H Y D R O C A R B O N R E S O U R C E S

The University of Utah based in SaltLake City sits at the base of theWasatch Mountains on the easternedge of the Great Basin. It has appro-ximately 29,000 students from morethan 111 countries.

The oil shock of 1973 transformed the global energy picture. As lines of automobilessnaked down the street awaiting their turn at the pumps, the realization dawned thatplentiful, cheap energy was not something to be taken for granted. Many govern-ments and leaders in the petroleum industry began asking scientific questions aboutfossil energy and alternative energy sources. And it is to this environment that theEnergy & Geoscience Institute (EGI) at the University of Utah traces its roots.

Storming the Ivory Tower

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Central CaspianPhase 1

EGI Energy & Geoscience Institute at the University of UtahEGI Technical Report # 50501030

R V ABRAMS

This study continuesEGI’s 15-year record ofworking the Caspianregion from north tosouth. This phasedstudy collected, analy-zed, and interpretednew geochemical andchronostratigraphicdata for the CentralCaspian region.

InInttegregraation of the Ction of the Chrhronostronostraatigrtigraphaphy andy andPPaleoaleoenenvirvironmenonments of the Mts of the Mesoesozzoic andoic and

CCenoenozzoic Soic Secection of Ntion of Norortherthern An AlasklaskaaPParart 2t 2

EGI The Stratigraphy Group

Energy & Geoscience Institute at the University of Utah423 Wakara Way, Suite 300, Salt Lake City, UT 84108

by:Dr. Emil Platon

Dr. Paul J. SikoraEGI Technical Report

50501231-08-05

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EGI TechnicalReport

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The Stratigraphy Group

An integratedhigh-resolutionchronostrati-graphic andpaleoenviron-mental frame-work for theMesozoic andCenozoic ofnorthern Alaska.

Multi-phased study toimprove surface geo-chemistry calibration.Phase 1 evaluated andidentified current bestpractices. Phase 2 deve-loped innovative newmethods to sample andanalyze surface geo-chemical samples, andthe on-going Phase 3 istesting these newapproaches in the field.

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Raymond Levey, Energy & GeoscienceInstitute (EGI) at the University of Utah

The Energy & Geoscience Institute(EGI) at the University of Utah hasnow for a decade served as center for

dedicated research in the energy sector.Located in Salt Lake City in the Universityof Utah Research Park, EGI is a not-for-pro-fit research organization that has conduc-ted multi-disciplinary projects on behalf ofindustry and government for more than 30years.

EGI was created in 1996 through themerger of the University of Utah ResearchInstitute, an organization focused on geot-hermal energy, and the fossil energy groupfrom the University of South Carolina’sEarth Sciences and Resources Institute.

The merger of these two internationallyknown research organizations propelledthe University of Utah to the forefront ofapplied geological and engineering rese-arch focused on the energy sector. TheInstitute serves as a cost-shared researchlaboratory to the petroleum industry andgovernments, and has conducted morethan $200 million of energy research.

A university-based institute like EGI isthe ideal place to conduct such research,since today’s complex scientific and tech-nological problems are often too broad tobe solved by a single researcher working inisolation. Instead EGI creates an environ-ment where multi-disciplinary researchcan flourish. Involving students in thisdynamic environment exposes them to ateam-based problem-solving process thatclosely reflects the approaches used intoday’s corporations.

Building relationships withindustry

Traditionally there has been skepticismwithin the petroleum industry of the valueof university research. Too often the imagewas of academics sitting in their ivorytowers unwilling to tackle the problemsfacing industry. This is a caricature, of cour-se, that does not accurately reflect reality.But, like most caricatures, it contains a ker-nel of truth.

The foremost requirement for success inmeeting industry’s research needs is deli-vering information, approaches, knowled-ge, and technologies that are directlyapplicable to their problems. The foundati-on for doing so is communication and rela-tionships developed between the institute

and industry. This strategy has enabled EGIto develop the largest upstream energyindustry supported research program atany university in the world—its CorporateAssociate program.

Currently 50 companies from 19 countri-es support EGI research through an annualmembership. Together these companiesrepresent the most active internationalexploration companies in the world, with acombined market capitalization of morethan $1 trillion. As a Corporate Associatethey have direct access to EGI’s research,information and data, and scientific exper-tise.

By building personal relationships withpetroleum explorationists, EGI’s scientificstaff learns what industry’s challenges are.As a result, both the Director and the seni-or scientific staff work hard to developextensive personal networks within each

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Changing scope The history of research has been vari-

ed. During the 1960s and 1970s researchwas synonymous with large, well-respec-ted corporate laboratories, including BellLabs, General Electric, Dow, DuPont, andEsso/Exxon. These labs were multi-disci-plinary with broad research portfolios.They fostered innovation and made signi-ficant contributions to scientific knowled-ge, both fundamental and applied. In addi-tion, they provided lucrative, secureemployment for class after class of scien-ce graduates.

