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Studied: Power Engineering, Exploration Technology, Worked Upstream, Midstream, Downstream in Oil and Gas, Pipelines, Drilling, Refineries. I'm Interested in very big picture, game changers that come from sizeable economic deposits of Oil, Gas, Gold, Silver, Uranium, Specialty Metals used in... More
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  • Shale Oil Exploration In The East Coast Basin Of New Zealand 11 comments
    May 16, 2013 3:19 PM | about stocks: TAOIF, NZERF, APA

    East Coast Basin is a term you may start hearing more often.

    These are vast resources, and they are in a region of the world where they can be extracted properly, safely, and transported by sea to any other port. This represents an unprecedent opportunity.

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    New Zealand's NORTH ISLAND has a vast prospective oil reservoir with shale that contains potentially commercial quantities of oil trapped in shale.

    Until research from the Bakken Formation paid off and other North American shale exploration was proven successful over past few years, these type of shale plays we're thought "un-economic".That attitude has changed, and fast, with the incredible success in North Dakota, East Texas, Colorado, and Saskatchewan.

    Now the combination of 3D Seismic, Horizontal Drilling, Hydraulic Fracturing and other game changing surface and downhole technologies are bringing excitement to areas with similar exploration potential in shale.

    If no proven oil reservoir was already drilled in an area you can buy land or obtain exploration rights for reasonable sums of cash, then if drilling confirms the prize is economic, you can be the first player in a very profitable business from ground zero.

    This is similar to what is happening on New Zealand's North Island right now. Exploration permits have been bought up by the wheelbarrow and technical expert laden exploration companies are making their calculated bets on where chance, science and nature can create opportunity. This very hard, expensive, risky work, but the rewards are so compelling it's easy to see the reason people dedicate their lives to such an exciting pursuit.

    Tag Oil Ltd. and New Zealand Energy are two companies with large ambitions in exploring the East Coast Basin, in New Zealand.

    The Geology found here is a rather rare find in the world, almost like the probability of finding a pink diamond in a diamond mine. The attributes that make for good oil exploration rock are not easy to locate by chance so this particular play has the oil industry in new zealand very excited.

    Both have purchased considerable acreage positions targeting oil shale reservoir rocks in the basin on the east coast. The Ngapaeruru well is one exploration well drilling right now that could help confirm the expectations of exploration geologist and geophysicist, that not only is the oil there, but it exists in quantities and of a quality decent enough to spark off a new Oil Boom like the Bakken did for North Dakota.

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    For more info: www.tagoil.com/

    www.tagoil.com/20130507-TAG-Oil-Ngapaeru....asp

    The rock considered the pay zone is 300-600m thick in some areas,(and it is that thickness that over many kilometers could spelling hundreds of million, or billions of barrels of recoverable oil.

    Tag Oil Unconventional Oil Play Targetes Eocene and Paleocene rock layers, dubbed the WAIPAWA and WHANGAI.

    this combined with exploration attributes like porosity, permeability, total organic content and other geoscience numbers show big promise.

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    The Chart Below is the wild ride you need to be able to stomach to be an exploration basin investor. Its up, its down, its no news for weeks, months, then whammo an event occurs and the ride starts again.

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    www.newzealandenergy.com

    5 years ago you might have experienced no activity, until a few wells added some barrels per day, the gains are attractive, but take your profits when they come because their are more wells coming and not every one is a success. You can pick up shares for near 1/10 of the cost from a year ago, and any week now could be an event that propels the company to new heights.

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    A commercial discovery by anyone in the East Coast Basin will translate to floating all boats (share prices, land prices) on the ocean of shale oil exploration in NZ.

    Meaning existing Land values should rise sharply for all players if any one player in the region hits pay dirt. So new entrants will have to pay much more to buy land, making the existing land owners wealthier. At least this is what happened between 2006 and today in North Dakota's land targeting oil shales)

    THE 2012 BLOCK OFFER RESULTS

    (The Permit Number and Block refer to Land awarded for Exploration)

    THE 2013 BLOCK OFFER bid Deadline is SEPT 26, 2013

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    THIS IS WHEN EXPLORERS BID FOR NEW LANDS TO DRILL ON.

    (Blocks offer 2013 Taranaki Basin )

    Onshore Blocks: Five pre-defined blocks, covering 1,562.7 km2 in total, in the Taranaki and East Coast regions. Bids for onshore blocks are for single blocks.

    Taranaki

    Three blocks covering 242.1 km2 in total.

