NXT Energy Solutions, CGGVeritas and Reelwell Rewriting the Story
"The Twilight of oil that is approaching in Saudi Arabia and across the entire Middle East will certainly make oil products much scarcer and less affordable for middle class citizens of developed nations, and will likely put them completely out of reach for aspiring populations in underdeveloped countries".
Simmons (2005, pp.341)
VANCOUVER, BC / ACCESSWIRE / September 5, 2014 / These are the words of respected speaker and author Matthew Simmons, on the topic of ‘peak oil’ in his book Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy. The author offers a troubling prediction of what to expect when we reach this pinnacle known as ‘peak oil’. He speaks so eloquently and poetically of the dimming sunsets in the Middle East as the oil wells dry up. But he was wrong.
Matt Simmons was no mere Internet blogger. He was a well-regarded energy investment banker and Chairman of the Association for the Study of Peak Oil-USA (ASPO-USA) Advisory Board. He was a regular speaker on the topic of ‘peak oil’ internationally and a New York Times best-selling author. While this author might have been a knowledgeable, respected thinker, not all authors lining the book shops were of the same calibre, with some simply trying to cash in on the hysteria.
There is one terrible fault in the analyses that he and so many other authors failed to address in their near doomsday predictions; it’s how technology has shattered this chaos theory that they are so keen to warn us about. What he and the rest of the world didn’t anticipate was a wave of technologies that would reveal large reservoirs of oil and gas that we couldn’t detect as recently as in the mid-2000s. These new technologies would dramatically reduce the cost and time of exploration, complementing the time-tested methods that came before. The arrival of hydraulic fracking, for example, has recently made the U.S. the largest oil producer in the world. This technology has now enhanced the energy security of the world’s largest economy, reducing dependence on oil exports from politically unstable parts of the world.
Here are three new technologies, like hydraulic fracking, that are bound to change the exploration game for the next generation of oil consumers.
Technology 1: Stress Field Detection (SFD)(R)
The inherent issues of 2D and 3D seismic lie within the sheer cost and time of permits and execution, in addition to questionable environmental repercussions. Despite this, they’re very valuable in the exploration toolbox. The biggest new oil fields in the world are being found in frontier areas (East Africa, Colombia, Brazil etc.), where the cost of 3D seismic surveys can run up to $90,000 per square kilometre. Companies can spend hundreds of millions of dollars, permitting, preparing and shooting seismic in environmentally sensitive areas in hopes of finding something below the surface that justifies a 20-30 million dollar exploration well. This author doesn’t need to detail the negative impact of preparing and shooting seismic surveys in environmentally sensitive areas such as South American rainforests, The Arctic and the oceans.
One technology that flies above these problems – literally – is an airborne quantum physics survey that scans the sub-surface for trapped fluid reservoirs (with potential to host economical oil and gas reservoirs) using a Stress Field Detection (SFD(R)). A jet flies the SFD(R) technology 10,000 feet above the earth and identifies reservoirs prospects both onshore and offshore. It does this by flying in a grid pattern of typically 5 x 5 km which can significantly reduce follow-on seismic acquisition spending.
In the end it provides a highly specific map of an area to concentrate seismic and ultimately drilling, saving companies the unnecessary time and money of first stage exploration in areas that are not prospective for commercial oil and gas discoveries.
(SFD)(R) has attracted some high-profile support, including the advisor to the Pakistani Prime Minister, Dr. Asim Hussain who mentions the government’s plan to use (SFD)(R) to ‘transform the oil and gas industry'.
The company that is pioneering this proprietary approach is the publicly --traded Calgary-based firm, NXT Energy Solutions (OTCBB: NSFDF, TSXV: SFD). NXT’s client list includes National Oil Companies (NOCs) like PEMEX and Pakistan Petroleum (PPL), a significant sign of confidence showing that governments recognise the value of saving time, money and while limiting their environmental impact on extracting their valuable resources.
