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Interviews

Canadian, British and American: ‘The evolution of a career’

An interview with John Nieto

Coordinated by: Satinder Chopra
John Nieto

John Nieto is a well-respected name in the oil and gas industry. With more than 35 years of industry experience behind him, and spending many years working at Mobil, Exxon-Mobil, Anadarko, Esprit Energy Trust, John has extensive technical experience in the international basins as well as the Western Canadian Sedimentary Basin. He also has strong leadership skills, which he has ably demonstrated all along, and continues to do so. At present, John serves as the Chief Technology Officer at Canbriam Energy Inc., a company that he co-founded, and which is actively engaged in exploration and production in the Montney. To go with the focus theme of this issue of the RECORDER, we approached John for an interview, which he very sportingly agreed to. He was very encouraging in sharing his impressions and opinions on different topics, and it was a pleasure chatting with him. Following are the excerpts from the interview.

John, let us begin by asking about your educational background and work experience.

I have a dual honours degree from London University, with geology/ geography and physics, followed by a postgrad from the Camborne School of Mines, Cornwall, U.K., in hard rock geology, with a focus on hydrothermal mineralization. After my degree, I worked as a wellsite geologist for Mobil Oil in Libya – this funded my postgraduate studies at Camborne. While in Libya, I witnessed several Schlumberger logging jobs and was fascinated by the logging engineer’s ability to translate physical measurements into something meaningful, whether it be lithology or fluids. I quickly made the decision to become a wireline logging engineer. This turned out to be a defining moment in my career. After four years of mainly open-hole logging, I joined BP (Britoil) as a petrophysicist. This meant I effectively returned to university for three and a half years under the expert tutelage of Roberto Peveraro, the manager of the petrophysics group. Rather than looking just at logs, the emphasis was very much on physics, and on integration with the rock and core analysis data. My geological background started to pay dividends!

Thereafter, I worked for Mobil and ExxonMobil after its merger, Anadarko, Esprit Energy Trust, and then co-founded Canbriam Energy in 2007.

How was your move from BP to Mobil?

left BP to join Mobil North Sea (MNSL) where my career took a jump! I worked mostly on unitizations in the Rotliegendes gas fields – really enjoyable detailed petrophysical work where the best technical answer wasn’t always required! It also introduced me to many of the problems that are faced in geophysics, geology and reservoir engineering. After three years at MNSL, I was moved to Mobil Research and Development Corp. (MRDC) in Dallas, Texas. This experience was priceless in my career, and I have to thank Mike Croft at MRDC for that. At the research lab I was lucky enough to work with some of the petrophysical ‘greats’, namely, Bill Mills and Scott Allen, who were brilliant nuclear physicists and invented the neutron porosity tool, and Joe Zemanek who invented the borehole tele-viewer, to name a few. Dave Herrick and Dave Kennedy probably had the biggest influence on my career when I was working on facies and permeability prediction from logs and core. They taught me to think ‘pore-scale’ and about ‘logging tool response problems’. Also, one of the people I really enjoyed working with was David Yale – a real expert in the area of rock mechanics – he was far ahead of the pack, especially in the area of acoustic anisotropy related to fracture direction prediction in core data. I published several papers with David over the years. At one point, I started to notice that sinusoidal log responses due to spiral boreholes (bit whirl) were becoming a real problem. Denis Schmitt, a geophysicist who is incredibly clever, assisted me on this problem, and I snagged my first patent!

