ACT-GEO, a U.S. consulting company that conducted a study on the potential discovery of oil and gas off Korea’s east coast, was found to have not paid business taxes for more than four years, adding to the skepticism about the credibility of the project.
“ACT-GEO’s legal capacity to act as a corporation had been partially limited due to a tax default from January 2019 to March 2023,” said Korea National Oil Corporation (KNOC), which commissioned the study to ACT-GEO in a statement Saturday, refuting to a report that said ACT-GEO was disqualified as a corporation due to a tax payment issue.
“Based on Texas law [where ACT-GEO is headquartered], even if legal capacity is partially limited, signing a contract is still possible. ACT-GEO’s status as a corporation has been maintained after January 2019.”
The state-run oil agency added Sunday the amount of overdue tax of ACT-GEO comes to approximately 2 million won ($1,450).
Since the announcement of potential oil and gas reserves off the east coast last week, skepticism has been rising about the credibility of the study conducted by the relatively unknown consulting company.
The mounting concern led its founder, Vitor Abreu, to come to Korea and hold press conference on Friday to address the doubts.
The geoscience expert estimated a 20 percent chance of success for the project, despite the absence of petroleum hydrocarbon in his findings.
“Twenty percent is very good in a frontier basin,” Abreu said at a press briefing held in Sejong on Friday to explain his company’s findings.
“The largest discovery in the world in the last 20 or 25 years is the Liza prospect in Guyana,” the geoscience expert said, referring to the 2015 discovery off Guyana approximately 190 kilometers (118 miles) northeast of Georgetown. “I participated in that project when I was working for Exxon Mobil. The prospect for the Liza oil field was 16 percent.”
“The quick summary is that Liza found 4 billion barrels of recoverable oil,” Abreu said.
Based on ACT-GEO’s analysis, Abreu claims that there are seven prospects that could have between 3.5 billion to 14 billion barrels of oil and gas buried in the waters around Yeongil Bay in Pohang, North Gyeongsang.
The four main geological conditions — reservoir, seal, source rock and trap, a geological structure allowing hydrocarbon to accumulate in a reservoir — were present in the seven areas. Hydrocarbon saturation, however, is yet to be detected. Abreu explained that the areas need to be analyzed for amplitude versus offset (AVO) anomalies.
In areas where there might be hydrocarbon accumulated from petroleum, reflected seismic waves often show distinctive patterns, known as AVO anomalies. Through seismic surveys, geologists can detect the anomalies, as hydrocarbons change the way sound waves travel through rocks compared to water or other fluids.
Regarding a question about whether the 20 percent probability was high, Abreu clarified that the chances are still risky.
“Twenty percent means that there’s an 80 percent chance that it will not work,” he said. “If there was only one prospect out there, I probably wouldn’t want to drill it. What this means is that if I have five prospects, I will find oil in one of them.”
“The only way to test now is by drilling,” Abreu continued. “They [the prospects] showed all the elements. There’s still a risk, but it’s an unavoidable risk at this point. So the only way to mitigate it is by drilling.”
Abreu also addressed the concerns relating to the credibility of ACT-GEO, where he serves as an adviser and consultant on petroleum exploration.
An online post started circulating on Tuesday pointing out that the address of the company’s headquarters listed on its website corresponded to a residential building.
Abreu confirmed on Friday that the address was his own private residence.
“The design of ACT-GEO is to be a new breed of consulting companies,” he said. “It is adapted for the new world where petroleum resources are getting less and less, and the prices are getting more challenging, and companies all over the world are decreasing their staff. This means that there’s a lot of really good talent out there in the world.”
“The only thing that this company needs to do our job is computer software and a camera, so my team is spread around the world,” he said.
A total of 14 employees currently work at ACT-GEO, and are located in New Zealand, Brazil, Mexico, Switzerland and Britain.
Doubts about the findings were further exacerbated when Woodside Energy, a major Australian energy group, was found to have stated in its 2023 business report that it exited the same project after assessing that it was “no longer considered prospective” last year. Following Woodside’s exit in January 2023, the Korean government tapped ACT-GEO, a U.S. geoscience research and consulting firm, to continue the prospecting study the following month.
Woodside partnered with the KNOC to conduct a seismic survey in the east coast site from 2007 to 2022.
KNOC principal adviser Kwak Won-jun clarified that the data analyses done by Woodside and ACT-GEO were different because the former withdrew from the project before the full 3-D seismic survey was completed.
“Woodside’s decision to withdraw was influenced by merger discussions with BHP [an Australian mining company],” Kwak said. “After the company’s withdrawal in 2022, KNOC conducted another large-scale 3-D survey within the area, combined with deep-sea data from Woodside. ACT-GEO gave its analysis utilizing this final piece of data.”
BY JIN EUN-SOO, LEE JAE-LIM [lee.jaelim@joongang.co.kr]
