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. Last Updated: 07/27/2016

Oil Drilling in a High-Tech Age

LONDON -- When you are drilling for oil deep down on the ocean floor, how do you know whether the reservoir you have found is full of fossil fuels or soaking in salt water?

The answer for oil companies, who waste millions of dollars drilling into so-called "dry holes," is an up-and-coming technology called electromagnetic mapping to pinpoint hydrocarbons, the main constituents of oil and natural gas.

Until recently, companies relied almost exclusively on seismic surveys, which use acoustic waves generated by explosions, to scour the seafloor for the right geological formations where oil and gas are mostly found.

Then the costly business of drilling was the only sure way to find out whether those geological structures contained the "black gold" that can be refined into automotive fuels and lubricants, or made into plastics and many other products.

The costs of drilling just one dry well in a difficult environment, particularly in deep sea, could easily top $50 million, global banking group Morgan Stanley estimated in a 2004 research report.

"In the industry now, electromagnetic mapping is definitely a hot topic," said Duncan Anderson, a project manager at Industry Technology Facilitator, which promotes new technologies for the oil industry.

"There are big bucks now going into it, and I think quite justifiably, seeing the results they have demonstrated."

To create an electromagnetic survey, receivers are dropped in a specific pattern on the seabed. Then a ship tows a machine that sends out electromagnetic waves. The signal the transmitters receive is affected by the resistance it encounters. Hydrocarbons show a higher level of resistance than water, rock or sediment.

Academics initially used electromagnetic signals to study volcanic systems. After more than a decade of research, the technology has become the powerful new tool in the multibillion dollar offshore oil exploration business that an

energy-hungry world is driving into more costly environments.

Morgan Stanley analyst Ole Slorer said electromagnetic imaging has triumphed over competing technologies because of its potential to revolutionize oil exploration.

"While there are several incremental efforts under way, the rapidly emerging technology of controlled-source electromagnetic imaging appears to be the only effort widely viewed as having game-changing potential," Slorer said in a research note.

One survey company, offering technology based on electromagnetic principles, is Norwegian-based Electromagnetic Geoservices, or EMGS. Terje Eidesmo is president of the company, which is owned by private equity firm Warburg Pincus.

Lucy McGregor, the chief scientific officer of British-based exploration company Offshore Hydrocarbon Mapping, said she believes electromagnetic surveys are also useful for studying how to maximize recovery.

For major oil companies, monitoring fields has become an important way to refine the process of recovery to ensure their full potential is exploited.

Eidesmo already has big plans for 2005. Trying to keep up with the demand by oil companies for the new technology means substantial expansion for EMGS.

"Right now, we have more activity than we can cope with," Eidesmo said. "We have one ship out there and we are in the stage of getting a second vessel in a month or two, and even a third one by the end of this year."