MARCH 2016 SIPES-HOUSTON CHAPTER NEWSLETTER Aubrey McClendon Oil Price Hits Bottom Why Booms and Busts Happen Prospect Wilcox Formation Origin Tim Rynott $12B War Chest SIPES-Houston Newsletter | Mar 2016 In This Issue Sipes Houston Chapter Letter From The Editor 1 5535 Memorial Drive Jeff Allen Suite F 654 Houston, Texas 77007 February Luncheon 2 Tim Rynott Tel: 713-651-1639 Oil Price Bottoms 3 Fax: 713-951-9659 IEA www.sipeshouston.org email: [email protected] Prospect 4 Chapter Officers 2016 Public Relations Chair Why Booms and Busts Happen 6-7 Jeff Lund Zach Beauchamp Chapter Chair (713) 275-1664 James Mertz [email protected] 8 (281) 205-8140 Aubrey McClendon [email protected] Membership Chair(s) Chip Betz Origin of Wilcox Formation 9 Chair Elect (713) 658-8096 x 17 Russell Hamman [email protected] Dr. Don Van Nieuwenhuise (713) 526-7417 [email protected] Newsletter Chair February Luncheon Review 11 Jeff Allen Past Chair (713) 302-5131 Barry Rava Jay Moffitt [email protected] (713) -750-9485 x 104 News From The Board 12 [email protected] Deal Buyers List Chair Barry Rava Bill Smith Secretary (713) 650-3060 Barry Rava [email protected] Houston Unemployment 12 (713) 621-7282 [email protected] Political Affairs Chair Ross Davis Exxon $12B War Chest 13 Treasurer (713) 658-3131 Aleksandra Gjorgievska David Wood rossda- (281) 549-2376x101 [email protected] [email protected] Season Pass 14 Sponsor Coordinator Website Chair Christine Milliner Danny Matranga (562) 881-6326 Saving Rivals Not The Plan 15 (512) 484-6385 [email protected] Collin Eaton [email protected] National Directors Technical Program Chair Ralph Daigle (National Presi- New SIPES Members 16 Michael Steed dent) Chip Betz (281) 404-9490 (281) 292-6859 [email protected] [email protected] Mike Jones Global Oil Freeze? 16 Continuing Education Chair (713) 654-0080 Melvin Backman Bill Bippus [email protected] (281) 364-1881 om bbip- On the cover: [email protected] Office Manager View of the Tungurahua Volcano in Ecuador spewing lava and B. K. Buongiorno ashes March 3, 2014. Hospitality Chair (713) 651-1639 Chris Atherton [email protected] Want to be on the cover? Email Jeff Allen, the editor, at (713) 861-1866 [email protected] [email protected] 1 SIPES-Houston Newsletter | Mar 2016 LETTER FROM THE EDITOR February was a rollercoaster for the price of oil, dipping down to $26 and then shooting up to $33. The IEA announced the price has hit bot- tom, but many are not sure. Whether it is the bottom or not, some pos- itive signs came up this past month; US production is down, OPEC, Rus- sia and Venezuela seem to have an agreement to freeze production, and spring and summer months usually draw down inventories. Whether the price begins it’s slow climb or stays bouncing around the bottom, now is the time to set yourself up for success when the price does return. Both SIPES and HGS have seminars on how to adjust and be successful in the independent environment. These seminars have been help in the past with great success. It is vital for an aspiring inde- pendent to attend both of these. For more information please visit HGS.org or SIPESHOUSTON.org. Let’s March forward, Jeff Allen IMPORTANT: the Petroleum Club has a new rule concerning food – if you don’t specify your special-needs meal before the luncheon you will be charged an extra $20. We don’t want anyone to be charged extra so please take the time to contact BK for your special meal needs well ahead of time. 2 SIPES-Houston Newsletter | Mar 2016 MARCH SIPES LUNCHEON EVOLUTION AND ECONOMIC IMPLICATIONS FOR U. CRETACEOUS SANDSTONES TIM RYNOTT Abstract extending the Upper Cretaceous shelf/slope Recent Upper Cretaceous onshore GOM ac- boundary 30-35 miles basinward from previ- tivity exemplifies re-focused venture capital ous research. towards conventional and semi-conventional opportunities. This trend had started prior to The robust porosity's at these great depths the recent price crash, and conventional oil resulted from the attenuation of quartz over- and gas projects have steadily become more growths when Chlorite was formed after appealing versus unconventional drilling the dissolution of volcanic rock fragments. starting in early 2015. Enhanced sub-salt seis- The resulting high porosity's and extended mic imaging combined with improved com- shelf boundary could potentially add 1000 to pletion techniques in extreme temperature 3000 square miles of new exploration frontier environments, has potentially added trillions in South Louisiana - a very mature basin of cubic feet of new gas reserves to a very which has been a major domestic energy mature basin. source for over 100 years. For example, in early 2015 production started on the Freeport-McMoran (FM