American Oil and Gas Reporter - June 2015 - 129

momentum this year, Capital One continues. It adds that respondents who expected growth in alternative energy to be
the leading industry trend dropped from
11 percent in the 2014 survey to only 1
percent this year.
Seventy-two percent of survey respondents identified access to and cost of
equity capital as the most important financing issue for 2015, followed by refinancing of current debt (17 percent), and
access to/cost of senior debt (9 percent),
Capital One adds.

"Concerns about energy prices will impact the operational and financial outlook
of companies across the industry," concludes
Russ Johnson, head of energy investment
banking at Capital One Securities.
He says 81 percent of those surveyed
expected the pace of mergers and acquisitions activity to increase this year, which
was a 30-point rise from last year's
survey. Only 10 percent of respondents
expected M&A activity to decrease.
Despite the volatility in energy prices,
Capital One says respondents maintained

a positive outlook overall: 79 percent
said they expected to feel better about
the performance of the energy industry
in a year, compared with 13 percent expecting to feel worse.
"We expect to see a trend toward consolidation in 2015, as some industry players
take advantage of M&A opportunities to
strengthen their strategic positions and
prepare for eventual movement in energy
prices," reflects Bob Mertensotto, head of
energy debt capital markets for Capital
One Bank and Capital One Securities. ❒

Techniques Give New Life To Old Plays

HOUSTON-As much as 141 billion
barrels of potential incremental hydrocarbon resources could be unlocked if
drilling and completion techniques refined
in U.S. shale plays are applied to conventional, low-productivity oil plays outside
North America, an IHS analysis predicts.
Curious as to what the potential might
be if newer techniques were applied to
old plays, the company says IHS Energy
researchers conducted a high-level assessment that identified more than 170
mature oil plays worldwide with untapped
oil potential that could benefit from horizontal drilling and hydraulic fracturing.
They published their results in IHS Energy
Analysis of the Use of Unconventional
Drilling and Completion Techniques in
Conventional, Low-Quality Oil Fields
Outside of North America.
"While our analysis was an initial, highlevel assessment of low-productivity plays
outside the United States, we were quite
surprised at the impressive potential for increased recovery using these unconventional
techniques," assesses Susan Farrell, vice
president of upstream energy research at
IHS and one of the authors of the analysis.
"As many of the world's oil and gas producers struggle to lower costs and optimize
assets, we wondered what kind of impact
applying newer technological innovations
could deliver to the industry in terms of
expanding conventional resource potential
outside North America."
IHS says the rock properties in these
mature plays are less than desirable for
production using conventional techniques,
and as a result, many of them have produced
only a small portion of the total oil in
place. Of the estimated 141 billion barrels
of potentially recoverable oil using unconventional techniques, its assessment says
135 billion barrels exist in plays that likely
would require hydraulic fracture stimulation
to produce, with the other 6 billion barrels
in plays that may not require fracturing.
"Drilling horizontal wells allows access

to thinner zones, where vertical wells are
not commercially productive," says Leta
K. Smith, director of upstream energy
research at IHS Energy and the principal
analyst of the study. "Also, horizontal
wells allow engineers to connect compartmentalized portions of the reservoir
with one well instead of many vertical
wells, which addresses cost and footprint
considerations as well as increasing the
well-to-reservoir contact ratio."

Better Placement
The study also points out modern seismic and measurement-while-drilling technologies would allow operators to achieve
better placement of fractures to take advantage of natural fracturing and other
geologic features to maximize production
and avoid water zones.
"Combined with other technologies
developed for shale development, such
as pad drilling, these improvements could
breathe new life into some of these older,
conventional fields," Smith offers.
The IHS Energy analysis looked at
three projects where operators were leveraging new techniques to address geologic
and production challenges:
* The Saint Martin de Bossenay Field
in the Paris (France) Basin;
* The Tahe Complex in China's
Tarim Basin; and
* The Bin Ben Tartar Field in Tunisia.
Discovered in 1959, the Saint Martin
de Bossenay Field was abandoned in
1996 after producing mostly water. Redevelopment began using new techniques,
including seismic specifically targeting
nonproducing portions of the field, IHS
says, adding hydraulic fracturing was not
used because it is banned in France. Following redevelopment, the analysis says
the field's recovery factor improved from
40 percent to 44 percent, adding 1 million
barrels to proven plus probable reserves.
According to the IHS analysis, the

number of low-productivity conventional
fields that could benefit from new technologies is relatively evenly distributed
across the world, but two-thirds of the
estimated potential incremental oil volumes are in the Middle East or Latin
America. The top three countries outside
North America for potential incremental
oil recovery in low-productivity conventional plays are Iran, Russia and China.
IHS points to Mexico as another candidate country, saying unlike many of
the other countries identified as having
potential for increased production, access
is not limited to international oil companies.
With the opening of the country's upstream
sector, Smith says Mexico may see new
investments in these resources.
❒

REX's New East-To-West
Capacity Gets FERC's OK

LEAWOOD, KS.-Tallgrass Energy
Partners LP says the Federal Energy Regulatory Commission has approved its
Rockies Express Pipeline (REX) to transport 1.2 billion cubic feet a day of gas
from Appalachia to the Midwest.
According to Tallgrass, the additional
east-to-west capacity will complement
REX's current capabilities, and will have
no adverse impact on its ability to meet
existing transportation obligations.
The Zone 3 east-to-west project's 1.2
Bcf/d capacity is contracted fully for a
weighted average life of 20 years, and is
in addition to the 600 million cubic feet
a day of east-to-west capacity being
served through the Seneca Lateral and
Zone 3 mainline, the partnership states.
Tallgrass says it expects the Zone 3
east-to-west project will be placed in
service sometime during the second half
of 2015. Once in service, REX will have
the ability to flow 1.8 Bcf/d of gas in
either direction in Zone 3.
❒
JUNE 2015 129
American Oil and Gas Reporter - June 2015

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