NXT Energy Solutions: How Big OIL Exploration Can Save Hundreds of Millions In Exploration

Every year the oil and gas industry flushes billions of dollars down unsuccessful and incredibly expensive exploration wells.  The cost of a single exploration well these days can exceed $100 million. That’s on top of the money spent on seismic data acquisition before the drill bit starts turning.

The annual global geophysics market is estimated at $12 billion, that’s a lot of money spent on collecting seismic data.

Can you imagine spending that much money knowing very well that your chances of success are about one in three?

That is the reality of wildcat exploration drilling in the oil and gas industry…and it’s about to change.

Stress Field Detection (SFD) is a proven technology that can eliminate a big percentage of those dry holes.  This technology can also eliminate the need for a huge amount of seismic data gathering.

This technology can save the oil and gas industry billions of dollars.

In fact, they have never failed test.  The proof lies in two recent technical papers that were released by two large oil and gas producers who have used SFD which validate the technology.

The papers were authored by the national oil company (NOC) of Mexico (Pemex), and the national oil company of Pakistan (Pakistan Petroleum).  Both papers independently said the technology worked great, but the paper that really caught my attention is the one from Pemex.

Pemex is a gargantuan company;  it produces 2.5 million barrels of oil per day.  That level of production matches the entire OPEC country of Kuwait which is the 10th largest producing nation.

Pemex isn’t just another end user of SFD, it thinks enough of the technology to co-author a technical paper on it.  That isn’t just a pat on the back for the technology; it’s a bell ringing endorsement that the entire industry is beginning to hear.

With the large success of their SFD surveys for both Pemex and Pakistan Petroleum, you would bet they are negotiating towards new orders for the technology.

If that happens it is going to be a major catalyst for shares of NXT Energy Solutions SFD.V 1.07 [-0.03] as they are the only company in the world that provides the SFD survey.

That is why 2014 potentially stands to be the biggest year for NXT.

SEISMIC ACQUISITION

Seismic is one of the most important tools in oil and gas exploration. It’s used by petroleum geologists to generate an image of the subsurface without having to drill a well.

The concept is very simple; sound waves are sent into the ground using an energy source such as dynamite or “vibrator” trucks.

seismic trucks

The sound waves spread out into the ground through the subsurface and are reflected back by different rock layers, and picked up by sensitive microphones.

Seismic takes time, costs money and involves getting the proper land access permits. A crew of 100-200 men is not uncommon. It costs anywhere from $40,000 to $100,000 per square mile to acquire 3D seismic data.

Shooting seismic in the jungles, deserts, and deep waters, where most of the billion barrel fields are being discovered—is expensive and difficult. These are the areas explorers will be focusing on in the decades ahead.

This is where NXT’s proprietary SFD technology comes in.

It allows oil and gas explorers to high grade their exploration targets at a fraction of the time and cost.  And it doesn’t only reduce the cost of gathering information; it also reduces the risks of drilling a dry hole.

SFD® involves a set of sensors that are designed to detect trapped reservoir potential from the safety of a plane. It doesn’t need on-ground permitting and it covers vast acreage very quickly. It tells explorers exactly where to focus their very expensive 3D seismic, greatly reducing the time and cost to get accurate drilling information.

sfd flight

Think of a large exploration block as “Treasure Island”, SFD produces a map with an X for every prospect on that island.  That “X” is a potential reservoir where economic oil and gas reserves may be trapped. The operators then focus their work on those X’s rather than spend time and money surveying the whole island.

Instead of spending money on gathering seismic for 100% of a large property, a company might only need to cover 5% -10% after using NXT’s technology.   That would save the company from the cost of acquiring the 90%-95% of the seismic which is useless.

Compared to seismic, the cost advantage can range from at least 1/10 (offshore) to 1/30 (onshore, jungle).

It takes NXT less than an hour to load its compact, ultra-sensitive SFD® system on a chartered plane. Flying at a survey altitude of 3,000 meters, the equipment maps the gravitational distortions as “anomalies” or prospectivity areas with sub-surface reservoir potential.

PRE SFD technology

The image above shows what the SFDtechnology reported when it flew over top of Rubiales field in Colombia with an estimated 1.5 billion barrels of oil in place.

The SFD technology has obvious huge advantages for companies exploring in frontier areas where gathering seismic is a nightmare.  SFD is also advantageous for companies exploring in North America and looking to minimize costs.

SFD also works for companies exploring in North America.  They’ve had repeat customers in both onshore Florida and Texas—groups looking to minimize costs and speed up exploration.

Pemex and Pakistan Petroleum Technical Papers

Gaining market adoption for new technologies is not easy in the conservative oil patch. That is why technical papers produced by Pemex and Pakistan Petroleum are so huge for NXT.

These papers provide credibility from satisfied customers.

Pemex had NXT conduct a blind test of the SFD technology over a targeted area of Mexico where oil and gas had already been discovered. SFD identified 98.9% of the big oil by picking up the big reservoirs but not the ones too small to pay attention too.   SFD found all of the big reservoirs!

NXT has also compiled results from surveys its flew in the Llanos Basin of Colombia from 2009 to 2012–covering more than 7,000 kilometers for several clients.

11  SFD recommended prospects were drilled, and seven found commercial discoveries that totalled 1.26 billion barrels of oil in place.  Interestingly, on that land there were 12 wells drilled on targets that SFD  did not recommend, and all of those 12 wells were failures.

If SFD’s results had been considered the millions of dollars spent on those 12 dry holes could have been avoided.

survey results sfd

In future, the big discoveries will likely occur in very difficult frontier areas – places like Africa, the Artic, Latin America and deep offshore.  These are places are hard to physically get to, potentially dangerous and definitely very expensive.

NXT’s technology can do the job in a fraction of the time, save an enormous amount of money, create a smaller environment footprint, and not put lives at risk.

NXT’s unique technology is getting adopted; its advantages are just too compelling. The oil and gas industry is notoriously resistant to change, and that is why the Pemex and Pakistan Petroleum technical papers are so important.  These papers put the SFD® technology in front of the entire industry for the first time. That will most likely boost the adoption rate and push the technology towards the tipping point of industry wide adoption – in my opinion it’s only a matter of time.

What’s your opinion on NXT?

 

 

2 comments to NXT Energy Solutions: How Big OIL Exploration Can Save Hundreds of Millions In Exploration

  • junior oil

    this stock has done a few runs of the years– but revenue and contracts are lumpy and with little consistency. Must be some reason that companies don’t use them more. like any corporate presentation they tell you all the goods and you have to find all the negative factors.

    • Mich

      JO, We know that the technology works based on the co-authored studies with PEMEX and the Paki NOC. The problem with this stock is that there is no visibility into a pipeline of upcoming orders. That, in my opinion, is the biggest negative and makes for a bumpy ride to stock holders.

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