O&G) Jeaner- Biography ette #1 in St. Martin Parish, Louisiana. Named Mr. Rynott, founder and owner of Ridge Re- after a historic region of Scotland, sources LLC (Durango, Co), has 33 years of oil “Highlander” encountered over 100 ft of net and gas experience - primarily focused on Cretaceous pay at depths of 24,000-29,000 ft, prospect generation, evaluation, and opera- representing the deepest perforations on tions. During his career he has generated nu- record in Louisiana, plus the first onshore merous discoveries, and has been personally subsalt discovery. The Jeanerette #1 tested investing in oil and gas drilling projects since Date: Thursday, Mar 17th multiple Upper Cretaceous sands at 75 1985. MMCFGD, with future wells expected to pro- Place: Petroleum Club duce greater than 100 MMCFGD. Seismic sug- Prior to Ridge Resources, Mr. Rynott was a 1201 Louisiana St. gests the reservoir could encompass ~25,000 Senior Geologist, and later Geological Manag- Time: Social 11:15 acs, or potentially 4-6 TCF of resource. er, at Red Willow Production stationed near Lunch 11:45 Durango, Colorado. The bulk of Mr. Rynott’s The Highlander success is directly linked to career (25 years) was spent in Lafayette, Luncheon registration deadline the enigmatic 2009 FM O&G Davey Jones La, where he worked for several medium and is Noon, Tuesday Mar 15th well, drilled just offshore in South Marsh Is- small Independents. land Block 230. Louisiana is synonymous with serendipity, and although Davey Jones was Over the past 20 years, Mr. Rynott has served exploring for deep Tertiary (Wilcox) sands, $30 for Members and Affiliates on the following Boards: AAPG Advisory they found hydrocarbon bearing Upper Creta- Council, AAPG House of Delegates, AAPG As- $35 for guests and non- ceous sands (Lower Tuscaloosa) below 29,000 sociate Technical Editor, Louisiana Oil and Gas members ft that exhibited anomalous 15-20% porosi- Assoc , Gulf Coast Assoc of Geological Socie- Additional $5 for walk-ups ties. This deeper revelation lead to the up- basin Highlander triumph, potentially unlock- ties, and Gulf Coast Prospect Expo. He also served as the 2004 GCAGS President-Elect, No-shows will be billed. ing a much larger treasure chest than the Chairman of the 1999 GCAGS Annual Conven- porosity challenged Tertiary targets. Depositionally, these enormous volumes of tion and 2001 Gulf Coast Prospect Expo. Mr Call, fax, or e-mail your reserva- Cretaceous clastics were sourced from the Rynott has multiple publications, plus has tion to the SIPES-Houston Office. erosion of the Ouachita and Appalachian up- provided recent technical presentations for You can sign up online at lifts and funneled into the Gulf of Mexico by www.sipeshouston.org. several Oil and Gas Conferences, including way of the Mississippian Embayment (Woolf AAPG, GCAGS, SIPES, and Emerging Shales 2012). Conventional core data places the Plays USA. newly drilled Highlander discovery in outer neritic paleobathymetric zonation, thereby 3 SIPES-Houston Newsletter | Mar 2016 OIL PRICE HITS BOTTOM; IEA Global oil prices appear to have bottomed out and are ex- pected to rise through this year as investment cuts help to reduce a supply glut, a senior analyst at the International Energy Agency said on Tuesday. Benchmark Brent crude futures LCOc1 were up 44 cents at $37.01 a barrel at 1304 GMT (06:04 EST), the highest in eight weeks. They hit a more than 12-year low of $27.10 on Jan. 20. "Oil prices appear to have bottomed out," Neil Atkin- son, the new head of IEA's oil industry and market divi- sion, told a seminar in Oslo. "Prices are expected to grow throughout 2016 and into 2017, reflecting expecta- tions that the market is going back into balance in 2017," he added. The global oil market was expected to begin rebalancing in 2017 as U.S. output is set to decline under pressure from low oil prices, the Inter- national Energy Agency said on Feb. 22 in its medium-term market outlook. If the U.S. producers were to "remain longer in the game", the market's rebalancing could be pushed back by one year to 2018, Atkinson said. The price rally, however, will be capped in the medium term by a potential increase in the U.S. shale oil production once a rise in oil prices makes it profitable again. "As soon as oil rises to $40-50 per barrel, it will give a signal to light tight oil producers (to ramp up)," Atkinson said. The IEA ex- pects prices to reach $80 per barrel by 2020, with U.S. oil production reaching a record high of 14.2 million barrels per day by 2021. Some analysts disagreed with the IEA's outlook on the speed of oil price rebound. "The change is not going to be gradual, but it will be sud- den," Torbjorn Kjus, senior oil analyst at Norway's leading bank DNB.