    • 13TAR1
    • 13TAR4
    • 13TAR5

    Map: Onshore Taranaki [2.4 MB PDF]

    Taranaki Geological Summary

    Taranaki Onshore
    East Coast

    Two blocks covering 1,320.6 km2 in total.

    • 13EC1
    • 13EC2

    Map: Onshore East Coast [2.5 MB PDF]

    East Coast Geological Summary

    (2013 East Coast Basin Blocks up for sale)

    When we learn what the prices paid for Two blocks covering 1,320.6 km2 in total. BLOCK 13EC1, 13EC2 in the east coast will be interesting,after Sept 26 the bidding closes, sometime after that the $/Acre paid will be announced.

    If that $/Acre is substantially more than 2012, it may indicate the interest in the Oil Shale is based on stratigraphic data confirming oil exists beneath the permit holders lands.

    SOME OF THE LARGE LAND HOLDERS IN THE EAST COAST BASIN.

    There are many companies acquiring land in NZ, like APACHE Oil and smaller companies, but the pure excitement lies with those going where no one has gone before, the risk takers, the explorationists, and these two Tag Oil and NZ energy are well positioned to make discoveries for years to come.

    OTHER EAST COAST BASIN, EXPLORERS:

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    Presentation

    Instablog on Waihapa

    Instablog on New Zealand

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    East Coast

    Click Link to Read Investor Presentation July 2013

    Previous Instablog on Tag, share price bounced back over summer.

    On November 1, 2012, Marauder announced that its wholly owned subsidiary Marauder Resources East Coast (NZ) Ltd was awarded PEP 53806 in the East Coast Basin of New Zealand. Marauder will be the initial operator of the permit with Canadian Overseas Petroleum Limited as a 50% Joint Venture partner. The permit covers 238,363 acres with an initial term of 5 years. On May 23, 2013, Marauder announced its New Zealand subsidiary has been renamed Endeavour Energy (NZ) Ltd.

    The East Coast Basin is considered highly prospective for large accumulations of oil and gas with over 300 surface seeps present. The recent focus in the basin has been on a potential light oil unconventional resource play within the Paleocene to Cretaceous aged Whangai and Waipawa shales.

    These formations exhibit characteristics similar to the productive Bakken Formation in Saskatchewan and North Dakota. Offsetting permit holders in the basin

    TAG Oil and New Zealand Energy, have had third parties assign shale oil resource potential of 12.6 and 20.9 Billion Barrels Original Oil In Place respectively.

    http://www.maraudernrg.ca/operations/MARAUDER_EAST_COAST_BASIN2.pdf

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    PEP 53806 New Zealand

    In November 2012, COPL announced that its partner in New Zealand had been awarded Petroleum Exploration Permit 53806 in the East Coast Basin Offshore New Zealand. The agreement between COPL and its partner provides for each company to hold a 50% working interest in the PEP 53806. The permit covers 965 square kilometres and has an initial term of 5 years.

    The East Coast Basin contains a number of large oil and gas accumulation targets focusing on unconventional resource plays within the Paleocene to Cretaceous aged Whangai and Waipawa shales. These formations exhibit characteristics similar to the productive Bakken Formation in Saskatchewan and North Dakota.

    2013 Presentation

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    [BLOG UNDER CONSTRUCTION]

    New Zealand HYDRAULIC FRACTING REPORT

    "The purpose of a hydraulic fracturing job is to create a large increase of the surface area of the target formation, which can contribute to flow into the wellbore, compared with a natural completion, in which the wellbore circumference is actually a relatively small area (see Figure 2). Each frack job is carefully designed in terms of pressure and fluid composition to ensure the optimal fracture growth and proppant placement in the fracture.

    The actual act of fracturing, in a properly designed and constructed wellbore, is the lowest risk action involved in the well development process, especially in wells more than about 2,000 metres deep."

    Video: www.youtube.com/watch

    Disclosure: I am long NZERF, APA, TAOIF.

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Comments (11)
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  • tonyconnolly
    , contributor
    Comments (106) | Send Message
     
    Hi, do u think NZEC has enough funds to keep going at it's current burn rate? What chance of a major player taking a percentage of NZEC?thanks,tc
    31 May 2013, 08:55 PM Reply Like
  • tullii
    , contributor
    Comments (79) | Send Message
     
    Author’s reply » I think they will need to do a financing to drill 2 wells this summer. The line of credit they have should be sufficient to close the Waihapa deal, but then they will need more cash. A major buying in will not likely happen until they get to 3000BBL/day, as there are so many sure-thing shale plays in the USA right now to pick from.