had a chance meeting with a brilliant chemical engineer at the Lab – named Jorge Pita. He was astounded that I, as a petrophysicist, was able to tell him immediately whether water saturation (Archie) went up or down when he changed input parameters such as the saturation exponent or cementation exponent. He had built a complex objective function to do this. Working on unitizations at MNSL made me realize the value of technical decisions, and that many of these decisions were uninformed about their impact. One example was a Southern North Sea gas field, where we argued for 5 hours against the opposing operator to raise the gas-water contact. I got an urgent call during the meeting from our geophysicist telling me he had a problem with velocities and we needed to lower the contact now! With this experience in mind, I thought it would be valuable to be able to quickly understand the impact of any technical decision we made, regardless of discipline. So, we discussed building a program to faithfully represent a North Sea ‘Exhibit D’ – the legally binding cookbook by which equity split is determined. Jorge, using our Cray computer in Dallas, connected the ZMap mapping with petrophysical methods and engineering functions. All of a sudden, we could run sensitivities in minutes, which would literally take every other operator days! To this end, we were invited back to the North Sea and ran the sensitivities on Scott Field Unitization and later Statfjord in Norway. I named the project DESMO or Dallas Equity Sensitivity Module. Unbeknown to Jorge, it was named after the valve gear of my favourite motorcycle! This work earned us a commendation from Lou Noto, the Mobil President.

It didn’t end there. Mobil had just discovered Zafiro in Equatorial Guinea in 1995 and I did much of the initial petrophysical work. We had 3D seismic which was of excellent quality, and Jorge and I discussed incorporating petrophysical properties such as D-N separation, and resistivity to identify lithology, oil and water in the field. Jorge came up with the idea to use a neural network (home-built) to tie these properties to the seismic to create volumes of D-N separation and resistivity. The results were dramatic! The channel sand bodies were picked out from the background and appeared as ribbons which were truncated at the oil–water contact. A petrophysical colleague, John Quirein and also Bob Shuelke, further refined and developed the work with John Logel, a geophysical friend at Mobil. Other such neural network based methods have subsequently been commercially developed and are available to the industry.

With the ExxonMobil merger, I was offered the position of Formation Evaluation Skill Area Coordinator – the first time for this role in the newly combined XOM! What a job! Two years flew by in a flash; I was responsible for formation evaluation worldwide, which meant a lot of travel. Two weeks away in XOM locations from Norway to Kuala Lumpur, then a couple of weeks back in the Houston office to get caught up with my emails and my large (32 people) core group. (No smart phones then!) Much of this time was spent driving to the many different offices in Houston to visit my other co-located groups, from the Research Lab to the Production Company to the Exploration Company and back! Eventually, after 2 years, I had an advisor to assist with all the travel, as I was missing seeing my children grow up! Part of the job was to visit both Calgary and Newfoundland, as I had Mobil Canada and Imperial Oil staff in my skill area. I thought to myself at the time that Canada is one of the best countries I have been to – and I had been to 58! So, how could I ‘engineer’ a move to Calgary and live there with my family?

It was time for you to again make a change!

I managed to get a job in Calgary thanks to an ‘old’ Mobil connection who used his contacts – John Logel – a big geophysical name in Calgary. I started with Anadarko and we left XOM in Houston as soon as we could! I was managing the newly formed petrophysics group working with Henry Posamentier and David James. I did return the favour to John Logel and was instrumental in getting him hired as the Chief Geophysicist in Anadarko Canada a couple of years later! Great times! Though XOM were considered the technology leaders, Anadarko was an outstanding company to work for, as they also realized the value of technology – always supportive of new ideas. For example, I designed the Anadarko collaborative network so that technical folks could share learnings across the company, and named it ‘TechShare’, I think it’s still running globally. Four years in Calgary evaporated and I was asked to form a new multi-disciplinary reservoir characterization group at their Woodlands headquarters, working on reservoirs for the whole company. The team used Petrel (Schlumberger) to model reservoirs from Nisku to the Arabian Gulf. Great experience – total, daily integration between geoscience and engineering! We even started looking at houses in Houston again – but for family reasons, it was difficult to move back, so I left and joined my current boss, Paul Myers, at Esprit Energy Trust, as V.P Exploration. The rest, as they say, is history! I’ve worked nearly twelve years with Paul, including almost 11 years at Canbriam, since we founded the company in Paul’s garage in July 2007. The name came from Canadian, British and American, in honour of our founders!

With a strong geology background, what motivated you to diversify into petrophysics and seismic reservoir characterization?

