The Conversation (0)
May. 15, 2014 04:15AM PST
China’s recent foray into South China Sea oil exploration territory seems to have come out of nowhere.
As Forbes reported, Chinese oil company CNOOC pulled a deepwater drilling rig to oil exploration blocks near the paracel islands, 120 kilometers off the coast of Vietnam, on May 3. Since then, ships from both countries have moved in to protect the area, resorting to antics such as ramming each other’s ships and spraying water cannons to lay claim to the territory.
The oil rig has sparked major protests in Vietnam, going so far as to burn Chinese and Taiwanese owned factories, according to the BBC. Furthermore, Vietnam’s state-run media is covering the protests, even though protests are usually strictly controlled in the country.
That move may not be in the country’s best interests. Tran Van Nam, deputy chairman of Vietnam’s Binh Duong province which was the site of many riots, said, “Obviously setting fire to and damaging the factories is a violation of law and that must be stopped and dealt with strictly. I am deeply concerned about this because it may hurt the image of the province as an attractive destination for foreign investors,” the Wall Street Journal reported.
Your paracel, my paracel
Still, Vietnam clearly feels the need to assert its rights in the South China Sea. The area has been hotly contested for years, and not just between China and Vietnam. In addition to disagreements over the sovereignty of the Paracel islands, the Washington Post notes that the nearby Spratly islands have garnered claims from Brunei, the Phillipines, Malaysia and Taiwan as well as China and Vietnam. The writer also refers to China’s ‘nine-dash-line’ that encompasses a blanket claim to the South China Sea and its contained territories. Also, Forbes points out that this is not the first time China has set up shop in the Paracel Islands in recent years, having done so in 2012.
China’s oil rig is next to the Paracel Islands, which were seized by China in a battle over the area in 1974. Vietnam tried to take the issue up with the UN at the time, but as this Hypermodern article from 2009 notes, China vetoed that move in its capacity as member of the UN Security council. Both countries have evidence of presence in the paracels for hundreds of years prior, and both still claim that the tiny, uninhabited islands fall within their territory.
Though Bloomberg wrote that foreign ministry spokesman Le Hai Binh stated that Vietnam is “strongly opposed,” to China’s actions, Fox News reported that China maintained it was within its rights and has ”maintained a lot of restraint” in spite of Vietnam’s ”intensive provocations.”
However, as the Diplomat wrote, the oil rig also falls within Vietnam’s exclusive economic zone (EEZ) as defined by the United Nations Convention on the Law of the Sea. Though some have argued that China rightfully controls an EEZ that overlaps with Vietnam’s through its ownership of the Paracels, it would have to undergo a formal process to determine ownership of the area according to International Law, which China has obviously failed to do. In any case, the convoluted issue of ownership here provides a good example for investors to note when looking at projects taking place in contested territories.
Sovereignty for sovereignty’s sake?
China’s actions are widely being seen as a tit-for-tat move against purported U.S. containment policies. Although Forbes stated that President Obama said, “[w]e’re not interested in containing China,” in response to assertions that his trip to Asia represented a ‘containment tour,’ a press statement from the U.S. Department of State acknowledged that sovereignty over the area was disputed and said China’s placement of the oil rig is “provocative and raises tensions.”
Indeed, the placement of China’s oil rig seems to coincide too closely with the end of President Obama’s tour to be purely coincidental. A New York Times article outlined China’s willingness to flex its muscle in the South China Sea, noting its declaration of an air defense zone in the area last year, and drawing attention to a statement from a Chinese oil company official that called oil rigs, “our mobile national territory.”
However, it cannot be overlooked that, mobile national territory or not, an oil rig is an oil rig is an oil rig – and if one has been put in the South China Sea, its probably there because China is hoping to secure its fair share of the resource.
Resources at the center
As well as hosting key shipping routes, the South China Sea is believed to hold rich oil and gas deposits, according to Reuters. Writing for Forbes, Christopher Helman stated that China placed its oil rig “smack dab in the middle of oil and gas exploration blocks that Vietnam claims as its own.” State owned PetroVietnam has been working with Exxon Mobil (NYSE:XOM) in the area, and PetroVietnam Chief Executive Do Van Hau stated in November that the companies had made a massive discovery with estimated reserves of 6 – 8 trillion feet of natural gas, according to Bloomberg.
