Makó trough, the Hungarian Dubai.

Delmagyar.hu

Csaba Kunstár

2009.08.08. 03:00

Makó – So far, nearly 400 million dollars (more than 75 billion Hungarian Forint) was invested into the exploration of the Makó trough. György Szabó CEO of TXM Kft. the Hungarian subsidiary of Falcon Oil & Gas said in this interview: From 2012 several thousand people will be ensured of employment.

-Have you seen ‘There Will Be Blood’ an Oscar winning movie?

-Our company organized a trip to the cinema to view this film about the heroics in early history of the American oil exploration. I liked it.

-In the movie, poor people and poor towns became rich, sometimes overnight.

Like in the movie, can this happen in Csongrád County?

-There is no reason to doubt it. The quantity of gas that has been identified, does give you a reason to believe. Norway was one of the world’s poorest countries in the mid 1950’s. Thanks to the oil and gas industry, now they are one of the richest.

- In the Makó trough, they have found so much oil and gas that would supply Hungary for a hundred years. So far, how much money was invested in the explorations?

So far, the price of two Danube Bridge, roughly 400 million dollars has been invested in the County of Csongrád. At the present time, our main task is to adapt this already successful American technology and apply it to our local geological conditions. All this requires a lot of time-consuming work, because

the solution resides in the details.

- How this technology is different from the technology that was used in the Algyő field?

-In the conventional gas exploration, the goal is to find and extract gas from zones that has gas accumulations, however the gas was not created there, rather it got there by migration from somewhere else. Research seems to prove our theoretical model that the oil in Algyo field indeed did migrate from the Makó trough. However the source of the oil and gas in the Makó trough is considered to be unconventional. Here, we are trying to exploit the so called mother-rock zone, or as the English would say ‘tapping the kitchen’ or with other words where the hydrocarbon is being created.

-Are you saying this source is inexhaustible and is generated continuously?

The school of thought is that the world will run out oil and gas rather sooner than later.

-If the solar, wind and thermal energy considered to be renewable sources, then why not the continuous generation of these hydrocarbons? The problem lies with our hydrocarbon consumption rate; it outpaces the hydrocarbon generation rate.

Over the past few years, scientifically proven facts came to light on topics in the field of unconventional exploitation. Scientific developments so new that these not yet thought at any of the Universities.

-When is the planned date for industrial productions?

A significant amount of production will start in 2012. In the United States, this type of unconventional gas production began in 2005. Today, the unconventional production accounts for one third of the US domestic production.

-Can change in governments influence operations?

We need to be able to work independently from daily politics, after all our investment needs decades to achieve its objective. Hungary’s European Union and NATO membership ensures the stability for such a large and risky investment. One time in the past, 200 people from an ultra-right wing movement promised to wipe us off the map. Then another time, no less than a shaman graced us with his presents, and ceremoniously took possession of the gas beneath the ground. These types of actions is beyond our understanding.

-The majority of the people expect to see new job creations. How many jobs can be expected in the region?

-Last year, we employed about 600 people directly or indirectly. In 2012, if we were to start production, we will be able to offer thousands of jobs directly or through sub-contractors.

-Our editors receive calls from overseas on a regular basis, apparently trying to obtain information about the work being done. However, after the second aggressive call, we started to think that there are some other reasons for some of calls.

-There are genuine callers with good intentions; however, it is also a well known fact that there are possibilities in information gathering also known as industrial espionage. Couple of years ago, a Dutch spy was residing in Szeged and was working for a Canadian. He must have been quite well paid, because he owned a chauffeur driven car and lived in the Novotel. He was driven to the drill sites and was photographing the drilling operations, and was gathering all sorts of information. Anyway, he was arrested.

-From the National Energy Security point of view, what are the consequences for the oil and gas production? I’m thinking in terms of our energy dependence on Russia, a concern that is voiced by many.

-In the day-to-day politics, occasionally arguments erupt over the topic of two pipelines, South Stream vs. the Nabucco. Last winter, at the height of Russian-Ukrainian gas dispute, when the gas pipeline was shut off. Numbers of countries were in a very difficult situation, however Hungary faired well, we even exported gas to Serbia. I think, the Russian dependence often overplayed. When half of the required supply is readily available from storage then it is not necessary to dramatize our dependence. Naturally, it will be necessary to develop other alternative sources, like the South and White stream and the Nabucco pipelines and the Croatian LNG terminal, investments in these advanced projects do suggest optimism.

About

György Szabó was born in 1940 in Szeged. His brother, Gábor Szabó, physicist, is a professor at the University of Szeged. In 1963 he earned his oil mining diploma at the University of Miskolc, later at same place acquired his doctor’s degree. Then he was teaching some years at the University in Libya. In 1991 he was the leader of the Hungarian team that came to Kuwait to put out fires of burning wells. He is a director of Falcon since 2006. His son and two daughters live abroad. Altogether he has nine grandchildren, with whom at home they strictly speak only in Hungarian.

Summation

Gas production in the Makó trough that lies along the axis between Hódmezővásárhely and Szentes, will start in 2012 with 10 billion cubic meters per year. Very hot temperatures deep underground adds difficulties to the exploitation; the gas temperature is 200 degrees Celsius when it reaches the surface. The company spent 1 billion forint to drill the 6000 meters well. Prier Hungarian depth record was 4000 meters. According to press releases, Exxon and MOL shares in Makó is 40-40 percent and Falcon with 20 percent. The Hungarian government receives 12% royalties on the production; also there are local and income taxes.

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My notes:

There are some inaccuracies in the newspaper’s summation.

“Hungarian depth record was 4000 meters.” This is false, in fact the Hungarian drilling record stood at 5842 meters.

The other one is a blatant misinformation about Falcon’s share of the Makó trough.

This map will help to clarify Falcon’ position in than Makó trough.

As you can see on this map, the hart of the Makó trough is the BCGA and is clearly shown in the red shaded area. That is where most of the gas is contained.

Falcon’s Production License covers 245,781 acres, even with an untrained eye you can see that is more than half of the BCGA.

Without going into calculations, I would say Falcon does have one third interest in the Makó trough.