With a geology and engineering background, petrophysics seemed to bridge the divide between the two disciplines. Reservoir characterization using a package such as Petrel, was the perfect integration vehicle for me. I found that I could contribute in nearly every process. In the 1990s integration wasn’t the norm. The process was more like unitization – very discipline specific – and I was never comfortable being ‘labelled’ the petrophysicist. That said, with the onset of ‘unconventional’ plays, petrophysics quickly became THE key to understanding a reservoir, which helped me considerably and was a definite advantage to Canbriam in the early days of the shale plays.

Given your wealth of international experience, were you concerned about just working in the WCSB?

Definitely not! The WCSB has incredible variety! I’ve met North Sea geologists who have zero experience in carbonate rocks. Here, you can drill a single well and encounter six or more reservoirs, including a limestone reef and a hydrothermal dolomite.

That said, Canbriam had a wide international focus when we first started, so my experience was useful. Also, I’ve been lucky to be included in the Warburg Pincus (our largest Private Equity investor) ‘Exploration Council’ which meets to discuss plays in a global context. I’ve also been able to advise Warburg on several international opportunities over the years.

It looks like, in the last 35 years, you have worked at different companies, in different areas of the world, and in different disciplines. Then you decided to carry on with your visionary, multidisciplinary, technical integration model at Canbriam Energy, and that too, you did successfully. How did you manage to do all this?

I always wanted to start my own company after working most of my career for ‘super majors’. That was great training and experience and I’m grateful for it, but when you put a large part of your own savings into a venture, I think it focusses you and keeps you awake at night. When you start a company with six people, you tend to do whatever is required. There is a clear order from startup to production. Geosciences, by necessity, are the first team at bat. You have to identify a play and produce maps of reservoir thickness and quality before deciding to spend millions of dollars on a farm-in or land sale. I mapped several plays from as far afield as Australia and USA, including Wilcox coals in Louisiana, before we decided to enter the Montney in early 2008. However, always thinking about integration, I recall jokingly putting a placeholder for a Petrel license in my first budget in 2008 – totally inappropriate at that stage of our company!

I have to say, once the team knew that we had a great asset after the results of our first Altares well, I thought multi-disciplinary integration using a shared earth model wasn’t too many years behind.

Geophysicists

I am sure you must have come across various challenges in your 35 years of experience. Tell us about some of the challenges you faced, whether they were challenging projects you worked on, challenges in setting up a group in your present company, or something else.

I think my career, as with most people’s, comes with daily challenges. When I was an individual technical contributor, there were always new problems to solve to help the company discover or delineate new assets, or new techniques to save the company money. I am a firm believer that disciplines should communicate and not have their own turf. It’s priceless to see what happens when a drilling engineer realizes the value of a 3D seismic attribute! As you can imagine, working on integration has given me one or two challenges over the years!

I’ve been very lucky to have worked with so many brilliant people in my career. I think I know my limitations and strive to hire people that are better in a discipline or smarter than me. This is the key to a high performing technical team: when everyone knows what they can bring to the table and can leverage each other’s strengths. I have been fortunate to be able to do this at Canbriam!

As a manager, and as a vice-president, challenges are very different. Not everyone has the tools or interest to become a manager. In every company I have worked in, technical contribution is valued as much as, or higher than, management skills. In addition, every manager should try to retain their technical skills, or at least retain a ‘skill-spike’ in one particular discipline. I think this gives a manager more credibility when interacting with his or her group. In any event, one of my foundations of management is to know each member of the team and their goals. It’s easy to do a Myers-Briggs survey and pigeon-hole the team members – not very effective in my opinion. I was always taught to succession plan and identify my replacement; Mobil, XOM and Anadarko were all similar in this regard and I think that I have succeeded in this at every company I have worked at.

Let us talk about the Montney, where your company is focused in a big way. How do you manage to integrate the different disciplines to reduce risk and produce the ‘best technical answer’?

