The exploration phase in mining, oil and gas is the initial stage in the resources business lifecycle, during which companies attempt to identify and locate mineral deposits or petrochemical reservoirs.
The traditional business model for exploration for minerals, oil and gas is awful. Petrochemical and mineral exploration takes a long time, is costly, produces limited resolution information, and has a low success rate. Can that equation be changed? Yes it can.
Let’s put each element of time, cost, and success rate in perspective. The risk of unexpected geological or environmental factors that can delay the project or increase costs is real. So, a long time means five to seven years on average. And yet it can often take more than two decades. In a world where technology is demanding rapid growth in supply of many minerals, that model is an impediment to the mining industry, technological advancement, and “progress”. Mining needs a faster process.
The costs of exploration can vary widely depending on the size and complexity of the project, as well as the location and geology of the deposit. High cost means between USD$50M and USD$250M. Offshore wells are eye waveringly expensive, it can cost USD$35M to USD$50M to sink one well. You’d better not miss your target!
The expense becomes an issue when one factors in the success rate on exploration projects. We define success as moving from the exploration phase to the production phase. The success rate is, on average, 5%. One in 20 projects get to production. When you put that together with the cost the business model is a wasteful use of capital. Mining needs a higher success rate process.
The traditional exploration model has prevailed because, for companies that are able to successfully identify and locate resources, the rewards are significant in terms of potential revenue and long-term growth and the benefits to society are real. So, the shining is the pay-off is high enough to afford that high cost and low success rate business model.
The traditional model has also survived because up until recently, there wasn’t any choice. Some electromagnetic technologies have been developing that are faster, lower cost, and support higher success rates. But each technology has its limitations in terms of where it can be applied, the accuracy, and utility, of reserve information they provide.
What makes for excitement in a world where mining companies need to bring more EV minerals mines into production fast is that we now have technologies in play that flip the exploration scenario. They slash the time, cost, and risk by as much as 80%, produce more detailed resource data and are environmentally friendly.
For example, we partner with CTAC in deploying their #mineralfindertechnology, #oilgasfindertechnology. Without drilling a hole, these tools and methods can complete surveys in 17 weeks, provide accurate 3-D maps of the resource, quantify grade and value, and measure pressure (for hydrocarbons) with accuracy above 94% and success rates above 50%. Game changing stuff at a time when we need it.
For exploration geologists the technology something of a disruptor to their thinking about how exploration is done, and can be done. It leverages different science and technology, has no environmental footprint, streamlines the process, shortens the timeline, slashes the cost, lifts success rates, and supports 43-101 and other resource certification standards. It sounds too good to be true!
But it is real. And it has been around for a while; the research started 30 years ago. Since then it has proved itself in hundreds of exploration projects and it has been constantly improved through ongoing research and development. Now is the time when it is getting more widely known and deployed.