In the 1980s and 1990s the situationchanged. For better or worse, corporateemphasis shifted to near-term performan-ce, preferring to outsource everything thatdidn’t contribute to short-term profitabili-ty. The result was corporate downsizingand cutbacks that led many companies todismantle their large research organizati-ons.

In order to centralize decision-makingand performance responsibility, manycorporations adopted a business unitmodel. This reinforced the trend awayfrom scientific research, as business unitsinstead sought specific solutions to theirimmediate problems. In fact, in somecases corporations completely lost theability to fund research that could not bedirectly tied to a business unit.

But while corporations were reluctantto devote the necessary resources, theneed for such research remained strong.This need created opportunity for the uni-versity research community, and resultedin the formation of numerous centers andinstitutes dedicated to advancing the sci-entific and technological state of the art.

EGI has conducted more than 480 projects in 62 countries over the past 3 decades.

Amerada HessAnadarkoApacheBHP BillitonBPBPC Ltd.CEPSAChevronConocoPhillipsDevonEl PasoEnCanaENI-AGIPFronteraGaz de FranceHardman ResourcesKerr McGeeLUKOILLundin GroupMaersk OilMarathonNation's EnergyNewfieldNexenNoble Energy

Norsk HydroOccidentalOil IndiaOil SearchOMVPaladin ResourcesPetrobrasPetroCanadaPetronas-CarigaliPioneerPremier OilReliance EnergyRepsolYPFROC OilRWE DeaSamsonShellSipetrolSpinnakerStatoilTalismanTotalVintageWintershallWoodside

EGI CORPORATE ASSOCIATE PROGRAM

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company at both the managerial and tech-nical levels. They then develop approachesto solve these problems. Having establis-hed relationships with the explorationiston the front-line of his or her company’sactivities in a particular region or disciplinecreates a feed-back loop that involvesthem in the design of a solution, and incre-

ases the likelihood of a breakthrough.The Institute also receives strategic advi-

ce from their Advisory Board, comprised ofsenior executives from the internationalenergy industry and the University of Utah.The current Chairman of the AdvisoryBoard is Steven Bell, President of BHP Billi-ton’s global petroleum exploration and

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Best in classAn example of developing best-in-class

research programs is EGI’s Surface Geoche-mical Calibration study. Michael Abrams, a19-year Exxon veteran, joined EGI in 2000 asmanager of the petroleum geochemistrygroup. Based on his global experience eva-luating geochemical surveys he had alwayswanted to evaluate the successes and failu-res of surveys after drilling a prospect. Theidea was to evaluate current methodo-

logies and determine their efficacy for fin-ding hydrocarbons.

With the support of 15 companies, hedesigned a multi-year research project to dosuch an evaluation. Involving many of thesupporting companies’ experienced and top-notch geochemists in the analysis and inter-pretation, EGI evaluated 20 basins aroundthe world.

The basins represented a cross-section of

basin types and tectonic styles, includingthose with active and passive seeps, as wellas onshore and offshore measurements. Theresults were a series of calibrations andmethods to reduce the risk of misinterpreta-tion. Subsequent phases of the projectdesigned new methods to improve theresults of surface geochemical surveys andtest them in the field.

EGI is within a half-day drive of 5 national parks, which provide an excellent natural laboratory for geologi-cal research and field trips.

new business development. He is flankedby Vice Chairman Robert Ryan, GeneralManager of worldwide exploration atChevron, and Executive Secretary KennethCrouch, Executive Vice President at Kerr-McGee. The Advisory Board meets twiceannually to advise EGI on strategic deve-lopments in the global energy scene. Theresulting dialog is unique and valuable,and enables EGI to remain at the forefrontof worldwide energy issues and tacklingthe challenges faced by industry.

The need for global reachThe energy industry in general and the

petroleum industry in particular are inter-national in scope. EGI’s Corporate Associa-tes are from 19 countries with explorationinterests across the globe. As a result, overthe past 6 years I have personally visitedand negotiated cooperative research rela-tionships with industry and government inEurope, South America, Africa, and Asia.Developing and maintaining the contactswith the research sponsors and partnersthat are essential to EGI’s success have ledthem to develop a strategic alliance withImperial College London, and maintainoffices in Houston, Calgary, and Sydney.

