- Today we'll talk aboutthe prospect and play development process, and I'll go through very high level review,and then there will be subsequent Knowledgettevignettes to cover key aspects. The important thing toremember is that it's a process to assess the technicaland economic success of a project, and to work on lowering risk throughout the project. The keys are to have an early idea and carry that from afrontier basin concept all the way through a playconcept, to a prospect concept, and on into, ultimatelydevelopment drilling. We'll focus on the first phases of this. The economic process proceeds along with the technical process. So how do we decrease technical risk? The critical thing is, you need to understand the petroleum system. What is the petroleum system? The critical aspectsof the petroleum system are developing anunderstanding of source rock, the migration route ofthe hydrocarbons from that source rock after it's matured, a reservoir rock, intowhich the hydrocarbons can accumulate, then the seal rock, which will contain thathydrocarbon within the reservoir and you have to have the trap system to accumulate enoughhydrocarbon to make it economic. And with these elements,there's also a set of processes that need to occur. We'll go into a review of these aspects with this discussion. Within this play and prospect assessment, it's important to remember that you're going to be dealing with a team. In the team, it's veryinteresting, and a lot of fun comes out of this, you'redealing with geologists who come from a spectrum of exploration all the way up to productiongeologists, and with engineers who come with someexperience with exploration and quite a few focused on production. And then you have reservoirsimulation specialists. They all have a different concept of how this system should progress,and the progression goes from basin ideas, pretty much ruled by the earth scientists,in the petroleum systems, where you start gettinginto flow mechanisms and bringing in the engineers, into plays, where you become veryfocused on economics, and the amounts of oiland gas you may have. And into prospects. And as you're pulling allthe information together, you are trying to decrease risk. The full risk assessmentincludes geologic, economic, and political aspects. It's important to remember that if you're going through this play and prospect assessment process, that you'redealing with a broad team that has a wide variancein risk tolerance. You're going from exploration geologists who may have a tolerance of a success rate of 1 in 50 to 1 in 20, all the way down to a production engineer,who really doesn't like to have a risk of failure of more than 5%. So they like 95% assurancethat they are going to get what they're looking for. And so as your petroleumengineers and geologists work together, you're comingfrom a hydrocarbon system where you have maybe a1-6% chance of success through the play and prospect development into field development. And through that wholetime, you're decreasing the risk, bringing in more information. It's important to remember the probability of technical success isthe probability of each of those elements times theprobability of the others. So if you have zero probability of any of the critical elements,you will have zero probability of success foryour prospect play or well. To give you an idea of what this whole process looks like, we'lltake the example of, say, if you're an explorationgeologist in North America. And you're going to try and figure out where are we going to work. Where does the company want us to work? And you decide okay, we're going to work in northern NorthAmerica, so northern US and into Canada, and we'regonna start off looking at that. We're gonna come up on amajor basin, for example. Say the Alberta basin. Within that basin weknow we have deep basin, we have carbonates, we havethe Rocky Mountains system off to the west. And so we're gonna say, let's focus over on that western side. We're gonna developsome plays in that area. We're gonna look at thestructural development through time, we're gonnalook at which sediments were deposited, what kind of source rocks we might have had, etcetera. When structures occurred,when source rocks were there. Did we heat this system highly enough? Did we migrate materials? And then finally we're gonna come up with, in our play area, whichis the green circle, we'll come up with severaldifferent prospects and we'll do detailed analyses on these to determine how muchoil we may have, or gas. When was it in place? What depths might it occur at? And from this, we will then start developing drilling programs. And so this is just kind of a sequence of how this system works. So just to carry on to alittle bit of the high level, how do we select the basin? We're going to look at theplate tectonic setting. So for example, we maystart in the Permian. And we say, okay, what did the system look like in the Permian? What kind of sediments did we have? Did we have inland seaways, waterways, did we have sandstonesor carbonate systems? And how did these change through time? And what structural elementsoccurred at different times? And this will help usassess whether or not we're in a basin that might have potential for hydrocarbon developmentand accumulation. And we'll be starting off with perhaps gravity magnetic measurements. And moving into seismic, andthen moving into outcrops, moving into drillingsome exploratory wells just to get information.