From the early days of Canbriam, we have had a view that unconventional reservoirs are not ‘factory’ or ‘statistical plays’. There is huge variation in any unconventional formation, and the successful companies isolate the sweet spots within the trend. We have used a Venn diagram approach, whereby maps of key parameters are overlaid. We isolated Groundbirch first, and were narrowly beaten by a super major at the important 2008 land sale. We immediately moved to the previously mapped Altares ‘sweet spot’. At that time, Montney penetrations were sparse, but enough key wells were present to produce useable Montney total isopach and net pay thickness maps. Other mapped parameters that we have used in this overlay approach include; vitrinite reflectance (Ro) and liquids maps, formation pressure and structure maps.

Subsequently, we have been in development mode for several years now. The importance of 3D seismic to optimizing development cannot be over-stressed. Pre-stack inversion products and edge detection seismic attributes are key to optimizing drilling and completions in a field area. We were lucky to have hired a very versatile senior geophysicist, one of the leading inversion experts in Calgary, onto our subsurface group at Canbriam!

Correlating well log data with seismic data to understand rock variability and in turn using this to assist with engineering completions and production is a big challenge. Could you comment on this and how you go about doing it?

I think the important thing is to do just that! Recognition of different resolutions is important, even in facies and permeability prediction from log and core. I published on this topic back in 1994 at the SPWLA in Tulsa. In prediction, the lowest resolution data is the lowest common denominator. No point in trying to predict density porosity from a deep induction log, you’ll get porosity at the same lower resolution as the resistivity. The same goes for seismic data. Log data must be smoothed to be used effectively with the lower resolution seismic data. Integrating with core data is always important if you are trying to predict anything lithological from a log; we do that routinely at Canbriam. Working with a shared earth model, it is understood that the reservoir engineer must upscale the geocellular grid to optimize performance on the dynamic earth, or reservoir simulation model. That said, multi-processor (MP) computing power is such that enormous models of >100 million cells can be simulated – that would have taken days on a Cray in the 1990s. We are lucky at Canbriam to have an excellent senior reservoir engineer who specializes in simulation modelling and works seamlessly with our senior geophysicist. The results speak for themselves.

There can be an enormous variation between wells drilled in adjacent areas, counties and provinces. So, how do you decide on the probable drilling locations in the Montney play?

Once the Montney fairway has been determined, as discussed, the 3D seismic data again assumes great importance. Proximity to faults, changes in lithology, porosity and mechanical properties within vertical layers, are all considered, prior to selecting a well location. This is accomplished in our visualization room, with both subsurface and operations teams. The same applies to well completions, with a goal of maximizing well productivity, yet minimizing risk of casing deformation and induced seismicity.

Before you get down to drilling wells, you must be carrying out cost-benefit analysis in terms of decline analysis, EUR, and how soon the reduced output will need to be replaced. Please tell us about that analysis. Does it always pan out as planned?

In our case, the high overpressure helps. We choke our wells back to 5mmscf/d for a variety of reasons. This allows us to keep a well’s production flat for more than a year in some cases, as we don’t see the high initial declines that other operators see. It means we can manage our production with fewer wells, too!

The cost of drilling and fracturing depends on many factors, including the play type, depth of shale, length of the lateral, number of frac stages, and geology. How does the cost of drilling a well in the Montney compare with a similar well drilled into, say, the Horn River or Duvernay, and then, say, compared to the Bakken, Eagle Ford or Permian?

I can’t really comment for all these plays, though I do know, regardless of the play, costs tend to reduce over time through both service company and operator innovation and clever technical work. Our costs in the Montney for drilling, completion and tie-in, have come down more than 50% since our first wells and I note that the Duvernay operators are achieving similar savings these days.

Just as an off-the-cuff estimate, how long does it take to drill a well in the Montney, what is the average length of the lateral, and what is its average cost?

This is an interesting question. Not all Montney is created equal, consequently there is quite a spread on time to drill and therefore, cost. An average cost for a Montney horizontal is a bit meaningless, as it changes from area to area and operator to operator. I can speak for Canbriam. We are unusual in that in our Main Fault Block area, we have very highly overpressured Montney, probably the highest in the whole trendalmost 2X hydrostatic. This has huge benefits for OGIP and productivity, but requires higher mud weights, leading to slower drilling times. That said, our drilling days on average for the Main Fault Block (MFB) have been reduced by more than 40% since we started, with additional potential time savings to come. There is certainly a general trend to drill longer laterals, as this probably gives the best ‘bang for your buck’ as far as EUR increase per well.

