploration program of on-shore prospects is presented which compares costs, success rates, finding rates, etc., for 2-D versus 3-D in order to calculate finding costs per barrel of oil or per MCF of gas. While more money is spent initially on the 3-D alternative, this is more than offset by savings from fewer dry holes.. 2-D versus 3-D finding costs are then compared to the selling prices for oil and gas to arrive at a rate of return index for each alternative. Several new field discoveries which resulted from 3-D surveys on wildcat prospects on-shore are also illustrated.

The oil and gas industry has been in decline for thirteen years as oil and gas prices plunged and the major oil companies withdrew from domestic exploration. 3-D and CAEX technologies are creating new investment opportunities for independent exploration and production companies.

AAPG Search and Discovery Article #91020©1995 AAPG Annual Convention, Houston, Texas, May 5-8, 1995