The foundation for much of EGI’s globalresearch is alliances and partnerships withlocal organizations in countries where theyare active. These groups range fromgovernmental research organizations, suchas the Geological Institute of Azerbaijanand Geoscience Australia, to academia likeUniversidade Federal Fluminense in Brazilor Moscow State University. They have awealth of knowledge and experiencebeneficial to industry, and involving themin EGI projects provides opportunity todemonstrate this expertise.

The international and cross-culturalaspect of EGI’s research activities requiresscientific staff with similar diversity. EGI’spersonnel are from 14 countries and col-

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lectively speak more than 18 languages.They have worked on all seven continentsand in more than 60 countries. Many EGIscientists also have significant industryexperience, having worked for Exxon, Shell,Amoco, Unocal, and JNOC.

The business of applied research

Notwithstanding the success that EGIhas enjoyed, getting industry funds to sup-port applied research remains a highlycompetitive venture. The way to competesuccessfully is by choosing several discipli-nes as core areas, and then working dili-gently to create broad and deep expertisein these areas. This requires a constantsearch for the best and brightest scientistsand technical staff, and not everyone whowas successful in either academia or indus-try has what it takes to succeed in this envi-ronment. It requires entrepreneurial flair tosee and communicate the application ofscientific knowledge to industry problems.

In looking for new trends, strategies, orareas where EGI can expand its expertise,much time is spent benchmarking otherinstitutes and for-profit research corporati-ons. My objective is to find ways to enhan-ce EGI’s existing core strengths, add newvalue to EGI’s Corporate Associates, andidentify the problems that individual com-panies cannot tackle alone.

Sometimes developing or expandingcore strengths does not happen throughorganic growth, but rather by acquisition.An excellent example occurred in 1999when BP donated to EGI the Global Com-posite Standard Database, which had been

developed by Amoco over nearly 40 years.The database consists of detailed micropa-leontologic and other time-scale data toprovide detailed chronostratigraphic con-trol, spanning Cambrian to present, in over100 basins. It providesEGI with a tool to deve-lop high-resolutionchronostratigraphicframeworks in impor-tant oil-bearing pro-vinces, such as the Gulfof Mexico, West Africa,and the North Sea. Italso builds EGI’s abilityto conduct paleo-cli-matic and paleo-oce-anographic studies.

EGI continues toexpand and improvethis global database. Ithas great potential toimprove understan-ding of the world’spetroleum basins, aswell as earth’s history. In fact, it has potenti-al to improve understanding of globaltemperature fluctuations through time asdefined by changes in global biota. As suchit could contribute positively to the on-going debate on global climate change.

Science for energyThe common theme in our projects is

taking cutting-edge science and applyingit to industry problems. The world haschanged since EGI got its start in 1973 in ahigh-energy price environment, but thosehigh prices have returned.Then as now EGIis unafraid to storm the ivory tower and

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From Utah to Landmark

Bridging academia and industry to leadsuch an organization requires a blend ofacademic rigor and entrepreneurial savvy.Director Raymond Levey possesses thosequalities. He was appointed Director in1999, after serving as Deputy Directorsince 1997. His background includes adecade at Shell Oil where he was involvedin petroleum exploration, development,and research. He also spent 7 years at theUniversity of Texas at Austin where heserved as Associate Director for FossilEnergy at the Bureau of Economic Geolo-gy before coming to the University ofUtah. He earned his Ph.D. in geology atthe University of South Carolina.

A university-based institute needs notonly visionary leadership in the director’schair, but also within the university admi-nistration. The University of Utah excelshere. There is both a societal and Univer-sity expectation that its intellectual capital

will be an economic eng-ine that benefits the Sta-te and the world throughinnovation and scientificadvances. Their recorddoing so is impressive,ranging from the firsthuman implant of anartificial heart andadvances in geneticresearch to computertechnology and visuali-zation techniques. Manyworld-renowned high-tech corporations wereeither founded or arepresently led by Univer-sity of Utah faculty andalumni, including Land-mark Graphics Corpora-tion, Silicon Graphics,

Netscape, Adobe, Novell, TerraTek, andPixar.

EGI scientists have been working cooperatively with colleagues from the Geology Institute of Azerbaijan sin-ce 1991. Here they are inspecting a mud volcano.

tackle real-world problems with real-worldimpact. From the Arctic to Borneo, frompetroleum to geothermal, from basic toapplied research, they do it by buildingpersonal relationships and forging allian-ces.

And as a result, EGI is the place wherethe international petroleum and geother-mal industries come for the science to findenergy.

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Raymond Levey, Director of EGI, exhibi-ting at a recent conference, showingEGI’s global research efforts.

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