Source: NXT Energy Solutions
Technology 2: Extended Reach Drilling (ERD)
Oftentimes drilling occurs in remote or unpopulated areas that results in little disruption to the area. Consider the empty space of the North Sea or the oil fields of the Middle East, even the sub-zero temperatures of the Arctic. But this is not always the case. Sometimes oil and gas reservoirs are found near populated areas or in environmentally protected areas. In these cases, drilling vertically is not always the most viable option. Besides populations and environment, accessibility or cost can be an issue.
This is where Extended Reach Drilling comes in. In the 1970’s British Petroleum (LSE:BP) pioneered a horizontal drilling method that could dig as much as 33,000 ft. deep. They successfully used this near a popular recreational location at Poole Bay near Dorset, in the U.K. ERD uses land-based drills and starts by drilling vertically as standard drills do, but later deviating horizontally until the deposit is reached. The ingenuity and innovation of this design won BP the Queen’s Award for Environmental Achievement.
ERD is primed to access the inaccessible. This method is also useful for reducing the capital requirement for off-shore platforms. Oil rigs alone typically cost in the US $600-650m range. ERD as a concept is non-proprietary however one company that has further developed the idea and created proprietary methods based on ERD (e.g. Reelwell Drilling Method) is Norway’s Reelwell, a private company based in Stavanger, who attracted the support of oil giants Statoil and Shell for the initial R&D.
Source: (c) Reelwell AS
Technology #3: Reverse Time Migration (RTM)
A fascinating new imaging technology last year revealed an estimated 5-8 billion barrels of oil off the coast of Brazil. Petrobras (NASDAQ: PBR) found an untapped oil deposit in the Tupi reservoir in the Santos Basin off the coast of Sao Paulo. The Tupi deposit is under about 2000m of water followed by another 4-5000m beneath the seafloor. With an estimated 5-8 billion barrels of oil, this find is now ranked amongst the 50 largest fields in the world.
The company behind the expertise on this find was CGGVeritas, (NYSC: CGG) a French-based geophysical services company though the tech itself is non-proprietary. They completed a 20,000-sq km 3D seismic survey over the blocks covering the Tupi discovery. RTM was then used to significantly enhance the image of the reservoir to see past the thick layer of salt which obscured what lay beneath.
Only with the help of this technology could exploration companies find oil and gas reservoirs obscured by material like the thick salt layer in this case.
Source: Trenton Systems
Blazing the Trail
The ‘peak oil’ idea has been passed around for decades now and yet it somehow keeps getting beaten by ingenious solutions. The industry today continues to face changing times by innovating to overcome the obstacles of the day.
Despite the hysteria around our use of oil, there are facts that everyone can agree on. The rising world population and particularly the development of highly populated nations such as India and China is placing strain on energy supply, with oil a dominant part of the energy mix. Renewable energy technologies will mature in time thanks to heavy investment and geopolitical pressure, but in the meantime, a key part of addressing the strain lies in our ability to tackle the rising costs of exploration and discovery while minimising risk. This is where these new technologies come in.
One part of the ‘peak oil’ hysteria is the belief that all the large oil reservoirs had been identified already. The 5-8 billion barrels of oil under the seabed off the coast of Brazil is just one example that defeats that idea and fracking is opening new frontiers that we couldn’t have imagined just a decade ago. Another suggested threat is the prohibitive costs of exploration and extraction. But SFD, ERD, RTM and others face this threat head-on. High-profile advocates such as Pakistan’s advisor to the Prime Minister on Petroleum and Natural Resources (on SFD(R)) is a notable validation of the industry’s’ latest innovations designed to cut costs and find new reserves.
Commentary in literature and the media keeps repeating the mistake of underestimating the ability of the industry to rise to new challenges and evolve with the times. Furthermore, it has completely miscalculated the revolution that fracking has initiated. Clearly the oil and gas industry is ready and willing to embrace cutting-edge technology to meet 21st century energy needs so perhaps the next round of ‘peak oil’ hysterics might want to hold the press.
SOURCE: Resource Reports