From the Mako Trough in Hungary to the Karoo Basin in South Africa to the Beetaloo Basin in Australia, Falcon Oil & Gas is tying up very attractive acreage as a first mover in these plays.
When it comes to exploring a new area, Falcon Oil & Gas starts with structural maps. The company starts with finding out where conventional fields are and then go looking for the source rock.
That’s how Rod Wallis, Falcon’s chief operating officer, described the company’s operations in the Mako Trough in Hungary where the company has about 250,000, in the Beetaloo Basin in Australia (7.0 million acres) and the Karoo Basin in South Africa (7.5 million acres).
Wallis presented information on his company’s operations to the Hart Energy DUG 2012 Conference in Ft. Worth, TX, on April 24 as part of a panel on “International Unconventionals -- Taking The World By Storm.”
In Hungary, the company is exploring the southern part of the Greater Hungarian Plains under a 35-year production license. Billions of barrels of oil and trillions of cubic feet of gas have been produced from the region, which means infrastructure is in place to get production to markets.
The plain is between the Algyo High and the Battonya High, where the conventional fields are located.
“We’ve drilled seven wells and found about a 3,000-m (10,000-ft) column of hydrocarbon saturated rock. We done some tests on five of those wells in each of the formations. These are small vertical tests. Each of the tests has flowed hydrocarbons.
“We’re looking at drilling a few more wells later this year, including testing the deepest well in Hungary,” he stated.
“What I’d like to point out is that you have OMV, Aspect, Assent, MOL and Delcaudro. There are all companies pursuing unconventional plays and doing fracs in this area. These are all small to mid-size companies. These are leading the charge here,” Wallis emphasized.
The Beetaloo Basin in Australia’s Northern Territory is equivalent to the net acreage in the Bakken play in North Dakota. The basin is about 600 km (360 miles) south of Darwin. The company feels blessed since a railway, highway and natural gas pipeline run through the basin.
The company got into the basin after another company -- Rio Tinto -- drilled 11 wells while searching for sulphite. Rio Tinto formed Pacific Oil & Gas to search for conventional structures.
“Some people discovered these basins before we got there but didn’t necessarily know what they had, and the technology had not been developed to take advantage of it. They took a lot of core, much more than oil companies seem to be able to manage, probably because it is a mining company.
“What they found was a lot of shale with oil bleeding readily out of the core. In the words of one of the mudloggers, gas was bubbling madly,” he laughed.
Falcon’s four licenses cover the majority of the basin. As he pointed out, Falcon was one of the first companies in the basin. Now, if you wanted to lease acreage, it would be “a bit late,” he noted.
The company drilled the Shenandoah-1, which was estimated to have 18 billion barrels of oil and 64 trillion cubic feet (Tcf) of recoverable resources.
“We tested a good vertical well and got good fracs in each of our three tests (Upper Kyala, Lower Kyala and Mid-Velkerri). We flowed hydrocarbons from each of the tests. Our targets were overpressured, which we though was going to happen, and that was very good news for the economics,” he explained.
“We also have a joint venture with Hess over the majority of the acreage (except an area around the Shenandoah well). Hess started a seismic program last year and will be running a seismic program through the rest of this year. The company has the option to drill five wells in 2013,” Wallis noted.
He pointed out that, just like Hungary, the small to medium-sized companies lead the charge in Australia where shale is very active.
The Karoo Basin in South Africa bolted out of nowhere into fifth position worldwide based on the 2011 Energy Information Administration study on shale gas. The estimated recoverable reserves for the basin are 485 Tcf, he said.
The company has a technical cooperation permit for the block, which is in southern South Africa. “That’s a country with a lot of energy demand, a lot of shortages and a desire to clean things up environmentally,” he emphasized.
In applying for the permit, Wallis stated, “We thought nobody else was looking when we got our application in. Two weeks later, Shell put in their application for the same acreage and more. Then, a month or two after that, Sasol, Statoil and Chesapeake also applied for the acreage.”
Falcon likes the acreage because it is in the valley. Shell’s acreage is to the north on the escarpment. “We’re also in the core of the basin. A well drilled in 1968, the Cranemere #1, flowed 2.0 million cubic feet per day from shales unstimulated,” he emphasized.
However, with all of this activity, the government called a moratorium to study shale operations in North America and devise needed regulations to deal with unconventional plays. The company understands that the report was delivered to the government in March. It is now waiting to hear what the government says and what is going to happen, he continued.
Contact the author, Scott Weeden, at sweeden@hartenergy.com.
