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To excited to chill, paper works in, rigs arrived, and its the weekend, and radio is playing all good feeling stuff..
Should'nt have added the "?", makes it read different, a challenging question, rather than adding..
Chill my man, the Mitchell bros are on the job.
Phil & Grant are the boys that get things done.
DM gave them the drilling contract, from which they will make loads of dosh;
and if there is Helium to be had, the bro’s will make sure they get all.
Sure DM described Tai as Robust, which I took to mean ideal strata for drilling?
My question was more that I can't see any real risks, as the things which could go wrong might be delays and not failures.
So, if a drill breaks and it delays by a month - annoying but not 'that' important.
However, drilling and finding no HE traps - serious.
That is where I am coming from, and the replies seem to confirm that, the chances of success here are actually quite high.
SeagullsFan & highlandmatt,
The technical risks with drilling might include loose, poorly sorted sediments and/or water content causing borehole instability issues, overpressured shales, an unusually high pressure regime, cementation issues, the risk of wireline tools getting stuck or failing to do a flow test.
I don't really see any of those being a problem here, given the geology at Tai.
The risks for me would be inadvertently drilling through the fault wall or drilling in the wrong place and missing the optimum location in the reservoir due to basing the decision on 2D data.
Look at 88e in Alaska last month - they had to drill 600 feet lower than they expected before encountering the reservoir rocks, went through a fault wall and failed to flow test. That is the difference between patchy 2D data and finely spaced 3D seismic.
I think the additional 2D infill survey carried out will be sufficient to avoid the same problem here.
Another issue raised has been the presence of adequate seals to trap the helium. I'll post some more analysis over the weekend that hopefully will reassure you and others about the seismic evidence available to us.
No, I was understanding you clearly and agreeing with you. The reason there was so much pre-work done is because it is a wild and kind of exciting project to go out and drill for helium reservoirs in total absence of a hydrocarbon system. They have had to think hard and carefully about the underlying premise (and do some pre-work for sure) to get it to the point of spending dollars to test it with with the drill bit. I am glad I have a seat to watch it play out. (using some of my dollars I suppose) And it has been fun to learn more about helium and the underlying geological research that has been done and actually is being done as they collect real time data on every well bore as they go.
I trust I wasn't clear when I said " I have never had an oil and gas with so much pre-work being carried before"; what I meant was to say I have never had an oil and gas with so much pre-work being carried before, such as academic geophysics, pre exploratory work, and even a phd thesis written where my company is about to drill, after they themselves dis all the seismic worth (which was carried out twice here).
I think the closer I got to this was in the early exploratory days of Hurricane Energy; the geology was very interesting.
" I have never had an oil and gas with so much pre-work being carried before. "
Partly because there is no oil and no "natural gas". There has never been a well drilled at a conventional reservoir (with a trap and a seal) looking to exploit migration of helium totally independent of migration of hydrocarbons. These will be the first greenfield pure helium wells ever drilled. Other wells have discovered helium enriched stratigraphic intervals but usually by accident looking for hydrocarbons in an area with known source rock for hydrocarbons.
just hope he1 are smart and dont get ripped off when they do find some bananas
Great reference Dai! Or maybe HE1 don't pay the fees and the equipment gets stuck on the other side of the border? Haha!
Thanks Mr Spacetomato.
I would say that the geo-political risks are lower as the current president is on-board, and the work being done to integrate the company into the local communities will buy them a lot of goodwill. If they are seen to play fair, you would hope that this will encourage support in the future even then the politics change. I realise that in developing countries things change, but for our current short-term horizon, that is not an issue.
Brilliant post. I must admit to little technical knowledge of helium extraction.
You must have spent most of the afternoon typing it.
As you say a huge amount of preparation had been done preparing for the drilling and imo it should pay back for all the hard work that has and is still being done.
results of drilling, testing and the actual production performance of reservoirs after the date of the estimates which may drive substantial upward or downward revisions; and changes in helium gas prices which could affect the quantities of proved reserves since the estimates of reserves are based on prices and costs existing as of the date when these estimates are made. Lower oil prices or the projections of higher operating and development costs may impair the ability of the Company to economically produce reserves leading to downward reserve revisions.
These are some of the notes I have compiled from general knowledge on exploration for oil and gas.
I have gone through it all and decided to invest here because the evidence and the work carried out before the drill, by academics and geologists and financial analysts and the work I duly put on here in terms of research and my experience as an investor in O&G tell me to buy it. I have never had an oil and gas with so much pre-work being carried before.
