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The Oil Detectives

What is an Oil Scout? Is it a ‘cloak and dagger’ operation – or a highly qualified occupation calling for extensive knowledge of the industry and great interpersonal skills? Andrew Melvin of Moyes and Co. sheds some light on the business.
This article appeared in Vol. 8, No. 6 - 2012

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Andrew Melvin was previously a Scout for Phillips Petroleum, Texaco Inc, and Energry365/energypedia. What exactly are Scouts? Late in the 19th century when oil in the US was in demand for a lighting fuel as whale oil declined, the cost of black gold rose and it became a much sort after commodity. Scouting for information developed as oil companies and prospectors became desperate to find out if a rival had been successful and what that implied about conditions in the area. This position on information has remained in the oil companies ever since although now it has spread on a global scale.  

Originally the Information Scout would roam the fields and plains of the oil provinces with a telescope and a note pad, checking on how deep the well was drilling by counting the drill pipe stems and hanging around to check on the success. As land leasing became more important secrecy levels increased – hence the need for the Scout. Oil traders were not above spreading misinformation about a well’s success or failure with scouting rumors being the bread and butter of speculation. The Scout was seen as a hybrid of a cowboy and a Pinkerton detective agent as they watched and infiltrated all around them to get the important information required. It became a high risk, hard drinking profession. The individuals or small teams assigned to the companies often flourished outside the normal working environment of the industry (and in some cases still do).  

How have things changed?  

For today’s Oil Scouts, life is very different, although there is a hint of the cloak and dagger glamour in finding a story before anyone else and reporting that back to the employers. The Oil Scout today will attend arranged meetings with Scouts or officially nominated personnel, who range from Geological Technicians to the CEO of the Company, and share information on recent company activity. Although new discoveries and dry holes are the talking points, the Scouts of today are more interested in the deals the companies are offering, who is farming-out or selling what acreage, or what country is about to release information on a new license round.  

The other big step change is the introduction of the professional or industrial scouting agencies – organizations that specialize in information and data gathering and then sell this information back to oil companies and other energy industry associated agencies, like banks, investors and advisors. This has replaced a lot of the employed scouts. Dependent on their reputation, the agencies value authenticity and correctness of information very highly.  

What sort of information do scouts seek?  

Obviously obtaining actual well data, logs, tests completion results is useful, but this is more and more difficult to obtain as most data is stored electronically. Any type of information that will give your company the competitive advantage when exploring in a new area with the end reward of producing new reserves is important. Sometimes it all starts from a rumor.  

Why is scouting important to the industry?  

Networking can be a very under-rated art, but it is key to know the who, what, where, and whys of what is happening in specific areas to maintain competitiveness. Of course the modern scouting representative is often well qualified and knows how to disseminate information very quickly to the appropriate department.  

When did formal Scout Groups start?   

The International Oil Scouts Association (IOSA) was chartered in 1924 in USA and is a federation of district scouting organizations. It promotes scouting and the petroleum industry and publishes an annual petroleum statistical book. Since then scouting organizations have formed in many countries, varying from established centers like Houston, Calgary and London to countries with lesser involvement in the industry, like Spain and Turkey. A code of ethics and rules will apply to each group to keep control and ensure fair play and any legal requirements.  

What makes a good Scout?   

Nowadays a person of diligence and experience, observation and forward thinking with a good communication manner and an eye for an opportunity.  

With modern communications and technology, is there a future for the Scout?  

Over the last 20 years the oil and gas industry has embraced information technology and this also applies to scouting. In the old days the Scout would be happy to slowly put together a jigsaw of facts to build a picture of what was happening. Now, so much information is available on the internet and the user friendly news sites, along with information companies, it is much rarer to produce anything outstanding and market changing.  

Oil Scouts have been described as ‘oil detectives’: would you agree?  

That is one of the nicer descriptions! I think it depends on the country!

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