Australia’s Neon Energy (ASX:NEN) is also drilling nearby, and as managing director Kenneth Charsinsky told the publication, “[a]fter anyone makes a big discovery, people will look north, south, east and west of it,” suggesting that China has good reason to be staking claims in the area.
Back in 2011 when Exxon first made the big discovery, Reuters reported that Chinese Foreign Ministry spokesman Hong Lei reacted by stating, “We hope foreign companies do not get involved in disputed waters for oil and gas exploration and development. This position has been consistent,” although the minister did not specifically name the major oil company. Exxon had received licences from the Vietnamese government to explore blocks in the South China Sea, despite the disputed nature of the territory. Certainly, the oil and gas producer’s willingness to invest in the area despite political uncertainty is telling.
The Diplomat suggested it is unlikely that China was drawn to the region purely due to Exxon’s discoveries, writing that China has not increased its objections to the company since it started work in the area in 2011. Furthermore, despite Exxon’s interest, the Diplomat stated other observers do not see promising oil and gas prospects in the area, and CNOOC officials have stated that they were unsure of the commercial viability of placing the rig and did so only under direction from Beijing. While these are important points, it would not be prudent to rule out Chinese motivations related to oil and gas entirely. As always, there is likely a mixture of factors at play.
Either way, it is important for those investing in oil, gas or other resource sectors to read between the lines when geopolitical tensions take the spotlight in international conflicts. The importance of potential oil and gas reserves in the South China Sea may not have been the central sticking point in the recent China-Vietnam story, but it is still worth paying attention to.
Securities Disclosure: I, Teresa Matich, hold no investment interest in any companies mentioned.
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Coelacanth Energy is a pure-play Montney oil and natural gas company advancing one of the largest contiguous land positions in the Montney light oil window of northeastern British Columbia. Supported by a substantial discovered and undiscovered hydrocarbon resource base, growing production, established infrastructure and a management team that has built and sold six successful energy companies, Coelacanth is executing a strategy focused on increasing both near-term cash flow and long-term resource value.
Overview
Coelacanth Energy (TSXV:CEI) is a Canadian oil and natural gas exploration and development company focused on the Montney Formation in northeastern British Columbia. The company controls over 150 contiguous sections in the Two Rivers region, a strategically positioned acreage block within the Montney light oil window. As one of the largest landholders in this highly prospective area, Coelacanth has assembled a large-scale resource platform with significant development potential.
The company’s asset base is supported by substantial petroleum initially-in-place estimates prepared by GLJ. These include 6.9 billion barrels of discovered oil PIIP and 8.3 billion barrels of undiscovered oil PIIP, alongside 5.9 Tcf of discovered gas PIIP and 7.1 Tcf of undiscovered gas PIIP. The resource spans multiple Montney intervals, including the Upper, Lower, Basal and Middle Montney, providing extensive opportunities for future development and delineation.
Coelacanth’s strategy combines near-term production growth with long-term resource value creation. The company has secured critical infrastructure, contracted gas takeaway and processing capacity, and advanced development activities across its Two Rivers assets. Average production reached 7,632 boe/d in Q2 2026, reflecting continued progress in transitioning from delineation and infrastructure buildout toward scalable production growth.
A key differentiator for Coelacanth is its leadership team. Management has successfully built and sold six previous public energy companies and has demonstrated an ability to create value through multiple commodity cycles. Supported by deep operational, geological and financial expertise, the team is focused on disciplined execution of the company’s Montney growth strategy.
Company Highlights
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- Infrastructure-led growth strategy: Key infrastructure, including facilities, pipelines, processing agreements and gas takeaway capacity, has been secured to support scalable production growth.
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- Multiple productive Montney horizons: The asset base includes the Upper, Lower, Basal and Middle Montney intervals, providing extensive development opportunities across multiple zones.
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- Proven value-creation team: Management has built and sold six successful energy companies and brings extensive operational, technical and financial expertise to Coelacanth’s development strategy.
