“Explorers always work on the frontier, that moving boundary between the known and the unknown, between the risk and uncertainty of tomorrow’s prospects and the relative comfort of today’s established plays,” wrote “Pete” Carragher in 2003 when he was managing exploration quality assurance at BP.
Carragher, a CIMS Industrial Fellow, has been involved in oil and gas exploration since 1974 when he graduated from King’s College London as a Tennant Medalist with a B.S. in geology and joined a small consulting firm and then Amoco, which merged with BP in 1998.
At BP he advanced to VP of Geoscience and Exploration, helping to assess new resources and areas of exploration potential, and then to BP’s chief scientist of the Deep Water Horizon Response team, working to reduce the environmental impact of the oil spill.
After retiring from BP in 2010, Carragher joined the Houston-based consultancy Rose & Associates where he is a partner, consulting with oil and gas companies on exploration and prospect evaluation. Innovation Management Report’s Editor Michael F. Wolff began the interview by asking:
You’ve had many different jobs during your career in oil and gas exploration. Has there been some intellectual common denominator to it?
The problem with exploration is that you are going to drill a well where one has never been drilled before. You are going to look for something in a place that has never been investigated until that point in time. And whether it’s 5,000 or 30,000 feet below the surface, it’s still a long way from where you are.
You are, in a sense, trying to build a picture from imperfect information, which is the reason there’s always risk in the exploration business. There is a whole technology involved in trying to reduce that risk and increase the accuracy of your prediction.
The other thing that happens involves a concept of efficiency in which the more obvious features get detected first and drilled first. That means you will always be at the edge of your technology in making the next exploration discovery because you have found the ones that were easy with the older technology.
So you end up in a constant battle of trying to improve the technology and the interpretation and integration of all the different technologies in order to stay ahead. It’s actually what keeps this whole industry fresh.
Is it fair to say that your entire career has been one of engagement in this battle?
Yes, and the battle is that the next exploration well has yet to be drilled and so always remains both risky and uncertain. However, once people start to find good exploration trends they enjoy a pretty high run of success.
Angola in the early 2000s was running at 90-percent success rate because people had cracked the particular geology and knew exactly what they were doing. But then they swept through all of those prospects and they were not there anymore. They were drilled and now they’re oil fields today, which is good but, “What are you going to do for me tomorrow?” is always the question for the explorer.
Within this constant battle, why has innovation been so important to you at BP and Amoco?
People who don’t know anything about oil and gas might say it’s a mature industry, an old-fashioned industry with no innovation going on. But you only have to look back at the last decade or so to see how wrong they are.
I’ll just pick four things that nobody knew existed and now do exist. First, exploration of the deep water Gulf of Mexico began in the late 1990s, and a huge amount of technical innovation has gone on. I played a supporting part with a BP team developing the idea and implementing wide-azimuth seismic, which is now the common technology in the Gulf of Mexico and, in fact, in many parts of the world.
Wide-azimuth seismic is what exactly?
This involves a fleet of seismic vessels. Two or more vessels have air guns that create sound energy that penetrates and is reflected from layers in the earth. The reflected seismic energy is recorded by a vessel towing an array of 8 to 10 separate, 10-km-long seismic streamers. These vessels have been called “the largest moving objects on the planet!” Supercomputer arrays convert the raw data into useable seismic volumes that geophysicists and geologists can interpret.
A tremendous amount of high-quality science has gone into seismic and developing the deep water Gulf of Mexico. So that’s one big thing, completely different.
Second is gas from shale. If that’s not innovative, I don’t know what is. Completely unheard of a decade ago, and now the country is sitting on 100 years of supply!
Third: offshore Brazil. Everybody knew there was no oil in offshore Brazil until somebody suddenly discovered billions and billions of barrels of it in a completely unanticipated reservoir. Somebody will say they knew all along it was going to be this microbialite carbonate reservoir, but not really. People drilled a structure and found a reservoir that was previously unknown at this scale.
Number four: We’re on the verge of revolutionizing the imaging of the Earth one more time, which means that frontier is being pushed forward and outward. Today we can see things we couldn’t see just a few years ago. Once you can see the geology clearly, you can evaluate, make a wise decision and drill a well in the right place.
