Guest Post: The Top 5 Oil & Gas Plays For 2012

Tyler Durden's picture

Submitted by Jen Alic of OilPrice.com,

2012 has been a stellar year for oil and gas. From East Africa to North America, new technology, major new discoveries, an unparalleled appetite for exploration and a metamorphosing perception of risk have changed the playing field.

We’re looking at potential rather than existing production, and here are our Top 5 picks for this year:

Turkana County, Kenya

We have to start with Kenya, the biggest success story of the year.

In March, the UK’s Tullow Oil and Canada’s Africa Oil Corp. discovered 100 meters of oil in the Ngamia-1 well. The euphoria was in part because this discovery was made on the very first try in the very first well. Stocks shot up to record highs as a result.

The euphoria has not abated. In late November, the same duo made another find of 30 meters of oil in the nearby Twiga-1 well.

September also saw Kenya strike 53 meters of natural gas in its first-ever offshore find in the Mbawa-1 well, off the coast of Malindi. US-based Apache Corp. owns 50% the well in a consortium with a handful of other companies. They’re still digging, hoping that going deeper will reveal the oil.

The bigger picture, however, is that only the surface has been scratched in terms of exploration. The East Africa Rift is believed to hold over 70 billion barrels of untapped crude oil, while offshore Kenya, Tanzania and Mozambique have a joint estimated 250 trillion cubic feet of natural gas. There may be offshore oil, too. The oil discoveries in Kenya so far have been confined to one massive basin, and there are six more.

In addition to the size of the prize here, Kenya is favorable for other reasons as well: It offers relative political stability in the midst of a rather restless Africa; it offers attractive fiscal terms; it offers easy access to export markets; and it has an appetite for infrastructure that is hard to beat.

While 2013 may see some changes in the regulatory environment that could be less favorable, as for 2012, Kenya remains THE number one East African play in terms of potential. Next year will give us a better idea of commercial viability. 

 

Bakken, North Dakota

The Bakken shale play has placed North Dakota ahead of Alaska, making it the number two oil producer in the US for 2012, after Texas. Because of Bakken, the US has increased oil production this year to a level it hasn’t seen in almost a decade and a half. In one month alone this year, North Dakota issued 370 drilling permits.

Stretching from Eastern Montana to Western North Dakota and across parts of Saskatchewa and Manitoba in the Williston Basin, the Bakken Shale Play could yield some 4.3 billion barrels of oil, according to the US Geological Survey. That’s the modest estimate. Continental Resources—one of the major Bakken players—estimates as much as 40 billion barrels.

The clincher is that much of the vast Bakken Petroleum System has not even been tapped. So far, drilling has primarily targeted the Middle Bakken and the upper Three Forks Zones.  The Three Forks Zones have not been fully tapped, and the Upper Bakken Shale hasn’t really been tapped at all.

Eagle Ford, South Texas

Eagle Ford is potentially the next Bakken. It’s one of the most ACTIVE plays in the US right now. And what the majors and juniors are playing with is 7,500 in total acreage, five producing wells, two more wells being drilled, and the potential for 100 wells. This year, oil production has increased to some 300,000 bpd (as of August).

Natural gas is also a major Eagle Ford offering. Last year, it produced 914 million cubic feet of natural gas, though that has dropped slightly for this year.

So far, drilling seems to have had even better results than in Bakken. And there is a great deal of confidence and optimism. Enough so that Marathon Oil is planning to shift its primary focus from Bakken to Eagle Ford and spend one-third of its operating budget there. Right now Marathon is producing around 40,000 net barrels of oil equivalent (boe) per day and plans to more than double this next year. It’s already doubled production this year (and, incidentally, seen its profits jump 11% in the first quarter).

The biggest producer is EOG Resources (NYSE:EOG), putting out about 110,000 boe/day and holding reserves of around 1.6 billion boe.

Analysts think Eagle Ford could end up out-producing the Permian Basin in west Texas—and soon.

 

Mediterranean Plays

The Levant Basin in the Mediterranean has an estimated 122 trillion cubic feet of recoverable natural gas, and around 1.7 billion barrels of recoverable oil. And the area has seen a flurry of activity recently.

Between 25 and 33 billion cubic feet of this gas is in Israeli waters. The rest is carved up between Greek-held Northern Cyprus (which is a bit problematic), Syria and Lebanon.

Of course, along with this potential comes some uncomfortable geopolitics; on one hand among Israel, Lebanon and Syria; on the other hand between Israel, Turkey and the Greek Cypriots.

The first new natural gas field in the region is expected to begin full-scale production this year, with two additional fields coming on-line over the next six years. 