Key Project
Two Rivers Montney Development
The Two Rivers project forms the cornerstone of Coelacanth’s growth strategy and encompasses the company’s extensive Montney land position in northeastern British Columbia. The project hosts multiple productive horizons, including the Upper, Lower, Basal and Middle Montney intervals, supporting a multi-zone development approach across the acreage. Geological delineation has been completed, providing a strong technical foundation for future drilling and development.
The project has demonstrated commercial productivity through successful drilling and testing programs. Coelacanth established proof of commerciality at both Two Rivers East and Two Rivers West, while development at the 5-19 and 10-08 pads confirmed productivity across multiple Montney benches. All 12 wells on the 5-19 pad were onstream by April 1, 2026, marking a significant milestone in the project’s progression.
Infrastructure development has been a major focus of the company’s execution strategy. Coelacanth has secured infrastructure financing, completed key facility and pipeline construction, contracted up to 100 mmcf/d of gas takeaway capacity and secured processing capacity of up to 60 mmcf/d. These initiatives establish the infrastructure foundation required to support future production growth.
The Two Rivers asset also benefits from strong market access. The company’s production can access major regional pipeline systems, including NGTL, Westcoast and Alliance, while its acreage is directly connected to LNG Canada through the Coastal GasLink system for potential future delivery. Coelacanth Energy said the long-term view for LNG expansion in British Columbia is very positive for its land, believing that lands with scale and direct access as such will trade at a premium once they are delineated and the resource is proven for development.
Combined with a commodity mix of approximately 31 percent oil and liquids and 72 percent natural gas, the project offers exposure to multiple energy markets.
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Rob Zakresky – President, CEO and Director
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Nolan Chicoine – Vice President of Finance and CFO
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Jody Denis – Vice President of Operations
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Jonathon Hanson — Vice President of Engineering
Jonathon Hanson has 20 years of industry experience. He previously served as manager for exploitation at Spartan Dela Corp, and was a senior exploitation engineer for companies Vermilion Energy, Lynx Energy and Saguaro Resources. He will focus on exploitation and reservoir management for Coelacanth Energy.
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Overview
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Unlike many alternative energy solutions that require extensive changes to existing infrastructure, synthetic fuels can be transported, stored and utilized through today’s fuel supply chains. The resulting fuels are molecularly pure, free from many contaminants associated with conventional fuels and compatible with existing engines, turbines, storage systems and transportation infrastructure. Produced using renewable electricity, hydrogen and captured carbon, the fuels can deliver over 90 percent lower lifecycle emissions while maintaining the energy density and performance characteristics required across multiple industries.
At the core of the company’s platform is its Hybrid Thermal Production System, which combines high-temperature solid oxide electrolysis with industrially proven fuel synthesis reactors. By incorporating low-cost thermal energy into critical production stages, Syntholene seeks to reduce electricity consumption, the largest cost component for most eFuel producers. This approach underpins the company’s targeted 70 percent cost advantage relative to competing technologies and supports its objective of producing cost-competitive synthetic fuels at commercial scale.
The technology builds upon advancements in high-temperature electrolysis, including work undertaken at Idaho National Laboratory. Following successful prototype-scale validation in 2022, Syntholene is progressing toward field-scale demonstration in Iceland. The company believes a successful demonstration will support future commercial deployment across a range of synthetic fuel applications.
Market demand for low-emission liquid fuels continues to expand across multiple sectors. Sustainable aviation fuel represents Syntholene’s initial commercial focus, supported by increasing airline decarbonization commitments, regulatory mandates, and fuel-blending requirements. Beyond aviation, the broader global eFuel market is projected to grow from US$8.89 billion in 2024 to more than US$215 billion by 2032, creating opportunities across transportation, shipping, industrial energy, and other sectors that depend on liquid hydrocarbon fuels.
Syntholene’s leadership team combines expertise across climate technology, synthetic fuels, industrial engineering, energy infrastructure, project development and resource industries. Recent additions to the advisory board, including former Shell and Suncor executive Marc Mageau and energy industry veteran HY Lee, further strengthen the company’s capabilities as it advances toward commercialization.