How would you react to a statement such as, “There is a certain amount of creativity required to do effective seismic interpretation and to integrate it with data from other disciplines.”? What is required?

The creativity comes with experience, as does an appreciation of the needs of other disciplines, to help them succeed in their work.

What are some of the professional goals you are working towards?

I have been fortunate and have achieved many of my personal goals over the years. I’ve published and presented around 40 technical conference talks and co-authored another 20 more. I’m sure you would agree that I’ve achieved every technical person’s dream, to present petrophysics to Her Majesty the Queen at the Clyde platform inauguration in 1987!

My succession plan at Canbriam and promotion to Chief Technology Officer has allowed me to spend more time in an advisory role internally, ensuring that multi-disciplinary integration continues. I am evaluating new technologies and their applicability to Canbriam, recently as part of Darcy Partners. I have become involved with a couple of boards as a director, one being with ARC Financial and Huron Resources and the other with the Canadian Society of Unconventional Resources (CSUR). I enjoy this variety and would like to be on another board at some point.

On the lighter side John, it is usually said that people who fall in love with geoscience stay at it and persistently do good work. How would you react to that? Seems to be true in your case?

Geoscience; I think you either love it or hate it, but to be good at it takes a career – there’s always something new to learn!

I do worry though, that in the current economic climate, universities are still turning out hundreds of new, keen geologists and geophysicists, only to have their hopes dashed by the realities of unemployment. I wish the government and political factions would get together and start doing what’s good for Canada.

John Neito

You have written and published quite a few research papers and, as you mentioned, have conducted some courses, as well. Ever thought of writing a book? I can furnish an inspiring quote for you by a British Statesman, ‘The best way to become acquainted with a subject is to write a book about it’ – Benjamin Disraeli (1804 – 1881). What say you?

If I ever write a book, it’ll be titled, “The Joys of Starting an Oil and Gas Company” It would be a best seller, I’m sure.

You have volunteered your time in serving on the professional societies as an executive or on committees. How important is it, and how time consuming is it, if one were to think of following in your footsteps?

I think it’s very important to give back! Personally, I’ve developed petrophysics courses for Anadarko, log/core integration courses for the CWLS and Joint Geoscience Conventions, and donated all proceeds back to the CWLS, probably on four or five occasions. I was the 50th President of the CWLS and co-chair of GeoCanada 2010. I made a point of doing something every year for the CWLS between 2002 and 2012. My volunteering time is now devoted to the CSUR where I’ve been on the Board of Directors for four years. I enjoy presenting or co-authoring technical talks and I would like to continue as long as I can, the last one being at this year's URTeC in Houston.

What other interests do you have?

Many! I ride a Ducati and have five other vintage motorcycles, mostly Triumph triples! I like to play golf, though can’t get good at it only playing five or six times a year. Lately, I have been encouraged by friends to take up long range target rifle shooting. I’ve joined a club and, so far, have won a couple of gold medals, which I’m very proud of. We’re members of a Springbank wine club and enjoy that every month. My wife and I enjoy travelling, sailing and cruising, but we now have two grandchildren so there’s this whole other “hobby”!

What would be your message for young geoscientists who are entering our profession?

Work hard to get good grades, and take courses that will get you employed. “Environmental” doesn’t have the stigma attached to it that it used to have. Then, I would say, network, network, network. In my experience, the best networkers manage to get employment, and even working under contract looks good on your resume. And don’t forget, your resume is very important. It’s not for everyone, but doing a Master’s degree can give a distinct edge when it comes to employment. Finally, I suggest you pick a topic for your thesis that is going increase your chances of employment.

I hope the industry turns around soon. It has already been four difficult years for new graduates!

End

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