My point about these discoveries is that they’re all hugely innovative and if people weren’t innovating, none of them would have happened. The trick for an oil company is to recognize these innovative breakthroughs and try to gather some advantage. It may only last a year or two, but you want to gather advantage in that particular area ahead of the pack.
At a more micro level, you’ve told me that you consider yourself effective in helping to push ideas over the so-called Valley of Death. Explain what you meant.
This leads to my connection with CIMS. In the early 2000s, I was reporting to Kenny Lang, BP’s vice president of Exploration and Production Technology. He told me he wanted to create some space for our technology people to be more innovative. His reason was that a service mentality had been imposed on the technology organizations. This meant E&P technologists had to — and still have to —charge out their time to the businesses.
The appeal to the leadership was, obviously, that this would make technology more responsive to the business. Well yes—except it made technology more responsive to cost cutting in the businesses and people had to scramble around for job codes and work and so on and so forth. Everything had to be done with a particular piece of business in mind.
The result, in general, was that people were being driven down into more mundane things that wouldn’t break through anything because a breakthrough idea is the hardest thing to sell to a business. That’s the Valley of Death: you have a really good technology idea, but how do you sell it to somebody in the business? They are often only interested in the bottom line. “What can you do for me today?” and not, “What can you do for me tomorrow?” This was the problem caused by businesses driving a hundred percent of the technology department time.
Kenny Lang recognized this problem and decided we needed to do something about innovation. I knew that Prof. Steve Markham and other CIMS people had been working in this space, so I volunteered to take on the job. With Steve’s help, I formed the BP Innovation Board [see CIMS Technology Management Report, Fall 2006], got some people involved in it, and built a process to budget the funding.
A number of ideas have come out from the Board that have actually pushed the research program forward. The way I think it worked best was that a BP researcher could go to the Board and be funded for up to a month of work in which to mature his idea and push it into the research program. It was actually a seed-funding mechanism and I think it’s been recognized as something useful.
So this is what you meant by pushing ideas over the Valley of Death.
Right. Now, the Innovation Board is pretty hard on ideas too, in its own way. They have to be; they keep asking people, “If it works, how would it be important? Why would I want one of these if it worked?” Steve’s been very good at helping people think through, “Is this really a technology you’re developing? Is it a product? Do you know what the market is that you’re trying to impress with this idea?”
As a result, there’s been a general increase in confidence through the organization about what it takes to push forward an idea and get it funded. Even if they’re not using it in innovation projects, they can use it in their day-to-day projects as well, so that’s actually quite good training.
Were you involved in any other management process like this, or was it mostly the technology?
The main process that I’ve been involved in for decades has been assessing risk and measuring volumes and so forth, which are complex and tricky sorts of tasks. I guess my modest claim to fame in Amoco days was I actually drove the introduction and development of our own risk-assessment system for prospects. This has turned out to be a reliable and valuable toolkit. Although the ideas were not unique, the underlying processes have been industrialized in the true sense of the word. Every exploration company now has a similar system.
You’ve been described to me as “monumentally impatient” and “demanding of in-depth thinking and analysis.” Fair description?
One of the things you find, at least in the oil and gas business, is that superficial is nearly always wrong. If you’re trying to find out the difference between a prospect that will work and a prospect that will fail, then don’t expect them to talk to you. They don’t have a flashing light on them saying, “I’m going to work,” or “I’m not going to work.” You have to spend a decent amount of time diving into the details to understand exactly what’s going on because exploration is an easy business to lose your shirt in.
Only a few companies actually make money at exploration. And so there is a differentiator in performance. If you look at things superficially, you jump to the wrong conclusion and end up drilling a lot more dry holes than you need to and missing things that you should be taking a risk on. So you can get impatient with people because they’re sometimes missing the important issues.
The people who are really, really good at this ¾ not myself, but you see these people in the industry ¾ they go straight to the heart of the matter very, very quickly. They don’t dance around the issue for a long time. They figure out what the critical thing is and they work that really hard. And if it doesn’t look like it’s any good, they stop and go onto the next thing.