Risks associated with the exploration and production of natural gas (Helium in our case)
Apart from the obvious health, safety, security and environmental risks, exploratory drilling efforts may be unsuccessful: Exploration drilling for gas involves numerous risks including the risk of dry holes or failure to find commercial quantities of helium. The costs of drilling, completing and operating wells have margins of uncertainty, and drilling operations may be unsuccessful as a result of a variety of factors, including unexpected drilling conditions, pressure or heterogeneities in formations, equipment failures, blowouts and other forms of accidents, and shortages or delays in the delivery of equipment. Poor project execution, inadequate front end engineering, delays in the achievement of critical events and production start up, and differences between scheduled and actual timing, as well as cost overruns may adversely affect the economic returns of our development projects. Failure to successfully deliver major projects could negatively impact results of operations, cash flow and the achievement of short-term targets of production growth.
On the top of it, the governments throughout the world in matters such as the award of exploration and production interests, the imposition of specific drilling and other work obligations, income taxes and taxes on production, environmental protection measures, control over the development and abandonment of fields and installations, and restrictions on production. We could have new regulations and legislation, as well as evolving practices, could increase the cost of compliance and may also require changes to our drilling operations and exploration and development plans and may lead to higher royalties and taxes.
And then we may have uncertainties in estimates of oil and natural gas reserves: Several uncertainties are inherent in estimating quantities of proved reserves and in projecting future rates of production and timing of development expenditures.
The accuracy of proved reserve estimates depends on a number of factors, assumptions and variables, among which the most important are the following:
the quality of available geological, technical and economic data and their interpretation and judgment;
projections regarding future rates of production and costs and timing of development expenditures;
changes in the prevailing tax rules, other government regulations and contractual conditions;
results of drilling, testing and the actual production performance of reservoirs after the date of the estimates which may drive substantial upward or downward revisions;
and changes in helium gas prices
Yep, I watched that video, getting a few trucks to their destination in Tanzania..
Most of the risks have mainly being covered on here I personally only see two risks that would affect HE1 the first one would be a spill over of violence from Mozambique which would be delt with via the army or private security, the second and highest risk could come from the government if HE1 is very successful they may not renew the license or they could take control of the operation.
@highlandmatt. - apart from item 1, everything else i would say is covered.
I think you’re taking the pee a bit there @dai2belts ;)
Traffic cops might impound the transporter and rig on the way to site.
Then the official required to sign the release paper is away enjoying the UK weather
Oil leak around the drive to the wheel station, and they dont have any bananas.
The transporter breaks down because the driver has been selling fuel between stops
Drilling app not compatible with operators version of android
1. Geological risk (no trap),
2. Technical risk (drill failure),
3. political risk (licences, royalties, fees),
4. Timeline risk (getting to production and market
In fact, you may as well do a PESTER analysis.
Like any mineral exploration project findingf the stuff is not the difficult bit. The science is in finding how much of it you've got, how much you can get at, what are the concentrations (lucrative pockets and run-of-mine) and what's its lifespan. Then you have to work out the extraction and processing cost to produce the stuff you want to sell and you weigh that against the current and expected price. The problem with mining is that you have to invest in a huge amount of capital cost upfront before you can produce in commercial quantities, which is usually when one of the big companies comes in to partner up. That way you avoid huge debts and/or unsustainable rights issues. The big risk is you run out of money before you can reach production. Happens a lot - the world is dotted with 'world-class deposits' of this and that mineral which no-one can afford to develop to full commercial scale. And don't forget the substition effect. If a materal gets too expensive the boffins will try and find a subsitute or a way of doing without it. But, that said, HE1 is a strong buy unless the drilling numbers turn up a dog's dinner. Anything reasonable from the drilling will be good news for the SP.
I know there are several posters who either understand mining/geology or have done a huge amount of research on HE1, the licensed area and the potential.
We're all aware of the upside (figures get thrown around from min of £1 to £10 - eventually). I get that the upside is unknown until there are successful wells which prove there are reserves of helium which can be commercially extracted.
However, I am wondering what the real risks are.
So, what do we know?
We know there's helium in high concentrations (maybe up to 10%).
We know they are in the goldilocks zone in relation to being near a volcano etc.
We know they are confident and so must the drilling company as they are taking part payment in equity.
We know the government is supportive and the HE1/DM are experienced in Africa and are ensuring the local community are engaged.
We know they are a dynamic team and have managed to get everything done on time or earlier. No f@ck-ups.
So, genuinely, what could screw this up? What could occur which could make this not a viable enterprise? It's not as if they have one shot at getting helium anyway. It's not sh@t or bust is it!
I am naturally an optimist, so I am trying to curtail that enthusiasm and consider where the pitfalls are.
Any thoughts Mr Spacetomato, deepbluediver, dai2belts, trek or anyone else?