Europe's Secret Weapon In Its Energy War With Russia

 FN Media Group Presents Oilprice.com Market Commentary

LONDON, March 12, 2024 /PRNewswire/ -- If Germany fails to make up for its winding down of Russian natural gas imports, high-priced LNG imports, delayed nuclear power phaseout, and even restarting of dormant coal plants will be the outcome.   That consensus led Berlin, in early February, to earmark $16 billion for the construction of four major natural gas plants to meet electricity demand, in addition to expansion of renewable energies.   Companies mentioned in this release include: Halliburton Company (NYSE:HAL), Schlumberger Limited (NYSE:SLB), Enbridge Inc. (NYSE:ENB), Golar LNG Limited (NASDAQ:GLNG), Transocean Ltd (NYSE:RIG).

While Germany has struggled strategically and politically in its effort to balance its climate change goals with its energy security needs, Austria has not only refrained from turning off the Russian gas taps—opting for a gradual approach--but it's also recently made the country's largest natural gas discovery in 40 years. 

Canadian small-cap explorer MCF Energy (MCF.V; MCFNF.QX) has scooped up previously explored and tested projects in Germany and large prospective targets in Austria at what may be the most significant time in Europe's energy supply history.

Drilling recently launched in Austria (and as of 11^th March the company has just confirmed an active petroleum system at the well site), and is planned to start in Germany in April.  

On the Heels of OMV's Giant Discovery

Of key interest here to Europe will be MCF's initial project in Austria, the  Welchau prospect near the Alps, where drilling will begin in just a few days. 

MCF Energy's  Welchau prospect appears analogous to large anticline structures discovered in the Kurdistan Region of Iraq and the Italian Apennines, and adjacent to an up-dip discovery that intersected a gas column and has a potential for 400 meters of closure.

All elements look to be in place for a significant discovery, with a best-estimate technical prospective resource of approximately 807 billion cubic feet of gas, proximity to the national gas pipeline system (~18km), and a nearby historic gas discovery. Welchau is targeting the same reservoirs as the nearby Molln-1 well, which tested gas in 1989.

A national gas pipeline network is only 18 kilometers away, making for what could be a short, cheap tie-in option for getting products to domestic markets. 

MCF will earn a 25% interest for exploration drill costs estimated at 2.55  million euros, which represents MCF's 50% share in drilling costs.