Specifically, we’re talking about:

•    The discovery to two offshore natural gas fields in northern Israel (Leviathan and Tamar) with an estimated 25 trillion cubic feet (about 100 years year of gas for Israeli domestic use)
•    Estimates that Israel has a potential 1.9 billion barrels of untapped oil
•    About 5-6 tcf of natural gas in the Aphrodite field claimed by Greek-held Northern Cyprus (just west of Israel’s Leviathan field)

Exploitation will be a bit expensive, though. Israel’s offshore fields are located 100 kilometers from the coast and in 6,000 feet of water. The natural gas is some 5,000 feet under the sea bed.

Offshore Tanzania & Mozambique

Tanzania has become a gas sensation in a very short time, with recent offshore discoveries of some 33 trillion cubic feet.

Sweetening the deal, we have political stability and low security risk, relatively speaking, as well as an existing 70-million-cubic-feet/day capacity for natural gas processing. More gas infrastructure is in the works.

Next door, Mozambique’s 130 trillion cubic feet of gas in its offshore Rovuma Basin is eye candy for foreign investors, and officials believe there is double this amount still waiting to be discovered. It’s not as attractive as Tanzania for one reason: There is no infrastructure.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Spastica Rex's picture

Are these linear projections? Based on what prior time period? I haven't seen these. Link?

Spastica Rex's picture

TFTLs

In fact, I've heard the claims but haven't seen the basis.

I'm suspicious that claims on future production are overly optimistic for a variety of reasosn, not least of which being the tendency to hurry initial production at new sites.

Some stuff on TOD today:

http://www.theoildrum.com/node/9702#comments_top

 

Matt's picture

Even if they are accurate, America producing 10 Million Barrels Per Day Equivelent means 50% of todays consumption.

North America may be able to produce enough to meet todays consumption, for a little while at least.

falak pema's picture

good catch REX, 

Trav has no faith in IEA but these Oil Drum figures are not far away fron those projections. 

correction : these look of similar origin.

trav777's picture

IEA has been lying for over a decade.

These are all magical projections.

otto skorzeny's picture

you're using BI as a source?

falak pema's picture

not BI, sources printed by BI. Hey don't get hoity toity...media is just an intermediate. You appraise the content of what's transmitted. 

CrashisOptimistic's picture

The farther into the future you look, the more presently producing wells there will be with reduced production.  Those reductions become additive.  If you don't drill more and more frantically, you can't overcome them.

The ugly part of the Bakken is not . . . "there will be 1 million bpd of production".  That's not the problem.  The problem is they may hit that number, but only hold it for 6 hours.  The decline rates for present wells are steep and drilling rig count is falling.

falak pema's picture

why concentrate just on Bakken, I hear ya, but that report has a cumulative view for US liquid energy balance. From all sources. To contradict that we need somebody who has an angle on each segment. It sounds far fetched but the euro press is going bonkers about US oil production surge in coming years.

CrashisOptimistic's picture

Shale gas plays are not gas plays.  They produce NGLs, seemingly as a byproduct, but they fund the entire effort.  NGLs are priced higher than gas, so they are actually the primary product of a nat gas well.

A barrel of NGL does not  have the energy content of a barrel of crude oil.  It's about 60%.  Adding up total liquids is an invalid calculation.  You can't stack a barrel of NGL onto a barrel of crude on a graph and declare a total that is meaningful.  NGL barrels are usually used as industrial feedstock; not as input to a refinery to make gasoline.

Total liquid numbers grow because of shale gas wells.  Not shale oil wells.  They don't equate to continued ability to fuel a truck that brings food to your grocery store shelf.

falak pema's picture

NGL is light, and has same BTU/kg as oil but less per cu M, so you r right on volume basis. But NGL is precious as its transportable cheaper than gas via pipeline. NGL/condensates (C5 cut) are the most valuable portions of NG production. And we will be finding more gas than oil in the future. 

So don't discount NGL. 

Darth Sidious's picture

There is almost limitless oil and gas in source shale.  The issue is the cost of getting it out.  More than likely the best and cheapest shale is being exploited now .... and those shales are still pretty expensive all in.  Most currently drilled Bakken wells require $60-70 wti all in to make a decent return.  5 years down the road you'll need $130 oil.  Just look at production profile of the first shale, the Barnett and you know what is coming. 

Shale story is another bit of wall street hype . . . meant more to exploit investors than natural resources

trav777's picture

IEA doesnt want to talk about that though, because it would upset people.

What's worse is that they make no attempt to talk about NET boe...it's always some BS fudged "liquids" total that they can make look however they want nevermind that the barrels don't have the same energy content.

Or that tarsands requires massive negative balance on NG and diesel to mine that crap and wash it off.

trav777's picture

10mbpd?? BWHAHAHAHAHAHAHAHAHA.

You might want to peek into how the IEA was forced under political pressure to effectively LIE on everything they've produced for over a decade now.

