Schlumberger Holdings Ltd v Electromagnetic Geoservices as
| Jurisdiction | England & Wales |
| Judge | Lord Justice Jacob,Lord Justice Sullivan,Lord Justice Waller |
| Judgment Date | 28 July 2010 |
| Neutral Citation | [2010] EWCA Civ 819 |
| Docket Number | Case No: A3/2009/0545 |
| Court | Court of Appeal (Civil Division) |
| Date | 28 July 2010 |
[2010] EWCA Civ 819
IN THE HIGH COURT OF JUSTICE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION (PATENTS COURT)
The Hon Mr Justice Mann
Before: The Rt Hon Lord Justice Waller
The Rt Hon Lord Justice Jacob
and
The Rt Hon Lord Justice Sullivan
Case No: A3/2009/0545
HC 07 CO1084/HC 07 CO1487/HC 07 CO 1488
Simon Thorley QC and Guy Burkill QC (instructed by Bird & Bird LLP) for the Appellant/Defendant
Michael Silverleaf QC and Hugo Cuddigan (instructed by Freshfields Bruckhaus Deringer LLP) for the Respondent/Claimant
Hearing dates: 26–30 April 2010
Approved Judgment
Lord Justice Jacob:
EMGS appeals the findings of Mann J, [2009] EWHC 58 (Pat) that its EPs Nos. 1,256,019 and 1,309,887 are invalid. It does not appeal the similar finding as regards the third patent in suit, UK 2,339,640 and I need say no more about it. Also, as regards ‘887 in the end it was common ground that it stood or fell with 1,256,019. So the appeal is about that patent alone. I shall call it “the Patent.”
General Matters
Mr Simon Thorley QC assisted by Mr Guy Burkill QC argued the appeal for EMGS. Mr Michael Silverleaf QC and Mr Hugo Cuddigan argued the appeal for the respondents, Schlumberger.
Like Mann J we had the assistance of a scientific advisor. Our advisor (who was found and agreed by the parties) was Dr Colin Brown, Director of the Ryan Institute for Environmental, Marine and Energy Research at the National University of Ireland, Galway. Prior to the hearing Dr Brown gave us an intensive two day teach-in of the technology followed by a brief non-contentious outline of the parties' respective main positions. He sat with us throughout the hearing, intervening very occasionally to clear up a technical point. Following our initial instructions to him, at no time did Dr Brown express his views of the merits of either side's arguments. Indeed even now – and even though he has been kind enough to check this judgment in draft to ensure that there are no scientific gaffes—I have no idea whether he has any or if he does what they are.
I would like to pay a tribute to Dr Brown for all his assistance. He is a fine teacher. In addition we greatly enjoyed his company.
The problem addressed by the Patent
The Judge describes the scientific and physical background and some terminology and concepts uncontroversially at [3–22]. For present purposes I think the position can be summarised in the following paragraphs.
Oil and gas (hydrocarbon) deposits are found in thin porous sedimentary rock. Typically a deposit will be of the order of 100m thick, though in exceptional cases a deposit can be as much as 200 or 300 metres. Generally this thickness is less than that of the layers above and below the deposit.
A variety of techniques has been devised over the years by exploration geophysicists to identify potentially hydrocarbon-bearing layers within sedimentary rock.
Of particular importance well before the date of the Patent were seismic techniques. Seismics had been well developed in the 1970s and 1980s and were serving the hydrocarbon extraction industry well. By using them it was possible to get three-dimensional (3D) information about sub-sea rock formations.
Seismics, however have their limitations. The Judge put it this way:
[6] Although there have been significant improvements in modern times (including the introduction of 3D seismics in the 1980s), seismics do not provide a complete solution in the search for oil. They do not always give the detail and characterisation of sub-strata that an oil company would wish to have. It is sometimes useful to have a different “view” of what is down there. The more information that is available, the better. Under some conditions seismics cannot see everything that needs to be seen.
More particularly seismics can reveal a thin layer within sedimentary strata which might contain hydrocarbon. It can tell you its shape and size. But seismics cannot tell you that there is hydrocarbon within it, for the seismic properties of a hydrocarbon-containing layer cannot, at present, be distinguished unambiguously from those in a water- or brine- containing layer.
