First Break - Volume 17, Issue 3, 1999

Guglielmo Moscato, chairman of the Italian industrial combine ENI, recently outlined some of the strategies available to the oil industry in order to survive in the low oil price climate. We publish a slightly edited version of his remarks given at a conference in Milan organized by Gulf Publishing and Assomineraria in Milan. The extremely critical situation of prices for major energy and non-energy raw materials is creating considerable difficulty for the balance sheets and the economical-financial budgets of the producer and processing companies, and some apprehension about the prospects in the long term. The entire commodities sector, which is a global market, now finds itself exposed to numerous political crises and often to serious regional conflicts as well; to commercial and industrial decisions taken by sovereign states or their supranational bodies; to choices made by large exporting countries and to the force that is exerted by their cartels; to regional financial and exchange rate crises; to widespread and to localized economic downturns; to new technological developments; to the competition between energy sources and between different raw materials; and also to a host of other conditions including the growing pressure deriving from both worldwide and local environmental pressures.

The severe beating taken by oil companies in the face of the decline in the price of oil has left oilfield service companies nervous about the impact. Andrew McBarnet reviews oil company policies in this crisis environment and reports on the anticipated impact on upstream operations and in particular the seismic industry. That chilling maxim that things have to get worse before they can get better proved numbingly true last month when BP Amoco announced their fourth quarter and annual results. Most analysts agreed that the BP Amoco results in themselves were better than their peer companies, which have invariably been reporting major plunges in earnings and in some cases losses. The bald figures, the first for the merged company, showed fourth quarter revenues down to US$19.6 billion compared with $26.8 billion in 1997, full year revenues were down to $83.7 billion from $108.5 billion with profit 34% down on the previous year at $4.65 billion (after exceptional items). The kicker was in the remarks from Sir John Browne, chief executive of BP Amoco, describing the companyís strategy for 1999. He said the company expected to take a restructuring charge of some $1.5 billion mainly to cover the severance and associated costs of the 7000 job losses already announced and the further 3000 likely over the remainder of the year. In other words, the cutbacks announced at the time of the BP Amoco merger last August were not the full story.

For several years velocity analyses and Hilbert and AVO attributes have been utilized in hydrocarbon exploration in the Pannonian Basin. Herein we report on some of the experience gained on this topic. Objective of the analysis Reflections of higher energy than surrounding sediments have been observed in a seismic section within the Neogene sequence (Fig. 1). Phenomena of this nature may indicate gas-bearing sandstone, but they may also be associated with other geological features (e.g. hard rock, layers of shale) or unusual features of wave propagation (e.g. tuning effect, anisotropy). It is known from well data that one of the reflections (marked R) is generated by a brine sand. The question is whether the other reflection, marked BS as it is a bright spot, not penetrated by a well, indicates gas trapped in a porous layer. Geological setting The intra-Carpathian region can be divided into several sub-basins separated by pre-Tertiary basement highs and infilled by a great mass of Neogene source rocks and other sediment traps. This area is thought to contain a considerable amount of oil or natural gas in traps associated with the older Neogene layers and the fractured zones of the pre-Tertiary basement. In the survey area the pre-Senonian basement is a nappe overlain by Senonian formations of varying thickness. The Miocene rocks overlying the Senonian may well be very thick in deeper sub-basins. They are covered by Pannonian sedimentary sequences. The Neogene sedimentary complex contains the potential hydrocarbon traps. Within it can be found wedging-out Pannonian structures, roll-overs, and flower structures derived from significant strike-slip tectonics. Along these faults gas may have migrated from reservoirs to the surface or it may be trapped in sandy layers forming shallow gas pools. None of these intervals has been explored because of their small extent; moreover, the recovery of gas from poorly consolidated sands necessitates special technology. Recently, however, the importance of these shallow resources has increased, because upward-moving gas may pollute ground-water and may cause explosions in the water system. Fractured zones in the basement, and other targets outlined by direct hydrocarbon indicators within the Neogene or older, may all be promising targets. Also worthy of special attention are the nappe edges overlain by the Senonian sequence.