Financial Times: Rivals get lost in a sea of names

By Sheila McNulty in Houston: Published: December 4 2006 02:00 | Last updated: December 4 2006 02:00

In the office of Greg Kelleher, Devon Energy’s manager of Gulf of Mexico exploration, is a bookshelf lined with binders tagged Caterpillar, Koala, Flying Squirrel, Sleeping Bear, and so on. It does not quite sound like the reading matter one might expect of a man responsible for exploring the ocean for billion-dollar drilling prospects. But that is precisely the point.

Each binder represents a prospective drilling field – or “drilling prospect” – and, in keeping with industry tradition, they have been given names that make it impossible for those outside the company to identify the field or the block number that denotes its location on a map of the Gulf.

“It is so people can go outside the office at lunch and talk about prospects, and nobody in Houston – an oil city – knows what they are taking about,” says Jeff Oslund, Anadarko’s exploration manager for the western Gulf. “There is a lot of eavesdropping in Houston.”

Fields are given names elsewhere in the world; following local customs they might be named after important leaders, geographical sites, or, in the case of the North Sea, birds. Yet C. Scott Cameron, Shell’s vice-president of global exploration strategy and planning, says the widest range of names occurs in the US, where the Gulf is a hotspot for deep-water exploration.

Not only do such “security codes” provide protection when discussing prospects in public, but they make communicating about the massive size of multiple-block drilling prospects easier. For example, each time Chevron cited its prospect in the Green Canyon area, it would have to refer to it as “Green Canyon blocks 640-641 and 596-597,” instead of “Tahiti”.

The approach to naming such important assets is notably casual for this otherwise conservative industry. Shell, for example, once named key prospects Bullwinkle and Popeye. These formed part of a broader cartoon “theme” – which each company adopts and then selects its names from. Other themes companies have used include beer and guns, for example.

Once the theme is decided, the companies let the earth scientists who identify prospects name them. Devon’s mapping team has put together a list of themes for consideration in the next bi-annual leasing round, when the government will lease out blocks of the Gulf to companies. Its themes include beaches or resort destinations; muscle cars; moons around Saturn and Jupiter and university mascots. They will select one of the themes as next summer’s bidding draws near, and then pull names for each drilling prospect from the selected theme.

Mr Kelleher says the company really prefers “macho” names – “you want big prospects.” He notes with a smile that the recent rollercoaster theme was “fun” and set a good tone for the meeting for top executives to decide how many prospects to pursue.

Rarely do company executives reject a name. However, not all earth scientists see their prospects developed. Those that remain in a company’s inventory may end up with someone else’s name should the company unload them.

Alternatively, names can fail to stick when companies join together to share ever-increasing expenses, each bringing its own code word for the prospect to the table. Michael Davidson, a Chevron earth scientist, notes that the Knotty Head prospect, for example, was called Cougar by Chevron and Mangarai (after an Indonesian railway station) by Unocal. Yet Knotty Head, named after a prize bull, stuck as Nexen Petroleum became operator of the project.

In addition, trademark disputes have sometimes forced companies to move towards more generic names. BP had to rename its Crazy Horse prospect Thunder Horse, after the family of the famous Indian warrior objected. Bob Malone, BP’s regional president, headed a delegation to South Dakota’s Great Plains to offer an apology at the Rosebud Lakota Indian Reservation.

In spite of these incidents, companies have maintained their relaxed attitude to naming prospects. Several auction off the right to name a prospect as part of an annual fundraiser. This year, the winning Devon bid came from Coyla Holmes, who gave the rights to her husband “Chuck” as a gift for their 25th anniversary. “He was very proud,” she says. “He had a big grin.”

For if the prospect produces the oil Devon is counting on, in these times of heightened energy demand the “Chuck” field might well become a household name.

Copyright The Financial Times Limited 2006

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