Paul Bennett has found a very easy way to get people's attention. He tells them that his small Calgary company may be sitting on 126 billion barrels of recoverable oil.
If you believe him - and it's worth pointing out that a substantial portion of the oil patch is deeply skeptical - that is about 74 per cent as much crude as the entire Canadian oil sands, which are so big they've made this country second only to Saudi Arabia in total reserves. It's enough to supply every drop of oil used by the entire planet for four full years. It's enough to supply Australia, the country that's home to this possible monster find, for 365 years.
It would, if Mr. Bennett can do what no one else has done before - that is, if he can actually prove that this oil is not a complete fantasy - change the global dynamics of crude.
"This is a game changer," he says. "For the world."
But even by the standards of an industry inured to risk, there are few - if any - current parallels to Mr. Bennett. Canada's junior oil and gas sector has long been home to people making big bets. It is a haven for the bold and the stupid. At this point, however, it's unclear whether Mr. Bennett is either, or both. What is certain is that few have the daring to contemplate what he is attempting. And it's unlikely any Canadian junior company has ever claimed the potential oil resource he is claiming.
A former executive with Exxon Mobil, Mr. Bennett now serves as chief executive officer of Rodinia Oil Corp. which holds an 84-per-cent interest in 23.5 million acres of land in the Australian Officer Basin. It's an area roughly the size of Hungary. It is a vast, dry section of land in the southwest of the country - and it's not the first time someone has looked to this area for potential riches.
For decades, the oil industry has recognized the Officer Basin as "the last untapped basin in the world." Some of the smartest players in oil and gas have tried and failed to find crude there. Hunt Oil Co. made an attempt in the 1950s. Royal Dutch Shell PLC tried in the 1980s. Neither succeeded. Even mining companies operating in the area have yet to find anything more than what geologists call "bleeding oil."
That means "very little oil," said Gary Tahmazian, the former head of geology at Mount Royal College in Calgary, who has bought Rodinia shares. "But the presence of oil in the rock indicates that oil has been generated in these rocks and the potential is there."
And, Rodinia argues, none of the most prospective areas have been sampled. A nuclear test area in the region, along with unresolved aboriginal land claims, kept much of the area off-limits for decades. Rodinia has now used seismic testing to identify the most promising areas, and has selected eight locations it hopes to drill - at least four in 2011, with an option to do the remainder. The first will be the only oil and gas well within a 350-kilometre radius.
"This is wildcat drilling. There is no oil produced from this basin. We intend to change that," Mr. Bennett says.
Yet even his most ardent backers acknowledge that many believe Rodinia is spending millions of dollars to poke holes into barren rock.
"The big risk is source. Because it relies on a Proterozoic source, and in the oilfield there's a legend that such oil doesn't exist," said Jim Buckee, the former chief executive officer of Talisman Energy Inc. who now serves as a director of Rodinia.
To understand, a quick primer on geological history may be useful. The Proterozoic rock in the Officer Basin is more than 500 million years old. Most oil in western Canada comes from rock five times younger. Though Proterozoic rock has produced oil in places like Russia and Oman, the chances of crude surviving in rock through hundreds of millions of years of geologic history are slim.
"We tried to farm it out quite a lot, and people go, 'Oh. Proterozoic source. Won't work,' " Mr. Buckee said.
Yet for the investors who placed $57.4-million into an IPO - and have since bid up the company's market value to over $200-million - even a razor-thin chance at success has looked attractive next to the potential. According to an independent estimate, 126 billion barrels of oil could be recoverable on Rodinia land.
That estimate, however, was done without the benefit of a single test well. Instead, it assessed data on underground rock formations and determined how much oil they could contain. Mr. Bennett says the data shows "big structures" that are "just asking to be drilled." But until the first well is drilled in February, what remains completely uncertain is whether they contain any oil at all.
In a research report, Macquarie Capital Markets analyst David Popowich warned that Rodinia is a "highly speculative investment," and said "disappointing drilling results can be expected to have a significant negative impact."
But Mr. Buckee said encouraging drilling results could have the opposite effect on a company with a $2 share price.
"It's like putting money on double sixes. If it's true, each share is worth $500 - $200 in the worst case," he said. "It's just an amazing bet. You've got to be prepared for the fact that it doesn't work. But if it does, it's fantastic."
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