FN Media Group Presents Oilprice.com Market Commentary
London – March 7, 2024 – Europe is weathering its second winter since it cut itself off from Russian natural gas, but beyond that, without its own sufficient supplies, the continent remains vulnerable to the whims of a volatile global market. Companies mentioned in this release include: Chevron Corporation (NYSE:CVX), ExxonMobil Corporation (NYSE:XOM), ConocoPhillips (NYSE:COP), Talos Energy Inc. (NYSE:TALO), Cheniere Energy, Inc. (NYSE:LNG).
That vulnerability is now beginning to resurface, as the Biden administration presses pause on all new LNG export projects, sending waves of concern throughout Europe, which has traded dependence on Russian gas for dependence on American LNG.
In the short term, this meant significantly higher energy prices throughout Europe, with energy costs rising by 40.8% annually within the EU as of September 2022. It got so bad, in fact, that Europe shelled out $800 billion to protect consumers from the spiralling costs.
The regulatory atmosphere has changed dramatically since Russia’s invasion of Ukraine. Germany has pleaded that the Bloc “work together with countries that have the capacity to develop new gas fields, as part of the Paris Climate Agreement commitments.”
That’s exactly what MCF Energy (MCF.V; MCFNF.QX) plans to do in Germany—the EU’s biggest economy—and Austria.
Confirmed Gas Plays in Germany and Austria
MCF Energy’s prospects in Germany include the Lech concession where Mobil (before it was Exxon) drilled a wildcat well back in the ‘80s. That well came in at 24 million cubic feet of natural gas per day, with 700 barrels of condensate, with a second well drilled to a deeper zone flowing almost 200 barrels of oil per day.
Back then, Germany did not require companies to share their data at all. But last year, due to Germany’s scramble to ensure more domestic production, this data was made available to the public. MCF took the opportunity and ran the 3D data by its AI specialist, which pinpointed multiple drilling locations on both Lech and Lech East with identical or very similar character to the big discovery well drilled in the 80’s on Lech that MCF will soon re-enter.
When MCF drills its first well in Germany in March, new AI and Machine learning technology as well as the improvements in drilling could change this game.
5 Prospects Secured, Drilling Launched
As a result of MCF Energy’s (MCF.V; MCFNF.QX) 100% acquisition of Germany’s Genexco last year, the company now has five licenses secured for four large-scale project areas in Germany and one in Austria, with drilling soon to be underway.
The first drill, will spud next week and set to complete in March, is in Austria, at MCF’s Welchau prospect near the Austrian Alps. Welchau appears analogous to large anticline structures discovered in Kurdistan and the Italian Apennines, and is adjacent and up-dip from a discovery, drilled in the 80’s that intersected a gas column of at least 400 meters, testing condensate rich with pipeline quality gas. A national gas pipeline network is only 18 kilometers away, making for what could be a short, cheap tie-in option for getting products to domestic markets.
MCF will earn a 25% interest for exploration drill costs estimated at 2.55 million euros, which represents MCF’s 50% share in drilling costs. Germany, which houses four of the concessions, is where MCF Energy is playing a bigger game.
The company’s Lech (10 square kilometers) and Lech East (100 square kilometers) concessions hold natural resources riches that have already seen two discoveries and three previous wells drilled.
As soon as the Austria drill is completed in March, the rig will be moved to Lech, where MCF Energy will re-enter Mobil’s former Kinsau #1 well, adapting new drilling and completion technology and eventually horizontal wells to stimulate what they already know is there.
Within the first fault block at Lech, MCF’s Hill believes there is around 20 BCF recoverable, with associated condensate.
Furthermore, all the wells had few problems during drilling, which means lows costs for drilling, coupled with nearby pipelines—the closest only 2 kilometers away—to get to market quickly and cheaply.
“The exploration possibilities are there. You’ve got the fractured carbonates, and even sandstone reservoirs that have produced in the area. So, now, it really comes down to the fact that there are also new exploration techniques, in addition to seismic, that I think will reduce the risk,” Hill told Oilprice.com.
Also in Germany, MCF Energy now has the Reudnitz Gas field concession, a large-scale natural gas prospect initially discovered in 1964.
An independent assessment by Gaffney, Cline & Associates suggests 118.7 billion cubic feet of natural gas for extraction, noting that the resources, as with the other fields in Northern Germany contain low-caloric gas rich in nitrogen, potentially diluting the hydrocarbons’ concentration. . In addition to methane, the gas at Reudnitz contains, best estimate (P50), 1.06 BCF of helium and an upper zone containing 4.4 million barrels of oil.
The fifth concession in Germany is Erlenwiese, for which 2D seismic has been acquired and is being reprocessed, with 3D on the way, along with AI analysis. This project contains two, well documented prospects which will be risk reduced with machine learning.
What Does Europe Do Next?
And the timing is significant: Europe has underinvested in natural gas as it strives to lower carbon emissions, but natural gas is turning out to be the accepted bridge fuel for the world’s energy transition. Nowhere is this more poignant than in Europe, where energy security and climate change must work hand-in-hand.
MCF (MCF.V; MCFNF.QX) is doing something unique on the natural gas playing field: It’s aiming to gain exposure to European natural gas for the first time since Russia invaded Ukraine and Western sanctions disrupted global markets.
