Natural gas is now back in fashion in a very big way and the new mantra is that domestic sources in combination with renewable energy are the only true answer to energy security.
In early February, Germany earmarked $16 billion for the construction of four natural gas power plants to complement a renewable energy expansion push. And Austria has recently made its largest natural gas discovery in four decades—enough to increase its domestic production by 50%.
All of this pinpoints Europe as one of the best and most exciting places to be for new energy opportunities, and that means huge opportunities for companies to come in and develop gas fields that were overlooked by the supermajors, who have taken to chasing bigger things in offshore frontiers.
Below are two companies well-positioned to take advantage of the new energy security atmosphere in Europe:
#1 MCF Energy (TSXV:MCF; OTC:MCFNF) Small-cap MCF Energy, backed by veteran explorer and producer, Ford Nicholson, is convinced that this is the right atmosphere in which to foster European energy security through domestic natural gas production.
Germany and Austria are key venues for this, and MCF is tapping into five key prospects several of which have had wells that have produced or are capable of producing gas from , three previous discoveries.
MCF Energy is the first new public company consolidating major exploration projects in Europe, and it’s the first since Russia invaded Ukraine to offer investors an opportunity to help build domestic natural gas resources in Germany and Austria.
The company is targeting large-scale natural gas exploration and production here, with two drills in the next several months, the first of which has already begun in Austria, in the Welchau prospect near the Austrian Alps. Strategically located only 18 kilometers from a pipeline, Welchau is adjacent to an up-dip from a discovery that intersected at least a 400-meter gas column previously. According to MCF, all elements are in place here for a significant discovery.
MCF management has indicated an intent to move its drill bit after the well at Welchau within a matter of weeks from Austria into Germany, in the Lech prospect, where it will re-enter a well previously drilled by Mobil (now Exxon) in the ‘80s, with proven gas and oil.
Thanks to its 100% acquisition of German Genexco last year, MCF Energy is now ready to drill down for some much-needed domestic energy resources for Germany.
MCF’s second drill, planned for March, is in Bavaria, which is home to the company’s Lech and East Lech concessions, which cover 10 sq km and 100 sq km, respectively. Lech has three previously drilled wells and two discoveries. Adjacent to this, Lech East, in southwest Bavaria, is a large-scale concession covering ~100 square kilometers, with significant 3D seismic and AI showing more potential ahead of MCF Energy’s planned 4.6-million-euro exploration program.
At Lech, MCF will re-enter Mobil’s former Kinsau #1 well, adapting new drilling technology and eventually horizontal wells to stimulate the hydrocarbons that are already known to exist. Mobil established production rates of over 24 MMCF per day of natural gas with associated condensate from the Kinsau #1 in the ‘80s. Mobil was exploring for oil so never developed the gas discovery. The second well drilled by Mobil found oil in a deeper zone which produced at about 180 BOPD with associated gas but with low oil prices was also never developed.
This well, being a re-entry of a proven, previously drilled hole could translate into quick cash flow for MCF Energy, and one hit could flare out into multiple development zones for each well.
About a week into a 40-day drill in Austria and only several months away from its first drill into Germany’s proven resources, MCF Energy is convinced it’s on track for a hit that could give Germany a partial domestic solution to its ongoing energy security problems.
#2 BP Plc (NYSE:BP)
What BP brings to the table is more significant than ever for European energy security. In mid-February, BP (as the key player in the Shah Deniz consortium) flipped the switch on its Shah Deniz 2 gas development in the Caspian Sea with first production.
This massive project, offshore Azerbaijan, currently has a production capacity of around 79 million standard cubic meters of gas per day (29 billion per year).
Late last year, Azerbaijan said it was on target to double gas exports to Europe by 2027, having exported over 8 billion cubic meters of gas to Europe in 2021, and with 12 billion cubic meters targeted for 2023.
Last summer, BP signed a long-term LNG supply deal with Austria’s OMV (VI:OMV) in bid said to help improve…
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