From the President- February 2010

 Statistics and the Box—Inside or Out
“Think outside the box.” This is a catch-all phrase that has been around for generations. It is meant to inspire one to look outside traditional methods for solutions.Management uses the phrase to excess. The trouble is, they rarely mean it. Thinking outside the box is, after all, risky. Things that have not been tried before often fail. Failure is not something that is advantageous to anyone’s career goals. This, of course, makes implementing anything conceived “outside the box” a very risky career move. Think Charlie Brown. If it works you’re the hero. If it doesn’t you’re the goat. These types of projects will not move forward in most companies without a champion, someone willing to risk it all to make the project a reality. The modern equivalent of “Who will bell the cat”? I heard recently of a company that instructed its exploration staff to use new innovative ideas to find large oil prospects in new areas. Oh, and make them low-risk please! High-risk projects would not be considered in this “think outside the box” strategy. Good luck with that.Managements that are more grounded in reality also wrestle with new ideas and lower appetites for risk. I read an article about a high school football team in Arkansas whose coach did not believe in punting away the ball…ever. They go for it on every 4th down. They do not kick field goals or extra points. They always do onside kicks. They do not even list a punter or kicker on the roster. Sounds like total madness doesn’t it? Well, the team has won 100 games in the last decade including the 2008 Arkansas 5A State Championship. (This is going somewhere, I promise) The secret behind the coach’s strategy?Statistics. The coach’s research led him to realize that the average high school punt nets 30 yards while 50% of 4th down efforts succeed. Since controlling the ball is the name of the game it makes more sense to work the statistics and try to keep possession. As for the kickoffs, the statistics place the ball after a kick off on the 35-yard line while an unsuccessful onside kick ends up on the kicking team’s 48-yard line. There is a one in four chance the onside kick will work. That means he is risking 15 yards for a one in four shot at keeping the ball. All the statistics quoted are the coach’s, and I have certainly not checked any of them. But the point is that he developed an “outside of the box” system and implemented it successfully. The real secret is developing a system you believe in and having the fortitude to stick with it.
 
Managements use statistics extensively. They sometimes even use them correctly. The main problem is that everyone is always looking for that one thing that will solve the issue of risk for them. The one magic number, the one constant that can be plugged into the formula and voila! One instantly knows whether to proceed with the project or not. For instance, some companies will not drill a prospect that does not have amplitude. Of course most amplitudes are not hydrocarbon indicators, but why worry about that? There is also the question whether or not you should expect to see an HCI in a particular prospect, but no sense in worrying about that, either. Just drill amplitudes is the company line. The result is that in order to get a prospect drilled there are some very odd “amplitude” maps running around out there. The company has latched onto something that it thinks will mitigate risk. The reality is usually not that cut-and-dry. The real trouble with drilling the statistics is that you will never drill anything that hasn’t been drilled before.
 
The fact is that exploration IS risky. If you want to play it safe, you’re in the wrong business. We must do everything we can to keep the risk down but if you are truly exploring there will be risk, and plenty of it. I once saw one of those corporate motivational posters which actually stuck. I believe most exploration geologists already follow the philosophy it enthused. If only we can get management to believe in our prospects as much as we do, perhaps they would believe it as well. It read, ”You will never discover new lands if you won’t lose sight of the shore”. We must lose sight of the shore, career or not, to make the discovery of a lifetime.
Happy hunting!