It's good to in retropect to read an old interview with Marc Bruner and reflect in what he had to say then.... Up to the reader to make their own conclusions but his claim to be a pioneer for unconventional gas is undisputed and an interesting mention on targetting the Szolnok..... Azz

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O&G. We all know that the global supply of fossil fuels is dwindling. As CEO of an exploration company, what is your experience of the impact of this on the industry to date – is it becoming harder to find new opportunities to tap?

MB. The global supply of fossil fuels is finite, but what is interesting is that new extraction methods and other technologies have caused the oil and gas industry to reconsider the amount of resources available. It’s certainly true that it is more difficult to find new conventional petroleum resources and the industry is dealing with it in two primary ways. First, the industry is increasingly turning to exploration and development of unconventional resources. The Mako Trough basin centered gas accumulation (BCGA) that Falcon is presently exploring in Hungary is a great example of this. The Mako Trough isn’t a new discovery, but the technology and skill required to develop it are new.

Second, the industry is focusing on increasing the reserves from known fields. Technological improvements and continued exploration have resulted in much better reserve growth. In fact, approximately 85 percent of additions to petroleum reserves in the US now come from existing fields. The North Sea is a great example of successful reserve growth in Europe.

O&G. How are companies responding to this, and to future prospects – are they looking further afield, deeper underground or diversifying their business perhaps?

MB. We’re seeing more companies focus a lot more effort and investment in exploring and developing unconventional resources. In Canada, for example, the industry in the last year has begun to produce more heavy oil than light oil. Despite the higher costs to produce heavy oil, the large resource base available has led the industry in this direction. Companies like Falcon are increasingly taking lessons learned in exploring for unconventional resources in North America and applying them to overseas prospects.

O&G. What are the principal problems you commonly face in exploiting new resources – are the challenges principally technical in nature or are there political or regulatory issues you have to deal with?

MB. The greatest challenge our industry faces is the limited availability of equipment and people to explore the opportunities. Rigs and other equipment for drilling and completions, pipe, steel and everything required for these projects are in high demand and low supply at present. The lack of people with the necessary technical expertise in geology, engineering, drilling and related fields is another huge hurdle. Over the last 20-25 years our industry has lost between 750,000 and a million people with these skills and college enrollment in these areas remains low at present.

Geopolitical concerns can’t be overlooked. Consider Chevron’s experience in the Sudan or the recent events in Venezuela, where petroleum production has been nationalized. It’s very important to conduct an evaluation of political risks to ensure stable regimes and stable markets before investing in new projects. National oil companies control a large majority of the world’s resources, which limits where others can explore. We’re very pleased with our experience in Hungary. Hungary’s membership in the European Union and its energy deregulation policies provide a very high level of political and market stability that is favorable to our efforts.

O&G. How are new technologies enabling us to exploit resources more fully or at lower cost?

MB. Technology has played a tremendous role in creating additional reserves. The advances in drilling, fracturing and completion technologies developed over the last 10-15 years have made many unconventional resource plays technically and economically viable. We also have the advent of sophisticated geophysical exploration techniques like 3D seismic that allow us to identify good drilling targets before engaging in a drilling program. The latest advances including mud systems, and improved vertical and horizontal drilling techniques are also allowing companies to increase reserves in existing fields in addition to seeking new opportunities elsewhere. On the production side, the latest smart wells have real time monitoring, allowing for maximum production efficiency.

O&G. You have a background in unconventional methods of exploiting natural resources. In your view are oil & gas corporations doing enough to research and employ less conventional means?

MB. There is a large opportunity to apply the unconventional and continuous resource extraction technologies pioneered in the US to other parts of the world. We’ve already seen these technologies expand from the Rocky Mountain region of the US to the Gulf Coast in plays like the Barnett Shale. We’ve also seen it move to the east coast in the Appalachian Basin. It’s also expanded from tight gas plays to include BCGAs, shales and coalbed methane. Overall, gas plays are the emphasis in the industry, as we’ve seen drilling on new gas wells exceed drilling on new oil wells.

O&G. How do you think your approach to exploration and development has differed from the norm and how successful has that been?

MB. My experience began in helping to pioneer exploration and development of unconventional resources in the Rocky Mountain region. When we began many of those prospects, they were considered to be high risk in nature. Now if you look at many of those plays, they are considered to be low geological risk plays. I began working in the Powder River Basin years ago and our approach helped to make the area very successful in terms of per well recoveries. We have also seen big successes in the Pinedale Anticline and the Jonah Field where recoverable gas is now in the range of 10 trillion cubic feet (Tcf).

We took projects that were considered revolutionary at the time and have made them more commonplace. Now we’re drilling at the bottom of basins rather than the tops of anticlines. Those basin plays are now continuing in the Uinta, Williston and San Juan. Overseas, opportunities now include places like Jordan and of course our project in the Mako Trough in Hungary.

O&G. To date, you’ve largely centered your interests on Hungary and Romania – why is this, and do you plan to expand operations in Central and Eastern Europe?

MB. Falcon is primarily focused on our operations in Hungary because the opportunity is so large. Hungary depends heavily on natural gas for its energy needs. In 2004, 45 percent of all its energy consumption came from natural gas. At the same time, Hungary imports over 75 percent of all of the gas it consumes, and most of that comes from Russia. Last year, an independent evaluation estimated with 90 percent probability the recoverable contingent resources on our licenses at 21.8Tcf of gas. We have plenty to keep us busy in developing the Mako Trough BCGA resources.

O&G. Where do you see most potential going forward – do you have a strategy in place for tapping into that?

MB. We firmly believe in the opportunities presented by unconventional resources. Our strategy and business model is to first identify a large unconventional resource, second to build a large land position, and third to apply advance drilling and completion technology. Once this is done, the project transforms into a simple resource play with tremendous upside potential.