This 10 mbpd can be filed with their 130mbpd of world production in 2020 or whatever it was.

The people they fired after that WEO...the last time they released an alarmist outlook.  Then they went and scrubbed it...when was that, like late 90s or something?  Calling for peak in the next decade and the US came down on them like a shelf of the BOE's tungsten bars.

then there is the USGS which is so laughable I cannot understand how someone could even mention it with a straight face.

Every single projection fills in the gap between what they REALLY project and what we NEED by "undiscovered countries."  Or whatever...fantasy BS.  Read any of the late 2000s vintage WEOs and you will see it.  There have been whistleblowers crawling out from under the floorplanks there exposing how IEA has ignored and softsold Peak while pretending that all the oil we could ever wish for will just be "found."

Then you have these idiots tacking on all these imaginary "reserves" without reference at ALL to the EROI or even base liquid production rate of the resource. 

tooriskytoinvest's picture

Largest Capital In The World Now Entering Gold & Silver Space: The Treasury Is Now Issuing Debt For FREE! If One Has Wealth To Preserve, The Time For Action Is Now!

http://investmentwatchblog.com/largest-capital-in-the-world-now-entering-gold-silver-space-the-treasury-is-now-issuing-debt-for-free-if-one-has-wealth-to-preserve-the-time-for-action-is-now/

yabyum's picture

The niobrara play is picking up steam in easter Colorado and Wyoming.

AnAnonymous's picture

Too bad the article only scales Israel consumption to their alleged reserves.

Would have been funny to read about Kenya, Tanzania consumption vs their reserves.

Somehow, in this 'american' world, some are entitled to consumption, others are not.

Indians are the scarce products of these days.

akak's picture

Too bad China's rampant and exponentially growing resource consumption is far greater than their alleged reserves of anything, including honesty.

Would have been funny to read about America's, Europe's, South America's, Africa's consumption vs China's ballooning resource consumption.

Somehow, in this Chinese shitizenism world, some are entitled to objectivity, others are not.

Ability to societally self-indict is the scarce product of these AnAnnoyingUs posts.

Scalaris's picture

Namibia, Morocco, Poland.

Mad Mohel's picture

Beware the shale bullshit they've been pumping lately. Trying to go for an energy bubble based on bullhit. The ROI makes it a waste of time, but the very bubblish 370 drilling permits is a good indication of what they are trying to do.

And the estimates are even more reason to be cautious. Seriously, between 4.5 - 40 billion barrels. Thats quite a wide margin there. Pump, pump, pump the bubble.

Matt's picture

Even if it is not BS and their most optimistic projections are true, 4 Billion barrels / 80 million per day consumption = 50 day supply. You need to discover a new one of those every two months.

Caviar Emptor's picture

New Joisey, exit 12-13 dirt play: the ground is saturated with oil from 90 years of seepage! Git it while the gittin is good

buzzsaw99's picture

Under 6k feet of water and another 5k feet of sea bed. That sounds like where a joo would hide his valuables. lulz

they don't need oil or gas while they have their hands in uncle sam's pockets anyway.

1100-TACTICAL-12's picture

What do you have against the chosen people ?

otto skorzeny's picture

who the fuck "chose" them? if we are all worship the same God-that of Abraham-then Jews,Catholics, and Muslims are all "chosen". also-Israel is a nation of welfare queens sucking on uncle sam's dry and cracked teats.

stiler's picture

you're right about that; the jews are no more "chosen" than any other people. Everyone must come to God by "calling on the name of the Lord" (notice no mention of repentance, but the calling on implies need). Anyone can be spiritually made one with God. Catholics must come in the same way as must a Jew. But as far as physical blessings are concerned, the Jews are more blessed than other people and God has used them to be a blessing; just look at the ratio of jews to gentiles in every field, and they are great in those fields. God told Abraham, a gentile moon-god worshipper to follow Him, saying, "and in thee shall all the families of the earth be blessed." They would be blessed to have the opportunity of taking the same faith in God through the One that would come through his loins-- Christ.

stiler's picture

by ratio of jews to gentiles I mean there are more jews in more fields of knowledge than would naturally occur. When a Jew is saved he becomes a member of Christ's body-- the church. At Armageddon the Jews will be saved nationally by repentance after 1/3 of them are killed by Antichrist--or is it 2/3? I don't know It's just pretty sad in view of their promises and in view of their sorry history, that that's what it takes for them to be saved as Israel.

CrashisOptimistic's picture

No, that truly is a big deal.  Israel is 100% dependent on Egyptian nat gas.  That would cease to be so when this gas from the find starts to flow.

