Vancouver, BC / March 14, 2014 / SOURCE: TheHydrocarbon.com - There’s a good chance that the world’s next giant oil or gas discovery will be identified from the sky, and not from the end of a drill bit. Majors are beginning to harness a new pre-seismic detection technology to spot reservoirs before a single boot touches the ground.
Able to cover gigantic sections of land at a fraction of the cost of seismic, this new technology is capable of spotting the biggest pools in the world.
Last year’s top three discoveries averaged 800 million BOE, each coming in new frontier countries such as Mozambique, Angola, and Malaysia. In these undeveloped or underdeveloped petroleum areas, many countries are offering up huge land blocks. These mega parcels often come with difficult and expensive terrains to map out and gather data on, leaving major acreages untouched for decades.
Despite these challenges, there are still plenty of huge discoveries waiting to be detected. Every major in the world is trying to be the next one to find them.
“There are elephants out there, and they’re easy to find,” says George Liszicasz, President and CEO of NXT Energy Solutions [SFD.V, NSFDF.OTC]. Liszicasz’s team has developed a technology called Stress Field Detection (‘SFD’), which can remotely identify trapped fluid bodies (reservoir prospects) from 3,000 metres in the air.
With plenty of miles flown, and the fourth largest oil company in the world among its clients, NXT is in a good position to help identify one of the world’s next giant discoveries before they happen.
THE PEMEX CONNECTIONPetroleos Mexicanos (‘PEMEX’) is NXT’s largest customer to date. The Mexican petro-giant needed to see what NXT was capable of, so they sent the SFD device on a mission in 2012: a blind test to see how much of its proven resources, the NXT team could identify. In addition, they tested the tool against proprietary seismic data, controlled source electromagetic results (“CSEM”, used in deep water exploration) and gravity data.
“The report back from PEMEX on the survey that we performed for them showed that we had successfully identified 11.9 billion out of a possible 12.4 billion barrels they had already discovered when they asked us to fly a specified route of blind lines,” says Andrew Steedman VP of Operations.
NXT identified the total proven resources at 98.9% accuracy. Now that the two companies have co-authored a report together, they’re in talks to determine what the next step is together going forward. SFD has performed equally well against the other tools as well.
PEMEX annually seems to make giant impact discoveries. Last year it was the Maximino offshore discovery in the Gulf of Mexico estimated to contain 500 million barrels. The year before that was the onshore Nevagante-1 discovery, also estimated to contain a half a billion barrels.
To continue the streak, PEMEX will undoubtedly look to push its frontiers wider to retain its position as the fourth largest petroleum producer in the world.
NXT has an even better track record in telling companies where NOT to drill. They flew large chunks of Colombia for several clients, and 100% (12 of 12) of the target areas where they told clients not to drill—but which they did anyway—came up dry.
SFD TECHNOLOGY AND THE NXT BUSINESS MODELFrom an oil exploration perspective, each explorer will ask 5 fundamental questions that need to be answered when doing a project:1. Is there a source of oil?2. Can the oil migrate up to a trap?3. Is there a trap?4. Is there a reservoir rock capable of holding the fluid?5. Is the trapped seal strong enough so the oil doesn’t leak out?
What SFD does is to answer three of those questions in a much cheaper, timelier fashion than just starting with seismic. It only responds if all three of trap, reservoir and seal characteristics are identified. There is no other exploration tool that is capable of providing this comprehensive result.
NXT also has a multi-prong business strategy. They can negotiate to have royalties on discoveries they make.
This was done in the past with Canadian producer Pengrowth in the Horn River Basin of northern B.C., where NXT is eligible for a royalty on potential future production on the lands surveyed.
They can use it in the international arena as well. They gather data over every mile the plane travels. That means that even though clients may send them up to analyze their acreage, NXT can acquire data on lands not yet acquired-which becomes their proprietary asset. This is similar to the “spec data” acquisition model that seismic companies utilize.
“We have acquired to date 40,000 line kilometers of proprietary data in Colombia. We intend to utilize this data to the best interests of our shareholders at a later date.”
In that model, NXT acquires data in uncharted areas that can later be vended into a third party entity for combinations of money, royalties and/or equity.
Says Steedman: “If NXT conducts an SFD survey for a client in a country in Africa that isn’t well explored, we can accumulates proprietary data on route to the target area and can later monetize that data. “
Such proprietary information used in a strategic way allows NXT to differentiate itself from technologies that cannot produce the comprehensive result provided by SFD. The “vertical” company with this information can then bid for the best land packages in a cost effective way,” says Steedman.
When taking a first pass at an area, NXT and its clients are always going to be looking for something very large. Before spending tens or hundreds of millions of dollars on an acquisition, companies can quickly analyze 10-15 different areas that should be of strong interest in a country. And they can do it in a very cost effective manner.
HOW NXT COULD BE A PART OF THE NEXT BIG DISCOVERYRounding out some of the top ten discoveries from last year, were countries that weren’t really on the oil map a decade ago: Congo, Tanzania, Egypt.
There will be more countries vying for a seat at the petroleum producers table in the coming years. Countries are opening their borders to new players in exchange for finding reserves that their geologists always knew were there.
As these open up, large land blocks will need to be charted. National oil companies may seek out NXT to help them know what blocks to focus on first, or which ones can entice more experienced majors. Along with PEMEX, Pakistan Petroleum also has enlisted NXT to help focus and high-grade exploration efforts.
Beyond reducing costs, NXT is more importantly reducing risk and time wasted on wildcatting in areas that have no potential.
With proven technology in the international oilpatch—where majors are spending big money to find big deposits—NXT will be significantly lowering the cost and risk, and also upping the speed—of the next Big Oil discovery.
G. Joel ChuryTheHydrocarbon.com