Where you get to be impatient is when people are working on peripheral parts of the problem and not getting to the heart of the matter. They’re wasting their time, they’re wasting the company’s money, and they’re wasting the effort because it’s not going to go anywhere.
I’m glad I asked!
Just to illustrate, let’s say that in order to build an exploration prospect, you have to complete six tasks, which is quite reasonable. You have to know about the source rock. You have to know about the migration. You have to know about the physical trap. You have to know about the seal. You have to know about the reservoir presence and quality, and you have to know something about the pressures.
So there’s a question; you’ve got to do every one of these tasks and they all take a lot of time. How many ways are there of organizing these tasks? Well, people are astonished when I keep telling them that there are factorial six ways or 720 possible paths to complete these six tasks. This is why some parts of the industry are quite inefficient, because they’re going through these six necessary steps in the most inefficient way possible. They’re not getting to the most important thing first.
How do you train people to do this, to get to the heart of the matter quickly, or is it just instinctive in some people?
One of the other things I helped to put into place at BP was a 21st century explorer program. I didn’t write the courses or anything, but I did muster the intellectual horsepower in BP to writing down some of these tips and tricks about moving quickly. The way we approached it was that people needed to know the basics: the state of the art in geophysics, in petroleum systems, in reservoir geometries and geology.
So we had these state-of-the-art courses taught by subject matter experts in the company. On top of that, we had an integrated program where we took people away for a week and forced them to do an exploration project in a couple of days. When you compress time, you have to think quickly. They can’t beat around the bush because they have only two days to come up with the project.
You have to do a project in a ridiculously short amount of time. You obviously wouldn’t do a real project in this amount of time, but people were divided into maybe six or seven teams and while the performance of the teams varied, everybody learned to do the assigned project rapidly.
So it is possible to train people to get to the heart of the matter quickly the way you say?
Yes, to some extent. Obviously, there’s individual talent involved. The way this course worked, some people who had 25 years’ experience wrote afterwards that, “I’m going back and doing things differently tomorrow.” I was like, “Wow!”
Can you draw any lessons from your oil and gas industry work for innovation managers in other fields?
I think the answer is yes. Whether it’s an Armstrong or Xerox or someone else, it seems to me that everybody has a frontier they are pushing on, a place they haven’t been before but need to go. I like the classic American idea of the frontier as a sort of a thin line that you’re pushing westward. It’s hard to do that.
The frontier is something that you have to push forward, and it’s always there in front of you. So people need to get clear about what that frontier is in their own context. Then they have to dissect that until they can say, “If only I could do X, Y or Z, then I would be able to move forward.” In the oil and gas industry it’s, “If only I could drill deeper. If only I could drill in deeper water. If only I could see underneath the salt. If only I could see underneath the basalt.”
All of those sorts of “if only’s” are the things that generate huge opportunities and new ways of making money. I believe that overview of where someone’s industry is and where they’re going and what they want to do would be quite useful.
Then you would advise people to look for the frontier in their own industry?
Yes, rather than creating a solution to a problem that may or may not exist.
Let’s talk about your background a little. You’ve been involved with oil and gas exploration since you graduated from Kings College in 1974?
What did they give you the Tennant Medal for?
Professor Tennant was one of the first professors in the world of geology. The Tennant Medal was struck in his honor and awarded to the leading graduate in the graduating class every year. That was me in that year.
I’m interested that before enrolling in Kings College you worked as a chemist.
Not exactly—let me tell you the story. My friend’s father was a mathematician and a section leader at Unilever Research, the people who make Sunlight Soap. I grew up in Birkenhead near the Unilever factory, research center and model village at Port Sunlight. I wanted to be a chemist when I was in grammar school (our U.S. high school). We didn’t do geology, which isn’t a very common subject in high schools in Britain, but we had two very smart chemistry teachers. In my advanced chemistry year, there were about eight to ten of us in the class and those two Ph.D. teachers.
So we had a really good lab and we knew what we were doing. As a result, I was able to get a summer job at Unilever. But I got there after the lab positions were filled and so was assigned to Operations Research.