     

    NZEC has had some challenges, and analysts have focused on what they thought would have been archived by now. Admittedly I am not a finance guy, but the size of the prize has become substantially larger in reserve numbers since they started the 2010 financing. So has the reservoir become better understood, the stimulation technologies have been experimented with, the story is moving from hypothesis to fact very quickly, and many in-the-know geoscientists are paying closer attention to the play in NZ.

     

    John Proust has a highly respected reputation as a entrepreneur, financier, his track record of putting together the team in 2 years that he has done amid all the global competition for the same type of skilled technical people, speaks accolades for his character and vision. He wants this to be a billion dollar market cap in a few year window, and it may be possible if the whangai turns into a Bakken like source rock or they find an elephant on seismic that becomes a producer.

     

    I do think they will need to raise money again even by this summer.
    I don't see that as a bad thing, if your horizon is longer out. That money will not be difficult to come by if Tag Oil's first east coast basin well shows favourable core sample data over the 115m interval that showed hydrocarbons last month, if total organic content, permeability, porosity, all prove to be what they expected then we have the stratigraphic, geologic and geochemical data to prove up the whangai formation as exploration worthy.

     

    Since NZEC has so much land in the east coast, any success of Tag oil will only escalate their land value and the promise of NZEC's land. The Geoscience team of NZEC was a NZ company that was sold for shares to NZEC, so they have skin in the game at or near 2.50\share so they are all motivated to make the company more valueable since it dwindled to .30 Any major player would likely be offered farm-in options, or some de-risking type financing for existing shareholders without dilution more than necessary., until the production gets up over the 3000 bbl range I don't think anyone will take a run at them.

     

    The shares are a bargain price today, that could change in a heartbeat, I don't think anyone can time a safe entry, best odds are to average your buys and hope for a decent overall average.

     

    The story is starting to pick up in USA..as you can see in this video
    http://bit.ly/17gT9rz

     

    The above link is a paid newsletter service for oil and gas, but the
    authors of it have no industry experience in the field so they are little too simple in their understanding of how the oil gets out of the ground, sold, and how profits are earned in a new frontier like NZ, but they do highlight the punchline of why people are excited about the east coast basin.

     

    I am in this because I believe the 3D seismic and data inventory that comes with Waihapa has enough value in it to take this back above $2, i think the tikorangi problems of the past will be solved with reservoir washes and stimulation any bonus on the east coast would propel this to be a potential 10x return from todays prices within 12-18 months.

     

    The real reason anyone should buy into NZ is that the Middle East is fast slipping into a nightmare and big oil is threatening to pull out or scale back in some areas. Saudi is not going to be able to export past 2030, as their internal use of oil is too high to sustain exports. Reserves from big oil are depleting and not being replaced fast enough. NZ has all the right stuff to be a solution to the western refineries as the API of the oil is comparable or better than Saudi oil in some circumstances. So NZ is a long term geopolitical play as much as it is an exploration play. That is my take on it.
    2 Jun 2013, 05:25 PM Reply Like
  • wackojacko
    , contributor
    Comment (1) | Send Message
     
    Please keep me informed - jacksoncolin@shaw.ca
    4 Jun 2013, 01:11 AM Reply Like
  • JNGinABQ
    , contributor
    Comments (4) | Send Message
     
    It seems to me that I've heard about some other areas of energy-development interest in New Zealand. Am I just imagining it?
    9 Jun 2013, 02:17 AM Reply Like
  • tullii
    , contributor
    Comments (79) | Send Message
     
    Author’s reply » Do you mean other areas of geographic areas, like canturbury or great south basin or other sources like geothermal, wind, hydro, coal, uranium...I think the geology of NZ is garnering a lot of attention due to oil exploration but then other geoscience data suggests the untapped potential of multiple energy sources. Prosperity is in her near future on multiple fronts.
    9 Jun 2013, 11:14 AM Reply Like
  • poyue
    , contributor
    Comment (1) | Send Message
     
    is this shale oil or is it oil shale?
    26 Sep 2013, 12:48 AM Reply Like
  • tullii
    , contributor
    Comments (79) | Send Message
     
    Author’s reply » In New Zealand we are dealing with Shale Oil, meaning that it is readily marketable to refineries, of high API quality, and in abundance in an order of magnitude that can seriously compete with other oil exporting nations. It is being compared to the Bakken in North Dakota, but it is much thicker, and this is why it is the play of a lifetime. (Kerogen, which is often referred to as Oil Shale is by the academics not fully ready to accepted as what we think of as Oil, it more like a precursor, an incomplete chemical that can be tweaked, but is not refinery ready. For the layperson they both have economic value, for the business investor or petroleum enthusiast Shale Oil is preferential due to lower extraction cost, more immediate sales and cash in hand potential.