They will very soon be drilling in Austria, and are planning to launch drilling in Germany in March, making this one of the most exciting new plays that the supermajors have left behind since they moved to bigger venues offshore.
Don’t Ignore the Energy Giants
Chevron Corporation (NYSE:CVX), one of the world’s leading energy companies, is making significant strides in the realm of natural gas, aligning its operations with the global shift towards cleaner energy sources.
Parallel to its natural gas endeavors, Chevron continues to fortify its foundational oil operations. The company leverages vast reserves and a robust downstream presence, committing to efficient and sustainable oil production.
ExxonMobil Corporation (NYSE:XOM), a titan in the global energy market, is assertively expanding its footprint in the natural gas sector, leveraging strategic investments in LNG projects and shale gas explorations to cement its position as an industry leader.
The company’s aggressive expansion into natural gas is paired with robust oil operations, suggesting a well-rounded vision for the future. Exxon Mobil offers both steady returns and growth potential, anchored by its legacy and forward-looking strategies.
ConocoPhillips (NYSE:COP), with its extensive global footprint, exhibits a balanced approach to energy, harmonizing its oil exploration and production endeavors with strategic investments in natural gas and LNG operations, particularly in North America and Asia.
Oil exploration and production remain critical pillars of ConocoPhillips’ strategy, with operations spanning across continents. The company’s emphasis on sustainable production methods highlights its commitment to environmental stewardship and operational excellence.
Talos Energy Inc. (NYSE:TALO) distinguishes itself in the exploration and production sector, focusing on oil and natural gas in the strategically significant regions of the United States Gulf of Mexico and offshore Mexico. Talos Energy has established a reputation for strategic acquisitions and a focus on exploration, demonstrating an agile approach to its operations.
The company’s commitment to environmental stewardship and sustainability is a cornerstone of its strategy, underpinned by efforts to leverage innovative technologies to minimize its ecological footprint.
Cheniere Energy, Inc. (NYSE:LNG), pioneers the liquefied natural gas (LNG) sector in the United States, operating the country’s first LNG export facilities. With a business model that encompasses the entire LNG value chain, Cheniere is well-placed to capitalize on the increasing demand for gas.
Cheniere’s commitment to sustainability is integral to its operations, aiming to improve the environmental performance of its activities. The company’s focus on safety, environmental stewardship, and community engagement positions it as a responsible provider, setting a benchmark in the LNG market.
By. Tom Kool
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Forward-Looking Statements
This publication contains forward-looking information which is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ from those projected in the forward-looking statements. Forward looking statements in this publication include that large oil and gas companies will continue to focus on offshore natural gas resources; that domestic onshore natural gas assets in Europe will provide a more affordable energy source than offshore resources; that demand for natural gas will continue to increase in Europe and Germany; that Russia will not supply the majority of natural gas in Germany and Europe; that natural gas will continue to be utilized as a main energy source in Germany and other European countries and demand for natural gas, and in particular domestic natural gas, will continue and increase in the future; that MCF Energy Ltd. (the “Company”) can replicate the previous success of its key investors and management in developing and selling valuable energy assets; that the natural gas projects of the Company will be successfully tested and developed; that the Company can develop and supply a safe, domestic source of energy to European countries; that natural gas will be reclassified as sustainable energy which will support the development of the Company’s assets; that imports of liquified natural gas will not be sustainable for Europe and that European countries will need to rely on domestic sources of natural gas; that the Company expects to obtain significant attention due to its upcoming drilling plans combined with Europe desperate for domestic natural gas supply; that the upcoming drilling on the Company’s projects will be successful; that the Company’s projects will contain commercial amounts of natural gas; that the Company can finance ongoing operations and development; that the Company can achieve its business plans and objectives as anticipated. These forward-looking statements are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. Risks that could change or prevent these statements from coming to fruition include that large oil and gas companies will start focusing on the development of domestic natural gas resources; that the natural gas resources of competitors will be more successful or obtain a greater share of market supply; that offshore liquified natural gas assets will be favored over domestic resources for various reasons; that alternative technologies will replace natural gas as a mainstream energy source in Europe and elsewhere; that demand for natural gas will not continue to increase as expected for various reasons, including climate change and emerging technologies; that political changes will result in Russia or other countries providing natural gas supplies in future; that the Company may fail to replicate the previous success of its key investors and management in developing and selling valuable energy assets; that the natural gas projects of the Company may fail to be successfully tested and developed; that the Company’s projects may not contain commercial amounts of natural gas; that the Company may be unable to develop and supply a safe, domestic source of energy to European countries; that natural gas may not be reclassified as sustainable energy or may be replaced by other energy sources; that the upcoming drilling on the Company’s projects may be unsuccessful or may be less positive than expected; that the Company’s projects may not contain commercial amounts of natural gas; that the Company may be unable to finance its ongoing operations and development; that the Company can achieve its business plans and objectives as anticipated; that the Company may be unable to finance its ongoing operations and development; that the business of the Company may be unsuccessful for various reasons. The forward-looking information contained herein is given as of the date hereof and we assume no responsibility to update or revise such information to reflect new events or circumstances, except as required by law.
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