Prior to the invention of the Patent (2000), so far as under-sea exploration was concerned, once seismics had revealed an under-sea bed thin layer which potentially contained hydrocarbon, the only way to find out whether it was hydrocarbon was to drill an exploration well. This cost about US$25m per well. The success rate was only about 1 in 10. So, on average, $250m per potentially producing well.
Clearly it was desirable to improve on that. The problem was longstanding: hydrocarbon exploration and extraction below the sea had been carried out on a substantial scale for many years. As time went by the activities were carried out at greater and greater depth but this is no real explanation of why the invention was not made earlier.
The Patented Solution
The solution of the Patent can be simply stated at a general level. It is to use marine CSEM (Controlled Source Electromagnetic) surveying on a previously identified (e.g. by seismic methods) layer to find out whether it contained hydrocarbon. The method depends on the fact that hydrocarbon has high resistivity (inverse, low conductivity) whilst water or brine is the opposite (low resistivity, high conductivity). The Patent puts it this way:
[0008] It has been appreciated by the present applicants that while the seismic properties of oil-filled strata and water-filled strata do not differ significantly, their electromagnetic resistivities (permittivities) do differ. Thus, by using an electromagnetic surveying method, these differences can be exploited and the success rate in predicting the nature of a reservoir can be increased significantly. This represents potentially an enormous cost saving.
(It was common ground that the reference to “permittivities” could be ignored).
Claims 1 and 1A of the Patent as proposed to be amended are the only ones which now matter. They read as follows:
1. A method of performing a survey of subterranean strata in order to search for a hydrocarbon containing submarine reservoir (35), or to determining the nature of a submarine reservoir (35) whose approximate geometry and location are known, which comprises: applying a time varying electromagnetic field to the subterranean strata; detecting the electromagnetic wave field response; seeking, in the wave field response, a component representing a refracted wave (43,43C); and determining the presence and/or nature of any reservoir (35) identified based on the presence or absence of a refracted wave component (43,43C); in which the transmitted field is in the form of a wave, and in which the distance between the transmitter (37) and a receiver (38) is given by the formula
0.5 &Lamda; ? l ? 10 ?;
where ? is the wavelength of the transmission through the overburden (34) and l distance between the transmitter (37) and the receiver (38).
1A. A method of performing a survey of subterranean strata in order to determine whether a submarine reservoir (35), whose approximate geometry and location are known, contains hydrocarbons or water, which method comprises: applying a time varying electromagnetic field to the subterranean strata; detecting the electromagnetic wave field response; seeking, in the wave field response, a component representing a refracted wave (43,43C); and determining whether the reservoir (35) contains hydrocarbons or water based on the presence or absence of a refracted wave component (43,43C); in which the transmitted field is in the form of a wave, and in which the distance between the transmitter (37) and a receiver (38) is given by the formula
0.5 ? ? l ?10 ?;
where ? is the wavelength of the transmission through the overburden (34) and l is the distance between the transmitter (37) and the receiver (38).
“Overburden” means the rock between the sea bottom and the subterranean strata the subject of interest (whose position and depth have been determined by seismic methods) “l” (the transmitter/receiver distance) is also called the “offset.”
The apparatus for conducting a CSEM survey was known. Although not a figure of the Patent, it looks like this (a figure taken from one of the cited pieces of prior art, MacGregor):
Sea
Subsurface
An electric field is transmitted by the dipole source towed a short distance above the sea-bed. Receivers are positioned at a distance away. They can either be on the sea-bed itself or towed along with the dipole source. The method depends on the fact that the resistivity (inverse, conductivity) of different kinds of rock (and indeed of the sea water and the air above) all differ. The electric waves travel at different speeds and are attenuated differently depending on the material through which they go. The receivers pick up a composite consisting of the combined effects of these different transmission paths. That composite will be the result both of attenuation and of interference caused by phase differences between waves which have travelled at different speeds and paths.
The actual physics of what is going on is very complicated. But in the end the very fine detail does not matter for the purposes of this case. The Patent describes the method in these terms:
[0009] The present invention arises from an appreciation of the fact that when an EM field is applied to subterranean strata which include a reservoir, in addition to a direct wave component and a reflected wave component from the reservoir, the detected wave...
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