My assignment, which I obviously remember clearly, was to map the careers of chemists. There were several divisions, including basic research, applied research, manufacturing, chemical engineering, and product testing. After analyzing the interview forms I was given, I found out— much to my horror— that most of the chemists ended up after about ten years moving out of basic research because the latest and greatest new PhDs were coming in. And unless they were in management, like my friend’s father, they seemed to end up testing whether washing powders worked or not.
Well, I decided that I didn’t want to do that. And since I had always been intrigued by geology, I applied to university to do geology and not chemistry.
What intrigued you about geology?
I learned from the university literature what at the time was a famous adage: “The best geologist is the one who’s seen the most rocks.” In other words, there was the idea, which I think is born out by my own experience, that cumulative experience in geology and geo science is actually a good thing, and that you actually get better as you get older, not necessarily less useful. Cumulative experience is really important because the more things you’ve seen, the better you are able to interpret what you see. I think in general that’s been proven to be true.
Why did that information make you want to go into geology?
It was the opposite of what I thought I had discovered, in the industrial chemistry world at the time, which was that as you got older you somehow got less creative.
So you got the sense that you could become more creative as you got older in geology?
Yes, and more useful.
That must have resonated with something. Had you as a boy been interested in minerals and rocks or anything like that?
A little bit. I was an outdoor person, mountain walking, looking around the Welsh hills and so on. I was a big Boy Scout, always camping and all that good stuff. We were always roaming somewhere.
Were your parents involved in any kind of technical business?
No. My dad was a bricklayer. I was the first person in my immediate family to go to college.
Back to BP, what were your principal responsibilities there?
I was very involved in the seismic business. I held BP’s relationship with the major global seismic contractors. BP is a big driver of new seismic technology, which gets implemented at scale through the seismic contractors.
I was also involved in the staff and the succession planning for the exploration department. I was involved in the exploration forum, advising the Exploration VP who approved every major expenditure that BP chose to invest in.
I also had the responsibility for signing off on discovered volumes. When you make a discovery with an exploration well, you have to estimate what was actually found, and I had the accountability to sign that off with the chief reservoir engineer.
What was your involvement with the Deepwater Horizon blowout?
The Exploration VP authorized the Macondo Well as part of a program of exploration in Mississippi Canyon. I was in the group advising him on that decision so I knew a lot about the Macondo well before the Deepwater Horizon incident and the blowout. After the exploration portion of the well was completed and before the incident I was actually preparing the work plan for the signoff of the resources, which was part of my job
Shortly after the incident occurred I worked with the team to help them assemble the data for controlling the blowout. BP had to figure out how to get the well killed, and the geology and geophysics were important there. The geoscience team assembled all of that data and started planning the relief wells.
I was involved in that for a couple of weeks when a friend and colleague who had been in Louisiana the day of the disaster called me and said he needed help down there. I went the next day and was BP’s chief scientist in the response effort from the middle of May until the middle of September, by which time the oil had stopped flowing for a couple of months.
The main area I was involved in was the monitoring and mapping of oil in the deep water, and in monitoring the changing nature of the oil once it reached the surface of the sea. We documented the rapid weathering and evaporation of the oil in the warm weather conditions of the Gulf of Mexico ¾ using advanced chemistry techniques. So it was handy that I had kept up my interest in chemistry over the years!
Also of considerable practical and scientific interest was the discovery by scientists from Lawrence Berkeley National Laboratory of specific new species of oil-degrading bacteria in the deep water Gulf of Mexico.
And you’re now writing a white paper on oil seepage for BP.
Yes. I’m a senior scientific advisor as a consultant in the BP Gulf Coast Restoration Organization. In 2011, I organized and executed a natural seeps survey because natural seeps offer insights into the processes of oil and gas migration and dissolution and biodegradation. Although natural seeps are orders of magnitude lower than the Macondo release, many of the same processes are active.
Finally, what next for Peter Carragher?
Steve Markham and I have a little idea that I just need a bit of space and time to pursue. We’re interested in the carbon dioxide problem and the general global warming problem. We’ve been thinking about this problem in a rather innovative way and hopefully something may come of it someday, but we’ll see.
I look forward to talking with you about it.
If we get that one off the ground, it will be a big deal.