Additionally, a great deal changes when they start to export that gas to local countries.  Jordan and Syria may change their attitudes about Israel if they depend on Israel for nat gas.  

jubber's picture

No mention of Kurdistan? biggest onshore Oil discovery in three decades  GKP. Exxon, Total Statoil Gazprom Chevron, hess, Marathon etc, all moved in this year.

Scalaris's picture

Indeed, Kurdistan is rarely mentioned despite its massive reserves. As for GKP, it has been a non-stop drama with speculation regarding its takeover by Exxon at some point, which would have been of little surprise, considering the around 13.5 billion barrels of gross mean oil-in-place, found in its Shaikan block.

At some point I thought that Rothschild would sweeten a deal for Todd Kozel, so that he would be able to cash out, and allow for a Vallares/Genel - GKP mergence of sorts, which would eventually be sold partial or as a whole to Exxon, when its reserves would be priced at multiples. 

haskelslocal's picture

Curious. How are these "plays" when the forward potential has been extrapolated out by first commers?

Are they "plays" to find prop investors to backfill profit take downs?

Taint Boil's picture

 

 

I would believe / listen to The Oil Drum before I would OilPrice.com

gmak's picture

Big deal.If the title had 2013 instead - you might have something here.

therearetoomanyidiots's picture

"Stretching from Eastern Montana to Western North Dakota and across parts of Saskatchewa and Manitoba in the Williston Basin, the Bakken Shale Play could yield some 4.3 billion barrels of oil, according to the US Geological Survey'

 

Too bad, as with the keystone pipeline, all that oil would not stay in the US for the US.   It will go to the highest bidder overseas and with the piss poor value of the USD and it's ever deflating value, our energy costs will 'necessarily skyrocket'.

 

 

Matt's picture

Why too bad? Don't you think America might benefit from higher energy costs? Less urban sprawl, less long distance commuting. Maybe people will walk more and eat less.

therearetoomanyidiots's picture

Yeah, real aswesome.   Just fuck those that have set up lives outside the big city.   I know, really, it'll be awesome when people have to spend, what, 500-1000 percent more on food, clothing, just about anything that isn't made or grown in the area?    Super, then the government canwork harder to take more money from idiots like you while creating more and more people who will need their help.  Yeah, super suggestion.  Then only elites can drive around, have things, enjoy life, everyone else can just shit.  that'll be super.    Beautiful vision of the future numb nuts. 

Why do you hate America and why do you continue to live here if you hate it so much.  

Super Broccoli's picture

there will be oil FOREVER ! Petrocorp are just not looking for it. If you were told petrol was pretty much as common water is you'll never be willing to pay $100 a barril !

Remember, 40 years ago we were being told the petrol ressources were about to end within 30 years ...

earleflorida's picture

the war has been fought and won... it's over-- blue-gold, now controls the blue skies?

and who is it that has won the battle-- why, the chinese of course.

think about it? amerika has been playing world cop for thirty years while the hen-house has been raided-- right, under our noses!!!

why???

jmo 

Matt's picture

Because America was playing Checkers while the Chinese were playing Go?

Super Broccoli's picture

there will be oil FOREVER ! Petrocorp are just not looking for it. If you were told petrol was pretty much as common water is you'll never be willing to pay $100 a barril !

Remember, 40 years ago we were being told the petrol ressources were about to end within 30 years ...

earleflorida's picture

"The most Important Video You'll Ever See" __ by Dr. Albert A. Bartlett *1995   [8 part series ~ 9min. each __ total ~1:14 min.] http://www.youtube.com/watch?v=umFnrvcS6AQ

ref: 32 min -35 min / 40 min - 50 min. marks best overview 

Note: it's well worth your time

Ps. when the U.S. was told we have plenty of oil... no one mentioned China, India, Russia, Brazil... all soveirgns of Latin America, S.Africa, N. Africa, EU, and the ME,...et.el.

Ps2.  The world population at the end of 2011 was ~7.0 billion people [  http://www.worldometers.info/world-population/  ]  In 1975 it was ~ 3.7 billion, so it will mostly have doubled by the end of 2013. Do the arithmetic, or [  http://www.prb.org/Educators/TeachersGuides/HumanPopulation/PopulationGr...   ] whatever?

Ps3.  Thorium Nuclear Module Reactors, can't melt down, or up... and light-water is no mystery today. Only drawback is where will the mega, mega wmd's controlled by the MIC get their plutonium, and who will have any use for uranium anymore!!!  

jmcadg's picture

Trav has been on the Red Bull :) Good work buddy.

Jack Sheet's picture

"2012 has been a stellar year for oil and gas"
What fucking rubbish, Where have the energy stocks gone? No fucking where.

PGR88's picture

for those of us small-fry unwilling or unable to go to Kenya or Mozambique, what do you suggest for oil and gas investments?

matsoR's picture

A world without oil, now that would be something!