Hydrocarbons – Bert Clever, Country Manager Netherlands
Bert Clever describes Hansa Hydrocarbons’ moves offshore in the Netherlands, following the Rotliegend deposits in the search for new gas reserves. Basing their efforts on a core internal team of geologists, they have recently finalised a seismic sweep of the ‘4Quads’blocks which potentially could deliver the company a significant coup.
One of the big stories for Hansa currently is the company’s search in the 4Quad blocks offshore here in the Netherlands. Given that this is an area which has many advantages for hydrocarbon production- namely a solid nearby pipeline network and shallow waters- why has such an ambitious search not been launched before?
Wherever a region becomes mature, there is a trend for the majors to divest and for smaller players such as Hansa to step in and create potential. This is true for the 4Quads where new thinking has been vital to identify the play. One of the key reasons significant resources have not been found here previously boils down to understanding of stratigraphy. From a Netherlands perspective, the Rotliegend reservoirs have been considered to peter out at the location of the structure near the border with Germany. A well drilled in 1969 was considered to have proven this area barren of reservoir rock given the particular stratigraphic model in use in the Netherlands. However, in Germany older Rotliegend reservoirs are well established and in a westerly direction their distribution becomes more erratic due to the particular configuration of the sedimentary basin at that time. Hence, these reservoirs can only be found in Dutch waters near the border with Germany. Doing ones ‘geological homework’, one can gain the understanding that these sandstone structures extend into the Netherlands, albeit in a more ‘mottled’ distribution.
This means that drilling effort must be far more shrewdly placed to ensure a significant ‘hit’ on a hydrocarbon deposit. In this region, two wells were drilled previously and found limited presence of hydrocarbons and the structure was considered uneconomic, though gas was of the right quality, with low enough nitrogen levels. More recently Hansa Hydrocarbons has integrated all the 2D and 3D data available for the region, and combined this with the understanding of the entire Rotliegend sequence in Germany from a large database of existing wells. This work has demonstrated that the area has game changing potential for Hansa and indeed the Dutch offshore. Potential volumes of the resource in place amount to 3 TCF or approximately 100BCM of conventional gas – a scale of asset which in our opinion is unique today for the Dutch offshore. We expect the 3D survey we have recently conducted in summer 2014 to verify our predictions as well as fine tuning our plans for the start of drilling, which is expected to be in 2016.
This builds on your discovery of gas in your Romeo field – can you expand on what this discovery meant for Hansa?
We have producing assets in the UK delivering 12 million standard cubic feet daily, generating a solid income stream which provides a foundation for building out our business in our two core areas in the UK and the Netherlands. Ultimately creating value comes down to drilling wells to prove up resources and recently we participated in the potentially significant Pharos discovery in November 2013 and in the Romeo discovery next to our Juliet field in June this year. Whilst work is underway to evaluate the commercial potential of these discoveries, we have further exploration and appraisal wells planned over the next 24 months making Hansa one of the more active E&A operators in the UK/NL gas basin.
This program is the result of Hansa capitalising on the efforts we have made in conducting proprietary geoscience, integrating existing data with the new on a regional basis. The focus and discipline of our in-house technical team is something which sets our company apart from competitors. In essence we are seeking out new gas in an “old” basin with new ideas. We are very cogniscent we are looking where others have looked before, and that is why we need to combine creativity with rigorous and best-in-class geosciences.
Was your confidence in the geological model that Hansa has developed the reason you went for the 4Quad exploration or did you pursue this opportunity having gained the security of production from other assets?
Hansa’s investors understand the importance in the E&P business of having a portfolio as things take time to develop and not everything leads to success. The story of the 4Quads began in Germany and Hansa exploited the old adage that geology knows no borders. Hansa has been partnered with Wintershall just across the border in Germany from the 4Quad site since 2009. It is a fairly large area of some 2,500 square kilometres. We joined this licence group in order to drill a well as we felt that the Rotliegend concept was under-explored and the exploration well we drilled in 2010 proved this concept. Armed with this new data point – the first in over 30 years – the Hansa team leveraged the geological model that was being used there and transported this model to the Netherlands. Now having developed ideas further, the team holds conviction that the plays extend into the Netherlands giving serious potential to the 4Quads area.
In 2012, I joined Hansa and with my previous experience I was well placed to assist in continuing the development of this geological model. It is confidence in this model which has led Hansa to pursue this opportunity.
Investors in companies such as Hansa have described the importance of entrepreneurial juniors in unlocking potential as a prime reason to invest. How does the regulatory environment here support junior players?
It is a challenging environment. Currently, Hansa is in the process of licence applications adding to our existing NL portfolio; this process takes a substantial amount of time and is nearing its end (in a positive sense). There are many competing interests, e.g.wind energy and areas of military activity. In our 4Quads area, the southern part has restrictions due to military use, and in the north the Gemini wind park is under development. For this reason, it was essential for Hansa to collect the required data before the wind park started its construction phase and we managed to make use of that window of opportunity. The authorities want to make use of the offshore area as much as possible and it is up to the users to ensure that mutual and often concurrent operations will fit. This proved to work with the very good relationship we have with the developers of the Gemini wind park. During the acquisition of the 3D survey we were in constant contact to ensure that the concurrent activities in the area were executed smoothly and safely.
There is a perception in society, and to some extent one which is mirrored by the government, that the E&P industry is an ageing industry, and that in five to ten years operations could be in the process of termination. This is absolutely not the case – in five years or so, Hansa could be installing a platform to commence production operations which would possibly be in use until 2040!
Of course, not so many wells are drilled as in the past, but the industry is still discovering hydrocarbons. For this reason, the pipeline network and affiliated infrastructure must be kept in place now to maximise returns through the small field rule that made this happen. The game is not over by a long shot, and that is something that policy makers must fully appreciate – gas is the most benign fossil fuel which complements the variability of renewable power generation. Moreover in these times of uncertain times due to onshore environmental issues and geo-political risk having our own gas resources here in the Netherlands is essential to have a secure energy supply.
What growth do you envisage for Hansa over the next four or five years?
As an existing producer and explorer in the UK, Hansa is at an exciting stage of development as it now an operator across a portfolio of high impact projects. We have plans to drill up to 5 exploration and appraisal wells in the coming years, includingthe first well in 2016 in the 4Quads area. Planning for a well must start at least a year and a half ahead and thus we are now embarking on operational plans for our Dutch activities, including the opening of a local office, in order to be able to safely drill this well on time, on budget and with minimal impact to the environment. Following exploration drilling success, the next step will be hopefully to bring forward a development plan. I am confident that Hansa will continue to strive to deliver on its vision for the area in order to realise its ambitions for the Dutch North Sea.