Skip Hobbs and Bob Merrill on assignment in Kiev, September 2008.
2008 was a tumultuous year for the global petroleum industry, and a busy year for Ammonite Resources. From our “hideout” in the woods of New Canaan, Connecticut, we have advised clients on some very diverse domestic and international assignments.
Client due diligence assignments have taken us physically and virtually from one end of North America to the other, and overseas, to evaluate conventional and unconventional petroleum E&P projects. Domestic projects have been in: the Gulf Coast – both onshore and offshore, the Rockies, Kansas, Appalachians, Cook Inlet and North Slope of Alaska; and South Florida. While our work normally involves the review of offering company prior geotechnical studies, Ammonite’s Dallas-based Dr. Jeffrey Levine prepared over a several month period a comprehensive report on the coalbed methane geology of the Cherokee Basin in Kansas and Oklahoma for a gas utility company client. The study identified areas of maximum resource potential and guided our client in making a $100+MM acquisition.
We have been very active in Canada, looking at conventional, coalbed methane and oil sands projects. Ammonite consultants Dr. Robert Mummery (Calgary) and Dr. Robert Merrill (Houston) evaluated the large Western Canada prospect portfolio of a mid-size Canadian public company as part of the due diligence for a significant PIPE investment. A Monte Carlo analysis was made of the exploration and development portfolio of the company to determine a statistical P10-Pmean-P90 distribution of future reserves and production levels which had not been evaluated by the company’s reserve engineers. Our most interesting Canadian project this year involved an assessment of a steam boiler technology and its applicability and market potential in the oil sands. Calgary-based consultant Susan Eaton conducted the study together with a process engineering firm which Ammonite sub-contracted, on behalf of a buyout firm that was interested in, and did purchase, a large steam boiler manufacturer.
Latin America has been very active for us this past year. Bob Merrill has made multiple trips to Colombia and Brazil to evaluate E&P opportunities there. Skip Hobbs spent a week in Colombia in February, where he was a keynote luncheon speaker and represented the AAPG at a Latin American petroleum conference. His talk was titled “The Future of the Global Oil Industry – the Resources, the Challenges, and the Geoscience Workforce.” Skip has given this speech at a number of conferences, lastly in Halifax in August as the keynote dinner speaker at the Atlantic Conjugate Margins Conference. It is regularly updated – and definitely needs an update now. West Africa, North Sea, Black Sea, Syria, Iraq, Qatar, and Indonesia have also been areas where we looked at acquisition opportunities for Ammonite clients. Our most interesting international project this year was in Ukraine in September. Our client had acquired an operating company in Ukraine, and was considering either making two additional acquisitions to reach an optimum critical mass, or selling their existing asset. Merrill and Hobbs, together with the client’s acquisition VP, spent a week in Kiev and in the Donets Basin in Eastern Ukraine. Conventional wisdom says that the huge tight gas resources in the Paleozoic rocks of the interior basins of Ukraine would be ideal candidates for Western horizontal drilling and fracturing technologies. Maybe so, but we found was that Ukraine is an impossible operating environment for foreign companies due to import restrictions, bureaucratic road blocks, corruption, and myriad other negative factors. We advised our client to exit the country. The photo below is of Bob Merrill and Skip Hobbs in Kiev. The city center and historic district have been restored and are now quite lovely, a big contrast from 1995, when Hobbs first visited Ukraine to look at CBM opportunities.
One of the factors that distinguishes Ammonite from many other consulting firms, is that we are – ever so modestly, perceptive at identifying future energy trends. We were one of the earliest firms in the 1980’s to develop expertise in coalbed methane. We recognized the potential of heavy oil and the oil sands in the 1990’s before the industry became “hot”. Admittedly, we were late on the shale plays, but Ammonite is now very much up to speed in that resource. Texas-based consultant Mary Van der Loop, for example, participated in a multi-basin shale characterization study for a major oil service company (this was not an Ammonite engagement, but gives us some very valuable expertise).
Two new areas for us this year are geothermal energy and carbon sequestration. Dr. Merrill and Skip Hobbs have looked at a number of geothermal projects, and Bob has built a Monte Carlo evaluation program for geothermal prospects. Skip’s advisory work with NYSERDA – the New York State Energy Research and Development, Authority has exposed him to carbon sequestration technologies and site characterization. Several Ammonite consultants (including Hobbs) have recently taken short courses on reservoir characterization for carbon sequestration. It may be a bit early for the commercialization of carbon sequestration, but it is coming, given the political interest in climate change, and President Obama’s commitment to green technologies. Ammonite is now in a position to identify and evaluate potential commercial-scale subsurface carbon sequestration opportunities.
Recognizing the importance of alternate energy resources, this past summer we brought Dr. Jonathan Kwan, P.E. into the Ammonite fold in Houston. He is now our expert on alternate energy resources, including gas-to-liquids. Jonathan’s experience includes some 20 years with Unocal, followed by appointment as University of Oklahoma Director of Natural Gas Engineering and Mewbourne Endowed Chair Professor at the School of Petroleum and Geological Engineering. He returned to industry, working at Anadarko (gas hydrates among other things), and has recently been on a retainer to Shell regarding oil shale recovery technologies.