‘Oil is first found in the mind’

Kim Won-bae
The author is an editorial writer of the JoongAng Ilbo.

In February 2007, the government under Roh Moo-hyun’s presidency released a press statement announcing a deal with Australia-based Woodside Energy to launch a deep-sea oil and gas exploration and production (E&P) project in the southeastern waters off Korea. Under a 50-50 joint venture with state-run Korea National Oil Corp. (KNOC), Woodside earned the exclusive right to drill in the prospective sites upon confirming petroleum deposits of economic value and paid mineral royalties to the government for E&P. According to the decree of the Korean Submarine Mineral Resource Development Act, the mining fee would range from 3 to 12 percent of the output depending on the yield.

If Woodside had succeeded in discovering vast deposits of natural gas or oil before it gave up, it could have earned scorns from Koreans for stealing away valuable assets from a resource-poor country. The Australian company extended the contract in 2019 for another 10-year exploration, but called it quits in 2022. Some could question why Korea is pressing ahead with the project Woodside dumped. But even oil majors are not always right.

Shell, which used to be a stakeholder in Woodside, entered an oil exploration with ExxonMobil on a 50:50 basis in Guyana, but abandoned the partnership in 2014 following a series of disappointments in underground and basin exploration.

But a year afterwards, ExxonMobil hit the jackpot in the deep sea off the small South American country, which led to the largest oil discovery over the last two decades. Vitor Abreu — founder of ACT-GEO whose assessment of the East Sea in Korea persuaded the government to press on with oil exploration — was one of the advisers for the Liza project in Guyana. During an interview with the JoongAng Ilbo, he said the first offshore exploration in the project confirmed deposits of 4 billion barrels, but the second drilling found nothing. In what appeared to be same exploration, one discovered 4 billion barrels and the other none, which explains the complexity in oil exploration.

The renewed East Sea oil exploration project remains in doubt. The reliability of ACT-GEO is being doubted, as the Texas-registered company was confirmed to have been subject to operational restrictions for failing to pay state sales taxes. Abreu flew to Seoul to personally explain himself and his findings in the East Sea, but the opposition Democratic Party (DP) sneered at him, calling him a “quack” for trying to sell fake medicine.

A Gallup poll showed that 60 percent of people were skeptical about oil reserves in the seabed. President Yoon Suk Yeol only fueled the disbelief with his exaggerated claim that the seabed held up to 14 billion barrels. He should have given more discretion before spilling the beans. Various reports can only raise suspicion about ACT-GEO. Still, given his credentials, Abreau does not deserve to be accused of quackery.

Because the government and KNOC lack credibility, they rely on big-name foreign investors to win validity for the ambitious exploration project. KNOC CEO Kim Dong-sub claimed that five oil majors expressed intent to join the project. But haste makes waste. Third parties will want to exploit the government if it appears too anxious. Given the importance and enormous cost of the deal, the exploration project requires a farsighted and broad perspective.

The KNOC last month signed a contract to commission a drillship for the East Sea project. The first drilling can be pivotal. Experts are doubtful of the drilling project proving worthwhile and leading up to a substantial discovery. But exploration is all about taking risks. In his often-quoted 1952 paper “Toward the Philosophy of Oil-finding,” Wallace Pratt, the American geologist and pioneer in scientific exploration of oil, said that oil is first found in the minds of men. “There exist more formidable barriers to success in oil-finding than the lack of perfected methods and techniques of the human mind: the ultra-conservatism of the trained scientist and engineer, the tendency of the human mind to discount or to ignore the significance of what remains unknown to it […] Where oil fields are really found, in the final analysis, is in the minds of men,” he wrote.

I asked the latest chatbot GPT-4o about oil exploration. The chatbot said, “Oil exploration is not just about digging holes on the ground to discover petroleum. It requires geological knowledge and analysis as well as creative thinking. Pratt emphasized the need for people to imagine the existence of oil in their minds and logically infer before confirming the existence of petroleum.”

Pratt’s advice does not just apply to petroleum searches. Innovations do not always materialize as imagined. But without imagination or making an attempt, there cannot be any progress.

It is true that KNOC’s track record on resource development has been poor, but exploring oil in our waters is a different matter. Japan and China explored their undersea resources more aggressively than Korea. The Namhae Block 7 can stoke conflicting interests among Korea, China and Japan. It is important that KNOC builds expertise on deep-water oil exploration and mining.