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Toreador (TRGL): focus on petroleum extraction in the Paris Basin
We change the pipeline to focus on the Oil wells:
It should be noted that in recent times, Americans have tended to want to strengthen in Ile-de-France. Not in Disneyland ... but in oil. The Small cap Toreador (Nasdaq code: TRGL - $ 190 million CB), allied to the Hess Oil Company, announced mid-May to assess the potential for producing "unconventional" oil from the Paris Basin. It is clear that France (better known for its nuclear electricity than for its oil resources) produces around 20.000 barrels of crude per day, or 0,16% of Saudi Arabia's 12,5 million barrels per day, the most major world exporter.
Hess and Toreador wish to relaunch the search for oil deposits in the basement of the Paris basin, the quantities of black gold of which would be equivalent to a productive capacity "of 65 billion barrels in the rock" according to Toreador (!). Proven oil reserves in the Paris Basin are currently estimated at 1,5 billion barrels, a third of which can be produced, said the vice president of Toreador, adding that the total reserves were in the range of 50 at 200 billion barrels.
In the long term, the assigned objective consists in developing a production of so-called non-conventional oil, that is to say located below the average depth at which the traditional reservoirs are found. The required extraction techniques, which are therefore more expensive and more demanding, could nevertheless constitute a credible alternative to conventional productions operated using oil wells on reserves doomed to progressive extinction.
Oil in the Paris Basin, exploited for 50 years
Oil tankers already know the geology of the Paris basin well. According to Les Echos, nearly 2.000 wells have been drilled in the plains of the Marne, Essonne or Seine-et-Marne since the first discovery of oil in 1958 (Coulommes, in Seine-et-Marne). Since that date, cumulative production has been found at 285 million barrels. But in total, national production barely covers 1% of the country's consumption.
Le Figaro reports that in the opinion of many specialists, there are still considerable quantities of oil, located in the source rock and no longer in conventional tanks. "These are the ones we are targeting," comments Emmanuel Mousset, director of Toreador. They will be made available if we can effectively combine horizontal drilling and hydraulic stimulation. ”
Production in the Paris Basin dropped from 40 bd (barrels per day) in the late 000s to 1980 bd today - that's around 10% of national production according to the Romandie website.
The rest of French production comes from the Aquitaine Basin (40% of current total production). Toreador has committed to drill six exploration wells. Toreador explains that "the deposits already identified by Toreador in the Paris region present a geological similarity with the Williston basin in Canada, considered very promising". At present, Toreador extracts 5% of hexagonal oil, against 46% for the Canadian company Vermilion and 25% for Total, according to the Office of Exploration-Production of Hydrocarbons (BEPH). Ultimately, the production of “unconventional” oil could allow France to “cover 5% of its oil needs”, geologists predict.
Toreador's approach
This oil must be extracted using innovative techniques, to which it owes its name of "unconventional". "Toreador was the first company to apply for permits for" unconventional "oil," Charles Lamiraux (responsible for oil exploration in France at the French Ministry of Ecology and Energy) told La Voix du Nord May 13, 2010. To increase these volumes, Toreador has decided to change its approach. Toreador does not seek to recover the oil contained in conventional reservoirs but rather in the rocks which are at the origin. For this, they will use technologies developed in the United States. Hess and Toreador will drill horizontally for several kilometers while fracturing, using water and sand, the rocks located nearby in order to recover the oil they contain. Unconventional oil is found between 2.000 and 3.000 meters deep, below traditional reservoirs.
The technique, already used in the United States and Canada, requires more investment and consists of drilling vertically at 2.500 meters and then installing a horizontal drain over several kilometers. Consequently, the determining criterion will be economic profitability. Requiring large quantities of water, these boreholes are in fact two to three times more expensive to carry out.
Partnership with HESS to probe the Paris Basin
The partner of Toreador Resources (Hess) already extracts 15 barrels per day (bd) of "unconventional" oil in North Dakota (United States). According to the final agreement signed between Toreador and Hess, the latter, who becomes co-holder of the exploration permits granted to Toreador in the Paris Basin over an area of approximately 000 hectares (the Paris Basin covers several regions : Île-de-France but also Burgundy, Center, Champagne-Ardenne and Picardie). It is the "first massive investment in 420 years" in the region, according to the two companies, agrees to pay immediately 000 million dollars and to invest up to 15 million dollars (15 million euros) during five years in this hydrocarbon prospecting campaign. In exchange, Toreador will supply its exploration permits on the 120 hectares
As indicated, the determining criterion will be economic profitability (the reason is that extraction requires large quantities of water, and that these boreholes are two to three times more expensive to carry out than a conventional borehole). However, it is not clear at what level the project will be profitable:
-According to specialists, "with a barrel above 40 dollars, the economy (of the project) is assured" (in the words of Charles Lamiraux, responsible for oil exploration in France at the Ministry of Ecology and Energy in the columns of Romandie)
-On the side of Toreador they estimate that producing oil in France is profitable at a barrel around 80 dollars
This figure of $ 80 seems to be more in line with the realities of exploration: indeed, an offshore project seems not to be profitable, nowadays, at less than a barrel at $ 80, according to TWST.
You should know that in 2009, Toreador sold on average a barrel of crude at $ 51 a barrel, with a profitability per barrel sold of 64%. As a reminder, American oil CLc1 reached a high of 150 dollars per barrel in the summer of 2008, before collapsing to 30 dollars after the start of the financial crisis at the end of 2008. The barrel of Brent quoted 79 dollars on 11 May, even if it has come back down to around $ 70 in recent days. Ultimately, the project remains linked to two important factors on this issue: the success of the extraction, and a price of brent at $ 80 (in the Worst Case scenario).
Technically, it seems that the Graph indicates significant support on $ 7.00, which could offer a buying opportunity on these levels (last price at $ 7,65).
Source: http://sachakin.blogspot.com/2010/05/to ... on-de.html
both ears and tail ...
