Petroleum Engineers and Independent Exploration and Production Companies in the Year 2000
Authors: Hawkins Warren S. 
Published: December 2007

This paper contains certain opinions and observations made on behalf of independent exploration and production companies regarding the future of the oil industry and of petroleum engineers. It was prepared at the request of SPE's Committee on Education and Professionalism for presentation at the 1986 SPE Annual Technical Conference and Exhibition during the depths of a serious downturn in the industry. While its focus is on the future, this paper will undoubtedly bear the mark of the period during which it was prepared.

Because our national security dictates that there must be a future for the domestic petroleum industry, the domestically oriented independent sector will be required to play a key role in that future. Petroleum and the ability to find and extract it efficiently and economically are valuable resources that will not soon nor easily be replaced.

Introduction

This paper responds on behalf of independent exploration and production companies to several questions posed by the SPE Committee on Education and Professionalism. An immediate challenge was to determine what an "independent company" is and then to determine how to represent such an apparently diverse conglomeration.

I have discussed these issues with associates employed by various independent exploration and production companies and hope that my opinions on these topics will reflect their ideas.

The following are five questions for which the committee requested opinions.What aspects of the petroleum industry will independent exploration and production companies primarily be concerned with in the year 2000?What significant technical problems will be addressed by the independent sector of the petroleum industry during the remainder of this century?What support will computers provide the independent oil company petroleum engineer in the year 2000, and how should the engineer be prepared to use this technology effectively?How will the functions of petroleum engineers change during the remainder of this century?What qualifications will be required for an entry-level engineering position with an independent exploration and production company in the year 2000?

Independent Exploration and Production Companies

To address the roles of independent exploration and production companies in the future, it is necessary to attempt to define the composition of that group at the present time. In several commonly used definitions, these companies are described aspurely domestic;with a common management and financial source;uninvolved in transportation, refining, and marketing;relatively small and largely unintegrated;uninvolved in interstate pipeline transportation; andwithout corporate affiliation with an interstate pipeline.1

In today's industry, very few companies could meet all of the above criteria; however, it appears that Definition 4 is a simple approach that can be used to fit nearly anyone's idea of an independent company because of its nonspecific nature. An Arthur Andersen & Co.2 survey of 375 companies handles the "relatively small" issue in Definition 4 by classifying majors as those companies with reserves in excess of 1 billion equivalent bbl [159×106 m3] (15 companies). Give or take four or five companies - or 0.5 billion bbl [79×106 m3] - this would appear to be a suitable line of demarcation. The survey further separates the companies with less than 1 billion bbl [159×106 m3] into integrated, pipeline/utility, and diversified, in addition to independent.

Prindle3 states the perplexing problem of isolating the concept of "the independent oil company" well when he qualifies his remarks on the subject with, "Whenever an ‘independent's perspective' is mentioned in this book, it must inevitably be something of a distortion, because the diversity of interests among independents makes any effort to aggregate their viewpoints misleading."