The Largest Oil Play of The Decade? (Part 1)

One of the world's largest offshore facilities

An interview with Daniel Jarvie By James Stafford 

As we approach the climax of a potentially enormous Permian-style discovery in the opening of Namibia’s giant, deep Kavango Basin, internationally acclaimed geochemist Daniel Jarvie explains in an exclusive interview why there’s so much cause for excitement–and why the independent explorer who single-handedly owns the entire basin is becoming so well known.

In this interview, Jarvie–one of the world’s most famous geochemist ‘wildcatters’ renowned for his work worldwide, a major force behind Barnett Shale exploration since the 1980s and former chief geochemist for EOG Resources–explains:

  • Why Africa is the final frontier for oil and gas
  • Why Namibia is the onshore sweet spot
  • Why it’s all about the small, independent explorer, Reconnaissance Energy Africa (V: RECOOTCMKTS:RECAF)
  • Why he jumped on this opportunity
  • Why it’s all about the source rock, and Kavango’s got it
  • How a non-typical style of drilling might get them there faster
  • How Kavango compares to the Permian Basin and the Eagle Ford
  • How the numbers could be so high they would be laughable 

Jarvie recently released a report on Reconnaissance Energy Africa’s Kavango Basin, putting the potential at 120 billion boe (barrels of oil equivalent) which, if it all pans out, could make this one of the biggest oil finds of the last few decades. 

James Stafford: Outside of offshore Guyana/Suriname, there hasn’t been any exciting discovery news in the oil patch in a long time–especially onshore. So, why should we be excited about Namibia right now, or about Africa in general?

Daniel Jarvie: Two reasons: First, Africa is the final frontier for oil discoveries because it’s so vastly under-explored and we could even be looking at the last major onshore oil discovery on Earth. 

Second, you can forget about super-majors like Exxon, Chevron when it comes to unconventional exploration outside of the United States… they aren’t the ones who make these onshore discoveries work. Instead, you should be looking for locations where independents are out in force looking for the next big thing.

So, why should we be excited right now about Namibia? Precisely because there is a very strong independent junior explorer here sitting on a sedimentary basin that rivals South Texas in a massively under-explored region. 

James Stafford: Can you tell us more about Recon Africa (TSX.V: RECOOTCMKTS:RECAF) in Namibia?

Daniel Jarvie: First of all, RECO founder, Craig Steinke jumped in on this in 2012. He didn’t just jump, he attacked: Craig bought up the entire Kavango Basin, which spans Northeast Namibia and Northwest Botswana. The Namibian license covers 6.3 million acres. The Botswana license covers another 2.45 million acres. And they offer large scale plays that are both conventional and unconventional.

James Stafford: What was it that interested you in this project as a geochemist?

Daniel Jarvie: I’ve worked all over the world, including in South Africa, Uganda, Tanzania and elsewhere, and Namibia was new to me and exciting, but it’s the petroleum systems involved here that make this narrative really flow. 

If you’re not a geologist or geochemist or related, as an investor you can fall into a bit of a black hole with these plays. There’s a lot of talk by promoters about “big traps” and their potential to hold a billion barrels of oil. But those “traps”–which are basically containers where hydrocarbons can get trapped — mean absolutely nothing if there’s no source rock to charge those containers. Source rock is where hydrocarbons are created, and it’s the source rock that’s responsible for a promising “petroleum system”. 

I travel the world and collect source rocks. 

For me, as a geological chemist, my excitement about Namibia–and Recon Africa’s Kavango Basin–was all about the source rock, which is one component of a petroleum system. A trap without a source rock charge is called a dry hole – which shows you the importance of source rock charge to the container.

James Stafford: So what specifically was it that really made you a believer in Kavango’s petroleum system then?

Daniel Jarvie: Well originally I got to see the core from the Owambo Basin that flanks Kavango. The core is a dark, rich, organic shale. That’s what prompted my interest. And since then, every test and piece of news that has come out of this basin has only made me more confident.

Survey and analysis have already confirmed the basin reaches depths of up to 30,000 feet, and as geologist Bill Cathey has already noted, he hasn’t seen a basin in the world of this depth and these geological conditions that isn’t home to a major petroleum system or multiple petroleum systems such as in the Permian basin of West Texas-New Mexico.

James Stafford: So, what’s next and what should potential investors expect with the next big news to come out of Kavango?

Daniel Jarvie: Now it’s all about targeting the drill, but the results of the next tests will be major drivers. This is where we prove up a working hydrocarbon system, so it’s a very big deal. 

What we’re looking for is a section to penetrate that will give us the most information. We’re drilling a stratigraphic test, which means geologically directed drilling to obtain information that will direct our efforts toward producing petroleum.  

But the three stratigraphic drills we’re doing aren’t just basic stratigraphic tests. They will be much more. They’re going to provide a lot of info on how much oil there is and what containers it has charged. That will be my job.

We need to know where the hydrocarbon system is and where it’s directed. With this bigger section in the countryside, we need to understand not only the source rock, but migration pathways with traps (containers) and seals (the lid on the container, i.e., the sweet spots).

James Stafford: From a technology standpoint, what can you tell us about the drill that would be relevant for investors who are keeping a close eye on Kavango?

Daniel Jarvie: Well one of the most important tech aspects of this is that we will also be drilling with water-based mud, which is a wonderful thing for me because it means we can identify pay zones that could otherwise be overlooked, e.g., low resistivity petroleum reservoirs such as the Middle Member of the Bakken formation.

If you aren’t an expert in drilling then you are unlikely to understand just how essential mud (drilling fluid) is when it comes to drilling. It’s what can make or break a discovery. That’s one reason so much by-passed pay is discovered, e.g., look at the Permian basin – it’s been explored for 100 years and they’re still finding pay zones that have been overlooked or bypassed during drilling. As our initial drilling is both for discovery and science, the use of water-based mud is extremely important. Once production is in place, then changes can be implemented to the drilling fluid as desired.

Frequently, drillers who aren’t using this method end up drilling through a pay-zone without even noticing. For the uninitiated, a pay-zone is a favorable location for oil and gas production. It means it’s a highly exploitable zone. And the type of mud you use determines your likelihood of missing a big pay-zone. 

That’s been a major problem in Mexico and even in the Permian basin for example, where most of the wells are drilled with oil-based mud. Oil-based mud makes it very difficult for geochemists to identify oil in the system due to the oil in the drilling fluid. That’s because the oil-based mud is reused and mixed in with other oil–sometimes even from a different basin– so it skews the picture and makes a pay-zone difficult to pinpoint from a geo-chemical perspective

So, water-based mud is ideal for me, and that’s what we’re doing at Recon Africa. We’ll be able to get outstanding data on both conventional and unconventional drill spots. And we won’t be missing any pay-zones.

Continued in part 2 

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