Black Bear Energy Resources looking to deliver solid returns at low-risk and low-cost in an environm
Black Bear Energy Resources Plc (LON:BBER), which just listed in the JP Jenkins matched bargain exchange, is taking a new and innovative approach to US onshore oil and gas driven by technology.
The aim is to deliver solid returns at low-risk and low-cost in an environmentally sustainable way, according to founder director and chief executive Tony Mason.
The focus initially will be the Enders area of mutual interest in Michigan.
The Ellsworth shale in Newaygo and Oceana counties has been a ‘prodigious’ producer in the past but has tended to be overshadowed by giant plays such as the Bakken and Eagle Ford (respectively in North Dakota and Texas).
The Enders area totals 1,400 acres to the west of the state’s lower peninsula that separates lakes Huron and Michigan.
Well re-entry planned
The plan after raising around £1mln of initial funding is to re-enter the 1-30 well, going down to a comparatively shallow 1,450-1,550 feet and then out 2-3,000 feet laterally.
Here’s where it starts to get really interesting: Black Bear Energy Resources is introducing a technique called fluid-free fracking to this area, which is safe, environmentally benign and has none of the costly issues of waste disposal associated with traditional fracking.
It is a process used by drilling giants Halliburton and Baker Hughes, and CEO Mason, a veteran and innovator of the E&P sector, sees it as the most effective approach for the local Berea sandstone.
“This formation is producing in and around this area, so it’s proven formation; it’s a regional formation,” explains Mason.
“It has never been developed using horizontal drilling technology and modern completion techniques. That’s what we bring.”
Wells on Enders are slated to come on at an initial rate of 75-150 barrels of oil a day and 100-150mcf, with the company using electronic submersible pumps to enhance output.
Oil will be transported to a sales battery, while the gas will go via the company-owned Huber pipeline (around 100 yards from the field) and then on to MichCon, the local power utility. The Black Bear Energy Resources team estimate the Enders acreage could host 20 wells.
Output will be comparatively modest, but then so will the costs to sink a well, which will be circa US$400,000, meaning payback will be months rather than years.
“We are focused on short-cycle returns,” says Mason. “You’ve heard that expression before; it’s certainly something that Shell of BP believe is significant. We are putting it into practice.”
Texas teed up
Black Bear Energy Resources’ next cab off the rank after Michigan is the Braveheart Pinnacle Reef in East Texas.
This is a 597-acre lease located in a prolific natural gas-producing formation with 50bn cubic feet of gas in place (on a P50 basis), which could produce at 30-35mln cubic feet a day.
Recently updated geophysical data has ‘proven invaluable’ at accurately determining Braveheart’s natural gas reservoir shape and size, Mason says.
Before drilling and developing the asset, the Black Bear Energy Resources team will reprocess the seismic data to confirm the reef size and its characteristics and carry out well design and reserve summary report.
At the same time, it will assess options for taking Braveheart into gas production (either independently, or via joint venture or farm-out).
Project funding is likely to come via the equity rather than debt markets, though Mason says there has already been some early interest from a potential partner.
Producing commercial gas, meanwhile, is “about cost control” and “the amount you deliver”, says Mason. “If we remember this, we can generate some decent cash flow.”
Focus on the environment
Environmentally, Black Bear Energy Resources is looking to be best-of-breed.
In this regard, Mason has helped develop what is described as a ‘digital twin’ remote system that can monitor emissions of any kind from the wells site.
It runs using the 5G super-fast telecoms network and will really come into its own when President Joe Biden looks to fulfil his commitments to address the oil and gas industry’s climate pollution.
A key pillar of this strategy is likely to be tough regulation around methane emissions.
Methane is a greenhouse gas estimated to be more than 80 times more damaging to the climate than carbon dioxide, and, according to studies by the European Geosciences Union and NASA, the fracking boom has led to a spike in methane levels in the atmosphere.
Black Bear Energy Resources’ new technology is likely to have tangible regulatory benefits that will mark it out as one of the greenest and cleanest fossil fuel producers of its size in the States, which puts it ahead of the pack.
“Our real-time monitoring will be a relatively modest part of our overall well completion costs,” says Mason. “But a very critical part, nevertheless.”
With the oil and gas sector returning to some sort of normality, Black Bear Energy Resources represents the new wave of junior exploration and development company coming through.