Dyke Netherlands – Hans Ryckborst, Managing Director
Dr Hans Ryckborst details Van Dyke energy company’s return to the Netherlands, explains the company’s origins in the country and its international trail of activity since the 1970s. Now, as Van Dyke moves to capitalize on mature fields, he describes the technical activities that the business is taking forward in order to deliver efficient production from its P08 field, and how the legislative and regulatory framework in the country is supporting the enterprises’ activities.
Van Dyke was one of the first small E&P players to enter the Netherlands in 1972- now that the company is refocusing on this country again, what is the status of its operations?
In 1985, Gene van Dyke, the founder of the company had been present in the Netherlands for ten years, since buying part of Tenaco in 1972. He had picked up 80,000 acres in the fifth bidding round and on top of the half a million acres he owned he had also made a number of discoveries whilst working offshore.
Mr. van Dyke had progressed into a business relationship with Amoco, working on a number of fields. He then moved to focus on projects elsewhere, until the 1990s, when the area caught his eye again, and he returned.
Now, the company is working again here, the P08 field being a primary interest offshore. This field was discovered by Mobil, in 1982 and though the company invested approximately USD 100 million in three wells and two sidetracks with extensive testing, they decided at that point in 1986 this asset was not approved at 10 dollars per barrel. They retained the asset until 1995, and from there the asset passed from hand to hand before finally Mr. van Dyke acquired it in 2012. Mr. van Dyke had sought to work with Mobil on this asset 40 years ago, but this had, for a number of reasons not come to fruition.
Amoco has gone, Mobil has gone – but Van Dyke is still here!
One of Van Dyke’s great strengths has been its ability to partner with other companies. Here in the Netherlands, the EBN is the working arm of the Dutch authorities partnering in the oil and gas sector. How does Van Dyke cooperate with EBN?
The P08 field was bought by Van Dyke when EBN had already been incorporated into the operation as a partner, for 40 percent. EBN has rights to be a two-fifths partner in every field and they are an AAA company- one of few that qualify. That is an achievement which must be recognized, as should the fact that the EBN is able to pass to the Dutch government profits of billions dollars or more annually, with a staff of 70. EBN is a non-operator, but have great expertise and is very much involved in providing the Minister for Economic Affairs with factual information on operations of oil and gas projects in the Netherlands.
The oil and gas industry in the Netherlands is a major contributor to government revenue, on top of the EBN’s profits, there is a profit tax of 50 percent, though with allowances this averages 45 percent in practice. This, one must admit is better than the profit tax in African Nations for example. On top of this revenue, moreover, the jobs and successive tax revenue on hydrocarbon product trading are accepted as a great boon to the Netherlands as well.
Do you consider the small fields policy and marginal fields allowance have been sufficient to achieve their objectives of encouraging production?
I think so- the proof is that this last year, there have been five frozen assets among the 120 previously defined and discovered which have been brought into production- 120 of them in total. Added together, the reserves amount to 200 BSM of gas which has been produced as a result of these policies. These are all in small patches, but the extensive pipeline network present in the Netherlands is a secondary reason that these disparate gas fields have been accessible.
This production has been conducive to the Dutch government’s policy of transforming the country into a gas hub- with gas storage and LNG imports the other key pillars of this ambition. The game plan is to import and sell- so the question should perhaps be not whether these policies have been successful in their own right- they have, perhaps more to what extent they have facilitated this greater ambition. In that respect, they have again supported wider Dutch ambitions, which have been of course reacting to the diminishing resources available from the original Groningen resource, now two-thirds empty. There is still 35 TCF left in this original gas-giant, however which is still of great use for North-west Europe.
Speaking about marginal fields being brought back into production, can you tell us if such opportunities means now they are creating an exciting time for players like van Dyke?
People seem attracted to the UK; there is less interest here in the Netherlands, but still there are many smaller players active and engaged in the Dutch North Sea. Efforts, including policies to encourage revitalization of fallow fields here in the Netherlands have to an extent, copied efforts in the UKCS.
The biggest onshore gas field in Europe is Groningen which was found in 1957, and the biggest oilfield onshore in Europe is also here in the Netherlands at Schoonebeek, discovered in 1943. Whilst since then, resources of such size have not- and indeed are not likely to be found again- there are still plenty of opportunities, including engaging with mature fields that continue to hold the interest of appropriately sized players.
To illustrate the factors which have influenced Van Dyke’s ambition to tackle the P08 resource the company will be investing inthe small fields it has an interest in, with an assumption of a operational cost of 15 dollars a barrel with predicted reserves of 20 million barrels. That offers a fair return for ones’ money.
Can you give us some details of how you plan to proceed at your P08 well, in light of this benign environment for juniors?
A rough rule of thumb is that capex equals opex over the duration of a project’s development in oil and gas, which would entail approximately 15 dollars per recoverable barrel in expenditure, split between the four wells that Van Dyke plans to spend at its P08 field.
Spurred on by this potential return, these four wells will be drilled two kilometers deep, with a one kilometer horizontal step out. The P8a field is already in part naturally fractured, but Van Dyke may artificially fracture the well further to ensure a substantial return.
One reason that fracking has already been considered is that the reservoir is a tight sandstone. Should fracking be deemed necessary following a well-test, a successful frack will seek to pressurize the rock, which stands, according to our predictions, at 200bar pressure (each ten meters of increased depth increasing bar pressure by one).
Conventionally, when fracking fluid is pumped into the rock, sand proppat is added to ensure that the cracks in the rock do not close when the pressure is switched off. Certain chemicals have been used in order to keep the sand in suspension, in order that it is carried into all the cracks. This should not give the public cause for concern- great effort is made to recover all these chemicals as they are expensive and of value, being reusable.
Nu-tech are assisting us with our fracking efforts- we wish to fracture the rock vertically in both directions from our horizontal well. This is a ‘safe zone’, and Nutech reccomends ten fracks per kilometer per well. This could add considerably to our opex, and so, as stated, we wish to test this well without first fracking. In 1982, the well drilled by Mobil produced 700-800 barrels per day out of a vertical well.
EBN reports that a horizontal well is likely to produce at a rate of three times that of a vertical well here in the Netherlands.
Lastly, we will have to ensure we obtain pipeline access. Van Dyke is considering a couple of options for this- we’re looking to start production in 2016, and so may connect to an oil hub, which another company is looking to develop currently.