     

    Although we have serious exploration work spending offshore and onshore, the Shale Oil status is still 'exploration' and it will likely be mid 2014 before this goes mainstream as having true acceptance as 'production' capable, however the speculation premium window will be largely missed out on if one waits for that certainty.
    4 Oct 2013, 06:47 AM Reply Like
  • rdoring
    , contributor
    Comments (4) | Send Message
     
    Hi,
    I am an investor who has traveled New Zealand extensively long ago.
    Can you please comment on the issue that the oil under Maori land belongs to the Maoris? How much of the oil explorer blocks belongs to Maoris?
    Thanks,
    Richard
    24 Oct 2013, 02:27 AM Reply Like
  • tullii
    , contributor
    Comments (79) | Send Message
     
    Author’s reply » This is a case by case basis, there are multiple groups and multiple agreements on many offshore, onshore permits. I don't have a % answer for you, it is a very valid question, and each company Investor relations department will have that number for each particular permit, it should be public info but depends on how far the negotiations are along in the land deals being drawn up.

     

    The minister of Resources would have this info, within each signed Agreement. Some details may be kept private for obvious reasons, especially during high impact exploration where first mover advantage is key.

     

    NZ link http://bit.ly/17kUijs

     

    This is outside my expertise, so take what i say with caution as i interpret it over there. Mutual respect, and dialogue before action are essential to avoid previous disputes from miscommunication and lack of existing protocols.

     

    I would suggest that each exploration permit called a PEP or Petroleum Exploration Permit is granted with the consultation of Government, Industry and Stakeholders in the Community.

     

    Keep in mind that Maori is a general term and there are many tribes and groups that outsiders may call Maori, but cultural sensitivities may exist within certain families, geo locations or island sites.

     

    "For activities other than minimum impact activities, the owners of Māori land also have an absolute veto right on all mining activities on their land."

     

    Source:http://bit.ly/17kUkb2

     

    There is an exemption for Māori land from access arrangements being determined by an arbitrator where there might otherwise be public interest grounds to support an access arrangement being negotiated. Crown land - In a similar way to privately owned land and Māori land, an access arrangement is required to enter Crown land. Consent to access has to be given by the Minister responsible for administering the land.

     

    In one case Tag the IWI are one group that are Stakeholders.
    Often the youth may feel upset over lands and this usually gets more press than when any mutual deal is struck, just the media's way of earning $ with controversy I guess.

     

    http://bit.ly/17kUkb4

     

    http://bit.ly/17kUkri

     

    Make no mistake, of all countries in the world, New Zealand Maori's likely have more influence that any other locale. As they should, they fought and won each right they have. Their history is very fascinating and they deserve respect as they are important culturally and historically.

     

    New Zealand Energy Ltd. was very successful in negotiating with the Maori as a TRUST and that will be one reason they stand to be very successful, they did it right from the very first step.

     

    Te-Runanga-o-Ngati-Ruanui is the iwi group that NZEC deals with.
    TroNRT is recognized as the representative body of 16 hapu (sub-tribes) who make up Ngati Ruanui, and has the responsibility of managing the interests of the Ngati Ruanui iwi for the benefits of its 8,500 uri (descendants).

     

    http://bit.ly/17kUkrm
    26 Oct 2013, 06:12 PM Reply Like
  • moppy
    , contributor
    Comment (1) | Send Message
     
    Get in on NZEC as soon as you can. Who knows when the wells will start producing profit. As it stands now TAG OIL's profit is NZEC's. As of today NZEC (.41) is a bargain steal per share. But go long! These things take time to materialize. No quick fix here. You'll be glad in the future !!!!!!!!!!!!!!!
    24 Oct 2013, 08:48 PM Reply Like
  • tullii
    , contributor
    Comments (79) | Send Message
     
    Author’s reply » All the right elements are in place now; Talented People, Access to Capital, Permitted Exploration Projects, I think it will get exciting very soon! We all hope that the stars will line up for all companies and help raise the bar for everyone in New Zealand and improve the living conditions and incomes and revenues for all communities they work near. Responsible growth can be very positive for everyone including the local communities who will soon enjoy the fruits too.
    26 Oct 2013, 06:18 PM Reply Like
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