ST. JOHN'S, Newfoundland and Labrador -- Acreage is being bid around the globe. Graham Kellas, vice president upstream consulting at Wood Mackenzie told attendees at the Newfoundland Ocean Industries Association meeting on June 21 there are great opportunities for investment. "Everyone is having a licensing round."
The number of licensing rounds is creating considerable opportunities for companies. "There are two types of companies," Kellas said, "one type is in the oil and gas business, and the other is companies that want to be in the oil and gas business."
Kellas used licensing changes in the UK to illustrate how the process is changing globally. He talked about the Fallow and Promote licensing in the UK and pointed out the increase in exploration these changes have brought about. DTI statistics published in March 2007 for the period 2002-2006 show 78 new wells in fallow areas, 17 sub-areas undergoing seismic evaluation, 19 appraisal wells, and four development plans approved.
Kellas also said that more national oil companies are forming agreements with one another. He also talked about some global trends in fiscal terms. Nine countries have increased government takes, with Russia and the UK taking the most in US dollars and Venezuela and Bolivia taking most in percentage of total value.
Another interesting change, Kellas said, is that some bid rounds are now requiring bidders to set the fiscal terms as well. That means the bidders tell the government how much cost liability they will assume in exploration and how much of the revenue they will give to the national government.
Generally, it is getting harder and more costly to purchase acreage, and rig cost and availability are factors that are making it more difficult to fulfill work commitments. Despite these considerations, however, investing in exploration is promising.
"There are probably more opportunities now than there have ever been," Kellas said.