Company Highlights
- Addressing a multi-layered growth opportunity: The company is initially targeting sustainable aviation fuel while developing a technology platform capable of serving a substantially larger global liquid fuels market spanning transportation, industrial energy and other hard-to-electrify sectors.
- Proprietary hybrid thermal production system: Syntholene’s technology integrates high-temperature solid oxide electrolysis with industrially proven fuel synthesis reactors, utilizing both electricity and thermal energy to improve efficiency and reduce production costs.
- Targeting a 70 percent cost advantage: By introducing low-cost thermal energy into critical stages of production, the company aims to produce synthetic fuels at 70 percent lower cost than competing eFuel technologies.
- Pathway to cost-competitive synthetic fuels: The company believes its technology provides a credible pathway toward producing synthetic fuels that can compete economically with conventional petroleum-derived fuels at scale.
- High-performance fuel characteristics: Synthetic fuels are molecularly pure and free from many contaminants associated with conventional fuels, including sulfur, nitrogen and heavy metals, while remaining compatible with existing infrastructure.
- Over 90 percent lower lifecycle emissions: Synthetic fuels produced from renewable electricity, hydrogen and captured carbon can deliver over 90 percent lower lifecycle emissions than conventional alternatives.
- Prototype validation completed: The company’s production process was successfully demonstrated at prototype scale in 2022 and is now operating a world-first geothermally-integrated demonstration facility in Husavik, Iceland.
- Demonstration facility advancing ahead of schedule: The Húsavík, Iceland facility is now operating, with efficiency and technoeconomic results expected in Q4 2026.
- Strategic geothermal platform: The Iceland project benefits from low-cost geothermal electricity, thermal energy, industrial infrastructure, deep-water port access and an existing 200 MW+ regional grid expansion permitting framework.
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Flagship Project
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A key objective of the demonstration facility is to validate the company’s thermal integration strategy and confirm that efficiencies achieved during laboratory and prototype testing can be replicated under commercial operating conditions. The facility incorporates Syntholene’s proprietary Thermal Coupling technology, which converts geothermal steam into high-purity industrial steam suitable for use throughout the fuel production process. Management believes this technology is central to achieving the targeted 70 percent cost advantage relative to competing synthetic fuel pathways.
The project also benefits from significant expansion potential. Iceland has completed environmental permitting associated with a 200 MW regional grid expansion, supporting future industrial development in the region. Following a successful demonstration, Syntholene intends to advance a 20,000-tonne-per-year commercial facility design and subsequently scale production through facilities ranging from tens to hundreds of megawatts. Management believes the Húsavík location alone has the potential to support development capable of generating approximately US$500 million in annual revenue.
Management Team
Dan Sutton – Chief Executive Officer
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Steve Oldham – Director
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Canon Bryan – Director
Canon Bryan is a founder and company builder with more than 25 years of experience across advanced energy and resource development. He co-founded Terrestrial Energy, Uranium Energy and NioCorp and brings expertise in finance, corporate development, economic modelling and strategic planning.
John Kutsch – Chief Engineer
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Jack Williams – Head Engineer
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Grant Tanaka – Chief Financial Officer
Grant Tanaka has more than 15 years of senior financial leadership experience across the global natural resources sector. His background includes senior finance roles at Teck Resources, New Gold and Copper Mountain Mining, combining financial discipline with operational performance management. He was also appointed Corporate Secretary in May 2026.
Anna Pagliaro – Director
Anna Pagliaro is a senior commercial and risk management executive with extensive experience across the energy and mining sectors. Her career includes leadership positions at Vizsla Silver, Ausenco, NexGen Energy and Integra Gold, where she focused on governance, commercial strategy, negotiations and risk management.
Marc Mageau – Advisory Board Member
Marc Mageau joined the Advisory Board in June 2026. He brings more than three decades of operational leadership experience from Shell and Suncor, including expertise in refining, oil sands operations, logistics, infrastructure development and industrial asset management.
HY Lee – Advisory Board Member
HY Lee joined the Advisory Board in May 2026, adding further industrial, operational and strategic expertise as Syntholene advances toward commercial deployment of its synthetic fuel platform.
