Africa is becoming the top choice for North American oil companies looking to diversify, and the East African Rift is the hottest of the hot, with Kenya waiting on commercial viability, Angola and Ghana already on the road to rival Nigeria and two newcomers—Namibia and Zambia—where the doors have been thrown open for exploration. Getting in on Namibia and Zambia is an extremely expensive endeavour, but here's a way to de-risk this adventure, keep your shareholders calm and strategically position yourself to take advantage of the next big find without footing the massive drilling bill: Buy up a ton of acreage and sit back and let others do the expensive exploration and drilling on territory adjacent to yours. Then strike and watch offers come in.
In an interview with Oilprice.com, Alberta Oil Sands (AOS) CEO, Binh Vu … discusses:
- How to get in elephant-sized plays in the East African Rift
- How to save cash by piggy-backing on others' expensive exploration
- Why Namibia could be a major oil monster
- What makes Zambia such an attractive oil venue
- Other African plays that are worth looking into
- Why it's hard for juniors to compete in Africa
- Why someone will always need Canadian oil sands
- What heavy oil economics will look like over the coming years
- Why Canada's Algar Lake is a major sleeper play
- What qualities investors should look for when betting on juniors
James Stafford: With the oil discoveries in Kenya and a lot of optimism over other rifts and lake systems including those present in Uganda, Zambia, Tanzania, etc. the East African Rift System has become an emerging oil hot spot. What we want to know is how to make money here without spending a ton of cash in exploration and drilling? What's the smart way to stake a claim on the East African Rift Basin?
AOS: That is a great question. The truth is that this area has become quite expensive as it has been found to be increasingly prolific. Major signing bonuses, deposits, and commitments are required in spots like Kenya, Tanzania, and Uganda. There is very little opportunity for the junior explorers to compete.
We believe that Zambia is a fabulous jurisdiction because it shares the geology and rock age in certain large areas that have hosted the Lake Albert Discovery and the Block 10BB Kenya discovery. However, it is totally underexplored for hydrocarbons and thus provides much cheaper access to very prospective areas. Our company has successfully tied up ~18 million acres or what we believe covers about 33% of the attractive rift areas in Zambia - which equates to oil and gas rights over about 8% of the country.
James Stafford: How does an exploration company on a budget go about covering and "high-grading" targets over such a large area?
AOS: Without a doubt that is a highly important question for any company engaged in the pursuit of elephant-sized targets in new frontiers. One of the things that we do is first is aim for concession agreements that don't tie us to expensive immediate seismic commitments. Second we eschew large and expensive 2-D seismic programs in favor of a process of high grading using satellites, other remote sensing techniques, and 'ground truthing'.
We estimate that by using satellite data analysis over a number of criteria--gravity gradiometry, thermal emissivity analysis, geobotany analysis including vegetation anomalies and geo-microbial review over specific high-graded areas on our acreage--we can save millions of dollars and years of time. We then get to specific areas that are ready for smaller, focused electroseismic surveys / 3-D surveys, and that can then be attacked as drillable targets either to take on ourselves, or to farm down to majors who are looking for the next major rift discovery.