Empyrean Energy

from oilbarrel.com interesting article for new comers.


Empyrean Energy Sets Its Sights On A Conventional Gas Play In Germany
A number of small cap companies are targeting Europe and not just because it offers a politically-stable investment environment. The continent is also in favour because, with nuclear power stations becoming unfashionable and coal-powered stations being wound down for environmental reasons, natural gas is in demand and prices are rising.

In Germany, for example, coal accounted for approximately 30 per cent of primary energy consumption in 1991 and 23 per cent in 2002 as more and more power stations switch to gas. During 2003 Germany was the sixth largest consumer of energy in the world and the fourth largest consumer of natural gas. In that year Germany imported 79 per cent of its natural gas consumption of 3.02 trillion cubic feet (tcf) at an estimated cost of US$13.9 billion (using a nominal gas price of US$4.60 per 1,000 cubic feet.)

Empyrean Energy, incorporated in March 2005, has a simple strategy: given growing demand for gas at high prices, it makes sense to find it closer to home, namely in Germany itself.

Unlike many of its peers, which have gone in for Coal Bed Methane (CBM) and Coal Mine Methane (CMM), Empyrean has opted for a conventional gas play. It has entered a farm-in agreement with three specialists US partners and acquired the right to earn a 52 per cent working interest in a substantial fractured reservoir, where two prospects - Glantal and Lautertal - have been identified.

The Neues Berland Exploration Permit, close to Frankfurt, contains the Pfalzer Anticline, a 515 sq km convex fold of rock strata containing deep coal beds overlaid by shale and sediment. The coal beds are too deep to mine economically but have been estimated by the Competent Persons Report to have created several hundred tcf of natural gas, with a P10 recoverable gas potential of up to 6.2 tcf in the Glantal prospect alone. The P50 estimate (50 per cent probability) is put at 1.2 tcf and the P90 (90 per cent probability) number at 350 billion cubic feet.

There are indications in the region that gas is present. The nearby Saar Anticline, about 25 km southwest of the permit, contains active coalmines with reports of natural gas leaks above the coal beds. The Saar coal seams are too near the surface for an effective seal to have been formed but in Empyrean’s permit area the coal sits fare deeper, below 2000 metres, with layers of shale silt and sandstone above it. The hope is that these Stephanian sediments may provide an effective seal and the big question for the company is whether they have trapped the gas?

Empyrean's first task is to test the seal. With drilling expected in August, this question should be answered soon. As the seal is not yet proven, there is significant geological risk associated with this project. However, the rewards, if successful, could flow pretty quickly.