Canadian Oil Companies Gather for CGEF’s “World of Opportunity” Conference

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“Follow the mice to find the elephants,” attendees of the third annual Calgary Global Exploration Forum (CGEF) conference were told last month. While Calgary’s international players, with a couple notable exceptions like Husky Energy, are generally small juniors and even smaller start ups, their impacts have indeed been felt worldwide. In sheer numbers alone they are impressive, as 165 Canadian E&P companies are currently active in 100 different countries. And in what is probably the greatest geographical concentration of energy companies anywhere in the world, most of these firms are within a nine-by-seven-block area in central Calgary.

Canadian Oil Companies Gather for CGEF’s “World of Opportunity” Conference
Source: KERN Partners Ltd. Presentation “Calgary’s International Reach & The Growing Role of Private Equity as a Funding Partner” CGEF 2014

So the “World of Opportunity” conference was comprised of an impressive lineup of international speakers. As was the case at its first two conferences, the gathering included Canadian success stories in various corners of the globe and a range of Canadian-operated international prospects that are available for farm in. However, this conference turned the tables a bit as it also offered sessions featuring NOCs, Canadian companies touting their cutting-edge technology, experts in raising capital for E&P, and several firms that shared their experiences in social responsibility.

Canadian Oil Companies Gather for CGEF’s “World of Opportunity” Conference
Source: KERN Partners Ltd. Presentation “Calgary’s International Reach & The Growing Role of Private Equity as a Funding Partner” CGEF 2014

The topic in the forefront of nearly everyone’s agenda these days, at least in the Western Hemisphere, is the opening of Mexico after slamming its doors to international E&P players three-quarters of a century ago. Jorge Miranda of SMPS Legal said the best opportunities in Mexico for Canadian players are not the 169 blocks offered in Round One, which he described as being primarily “huge prospects with huge complexities.” Rather Miranda said Canadian companies should be looking at the blocks Pemex retained in Round Zero. In Round Zero Pemex laid claim to 83% of the country’s 2P reserves and 21% of its prospective resources. The good news for companies looking for opportunities in Mexico is that Pemex will need technical expertise to grow production and maintain these assets.

Another opportunity lies in the existing Comprehensive Contracts for Exploration and Production (CIEP) and Public Works Contracts Financed (COPF), which may be migrated into E&P contracts. The operators of those contracts will also need partners to move forward.

“The time to approach Pemex is now,” was Miranda’s advice to Canadian E&P firms.

Canadian Oil Companies Gather for CGEF’s “World of Opportunity” Conference
Source: SMPS Legal “Mexico Perspective” Presentation CGEF 2014

Cam Boulton with McDaniel International also outlined the opportunities opening up in Mexico, advising attendees on how to “get a piece of the pie.” He noted that although Mexico in the past decade has substantially increased its E&P expenditures, both production levels and reserves have continued to decline. Therefore, Boulton said, significant opportunities are available for companies with expertise in heavy oil, deepwater exploration – particularly on the Lower Tertiary trend on the Perdido Fold belt– and shale gas exploitation.

Round One offers acreage in the Perdido area, while Pemex is looking for farmout stakes in its Trion, Maximino, Exploratus, Kunah and Kiklis fields. The tender also features heavy oil tracts in the Southeastern Basin, while additional opportunities are available in partnerships with Pemex in the Ogarrio, Cardenas, Mora, Sinan, Bolontiku, Ek, Utsil-Tekel Ayatsil fields.

Canadian Oil Companies Gather for CGEF’s “World of Opportunity” Conference
Source: McDaniel and Associates Consultants Ltd. “Mexico: An Emerging Opportunity” Presentation CGEF 2014

In the past decade Pemex has devoted a lot of capital and man hours to Chicontepec, with little to show for it. Blocks in this geologically complex play are included in Round One. And while the Eagleford is the hottest play in the US these days and certainly doesn’t stop at the Rio Grande, no Eagleford acreage is being offered in Round One. Rather it is another near-Texas unconventional play, namely the Cuenco de Sabinas, which lies across the Rio Grande south of Del Rio.

While Mexico tended to take the spotlight, a number of other country representatives had traveled to Calgary to promote their opportunities, including Suriname. Marny Daal-Vogelland of Staatsolie said her country, which is perched on the northeastern shoulder of South America on the highly prospective Atlantic Margin, is striving to have 40% of its offshore leased by the end of 2015, up from the current 34%. Staatsolie is also looking for partners in its onshore Nickerie and Commewijne blocks.

Jevon Hilder of Spectrum outlined the prospectivity of Croatia, which is in midst of its first onshore bid round that will close on February 18, 2015. Hilder says the Mediterranean country expects to following with a second onshore bid round in late 2014/early 2015 focusing on the Sava sub-basin, possibly followed by a third further down the line.

Canadian Oil Companies Gather for CGEF’s “World of Opportunity” Conference
Source: McDaniel and Associates Consultants Ltd. “Mexico: An Emerging Opportunity” Presentation CGEF 2014

Mark Priest of the UK Trade & Investment was on hand to share the news that his country is committed to developing its shale gas to meet its domestic needs. At present, UK gas demand is 2.6 Tcf, of which half is imported. Consequently, as Prime Minister David Cameron said, “We are going all out for shale.” This push offers access to new entrants who can provide lower cost, faster and easier asset sharing. The government is also actively working to garner community support. Priest concluded, saying the geologic knowledge is “expanding all the time” and the country’s Bowland shale is very gas rich, 50% more than US Barnett Shale.

However, as Drillinginfo’s Northwestern Europe manager Bruce Walker notes, the 14th Landward Licensing closed at the end of October, with preliminary reports indicating only around 100 applications were received for the round. Walker said in addition to the Bowland, several other shale plays are also attracting interest. Chemicals multinational INEOS has staked a claim in Scottish shale gas acreage and has promised to offer US-style royalties to landowners on their acreage, while IGas and Cuadrilla continue to await regulatory approvals to advance their own unconventional plans.

Canadian companies’ well-established reputation for success abroad was certainly the draw for these countries appearance at the conference, and certainly any number of Calgary-based firms are due certain bragging rights. Among those is TransGlobe Energy, which after seven years in Egypt has become one of that North African country’s leading onshore drillers. In the process, TransGlobe can claim a number of ground-breaking achievements: first international company in many years to create a core area in the onshore Gulf of Suez, Eastern Desert; first to drill a horizontal well with a multi-stage stimulation; first to implement routine well stimulation on a field basis in a non-conventional reservoir; first to discover the syn-rift Red Bed stratigraphic play; and anticipated to be the first company to implement a chemical flood (ASP) EOR scheme.

Drillinginfo’s Tom Liskey, Dai Jones, Bruce Walker and Ian Blakeley can be reached for further comment on their areas of expertise, respectively Latin America, Continental Europe, the UK and North Africa. Also for further information see: www.cgef.org

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Anne Leonard

In January 2015, Anne Leonard headed the team that launched the latest addition to DrillingInfo’s international publications, International Scout Frontier North America which covers the US Gulf of Mexico as well as Maritime and Arctic Canada. She has been reporting on exploration and production for more than 30 years. She began her career in Denver covering the Rocky Mountain Region, and has spent the last 10 years covering the international arena, with a particular focus on Latin America, Africa, Western Europe and the Far East. Anne received her Bachelor of Arts in Journalism from the University of Nebraska.