* Algorithm identifies large oil deposit in Gulf of Mexico
* BP aims to deploy new Wolfspar technology in Angola,Brazil
* British major outlines costs of digital seismic imaging
* Company seeks edge against rivals making own innovations
* Deepwater tech making comeback after years of shaleadvances
By Ron Bousso
LONDON, Jan 18 (Reuters) - Buoyed by the success of seismicimaging that found an extra billion barrels of oil in the Gulfof Mexico, BP is looking to take its latest technology toAngola and Brazil.
The software used in the Gulf, based on an algorithm createdby Xukai Shen, a geophysicist straight out of StanfordUniversity, led to BP discovering the crude in an area where ithad long thought there was none to be found.
Industry experts said the scale of the discovery 8 km belowBP's Thunder Horse field, announced last week, marked a majorleap forward for deepwater exploration - a costly business knownfor its low success rate and high risk. It is an example of howtechnology is helping deepwater make a comeback after a decadewhen the industry has focused on advances in onshore shale.
The new deposit was found with software known as FullWaveform Inversion (FWI), which is run on a super-computer andanalyses reverberations of seismic soundwaves to producehigh-resolution 3D images of ancient layers of rock thousands ofmetres under the sea bed, helping geologists locate oil and gas.
It is more accurate than previous surveying methods, BPsaid, and processes data in a matter of days, compared withmonths or years previously.
While the discovery marked the biggest industry success fordigital seismic imaging, the British oil major's rivals are hoton its heel with similar techniques.
BP scientist John Etgen, the company's top adviser onseismic imaging, said it aimed to retain its edge with a newmachine it has developed, Wolfspar, to be used alongside FWI.
The submarine-like Wolfspar is dragged by a ship through theocean and emits very low frequency soundwaves, which areparticularly effective for penetrating thick salt layers thatlie above rocks containing fossil fuels, he added.
Etgen told Reuters that BP planned to roll out Wolfsparalongside FWI in the second half of this year at the Atlantisfield in the Gulf of Mexico, where a large salt layer stillhides parts of the site. The company plans to expand the use ofthe technology to other big oil and gas basins, including Brazilnext year and Angola at a later stage, he said.
"Seeing through very complex, very distorted salt bodies wasthe hardest problem we had, the most challenging," theHouston-based scientist said in an interview.
In both Brazil and Angola, oil deposits are locked underthick salt layers. Brazil's deepwater oil fields comprise one ofthe world's fastest-growing basins in terms of production. BPlast year signed a partnership with Brazil's national oilcompany Petrobras to develop resources there.
INDUSTRY TECH RACE
Billion-barrel oil finds are rare, particularly in maturebasins like the Gulf of Mexico. But the scale of output fromdeepwater wells means they can compete with the most low-costbasins in the world, in particular U.S. shale.
BP is far from alone in focusing on technology; all big oilcompanies have put a growing emphasis on digitalisation toreduce costs following the oil price collapse of 2014.
In fact, BP's spend on R&D was the third lowest among theworld's top publicly traded oil companies in 2017 at $391million, compared with Exxon Mobil's $1.1 billion andRoyal Dutch Shell's and Total's budgets ofover $900 million.
Other majors have also made advances. Italy's Enihas launched the world's most powerful industrial computer toprocess seismic data, for example, while France's Total is usingdrones to carry out seismic mapping in dense forests such as inPapua New Guinea.
However Barclays analysts said in a report last year that BPand Norway's Equinor had the most advanced deploymentof technology among oil majors.
'MAGIC' ALGORITHM
The seismic breakthrough for BP came when Xukai Shen testeda new idea he had for the FWI algorithm in 2016.
"What happened was magic - the pieces came together,"recalled Etgen. "We finally had the right algorithm with theright data set to create the model of the salt formation and usethe model to remove distortion."
BP says its new seismic technology could save it hundreds ofmillions of dollars in exploration hours by pinpointing thelocation of the most promising deposits.
"It allows us to drill the right wells, drill wells at lowercosts, drill wells in the best part of the reservoir, drillfewer wells," Etgen said.
The costs of the technology are a fraction of BP's oil andgas production budget of around $12 billion per year.
An FWI survey costs up to $20 million to carry out, whileprocessing the data costs up to $10 million, Etgen told Reuters.The annual spend on the super-computer that runs the software isabout $20 million.
"The companies that are investing in technology are comingthrough and winning the race," Henry Morris, technical directorat independent North Sea-focused explorer Azinor Catalyst.
"That's where BP are doing a good job. It's working."
Seeing through salt layers with confidence "adds real value"and saves companies the premiums they must pay to acquireresources through acquisitions, according to Bernstein analysts.
"With high-performance computing, the seismic processing andinterpretations are being done in two weeks rather than 1,000years, as it would have been if they still used 20th centurycomputers," they said.
"Investors should therefore expect more from BP with thisedge."
(Additional reporting by Shadia Nasralla; Editing by PravinChar)
