U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: October 27, 2005
TIDELANDS OIL & GAS CORPORATION
(Exact Name of registrant as specified in its Charter)
Nevada 0-29613 66-0549380
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State of Incorporation Commission File No. I.R.S. Employer
Identification No.
1862 West Bitters Rd. San Antonio, TX 78248
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, ( 210 ) 764 - 8642
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(Registrant's former name and address)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions below:
[_] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17CFR 240-14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240-13e-4(c))
Item 7.01 Regulation FD Disclosure
On October 27, 2005, Tidelands Oil & Gas representatives attended the
Platts Conference, a Mexican energy conference, in Houston, Texas. Tidelands
presented information on the project status of Terranova Energia SRL de CV, the
corporate subsidiary responsible for the proposed natural gas transportation,
underground storage facility and offshore LNG (liquefied natural gas)
regasification project in Northeastern Mexico. The following is a summary of the
conference presentation highlights. A copy of the presentation will be available
on the Tidelands' website www.tidelandsoilandgas.com in a PowerPoint file titled
Platts Conference. Additional detailed information such as maps, charts and
pipeline diagrams are included in this webpage file. We encourage our readers to
review this file.
The Company is focusing on the development of infrastructure projects
through its Mexican entity, Terranova Energia S.de R.L. de C.V., in the nation
of the United Mexican States (Mexico).
Terranova Energia is focused on project development and implementation
of a natural gas storage and transportation infrastructure to support the
integration of Northeastern Mexico and South Texas and the related economic
growth of the border regions.
Tidelands and Terranova Energia have hired project development advisors
in the United States and Mexico. The Terranova Energia advisors include ALF
Energia, Rich, Heather Muller, Abogados and Miriam Grunstein, Abogada. The
Tidelands advisors include Netherland Sewell & Associates, CenterPoint Energy,
LLC, Mayer Brown Rowe & Maw, LLP, BNC Engineering, LLC, HSBC Securities, USA,
Inc. and R.W. Beck, Inc.
The Terranova Energia project was inspired by the fact that PEMEX, the
Mexican national oil company, needs to manage its natural gas production in the
Burgos Basin and the CFE, the Mexican federal electricity commission, needs to
support a natural gas policy which encourages reliability, flexibility and
competitive pricing for natural gas in northern Mexico. The regions forecasted
growth will require additional natural gas for power generation in the region.
Our project area is called the Northeast Hub. Our medium term goals,
subject to a variety of factors, including, but not limited to, regulatory
permitting, engineering design, financing, construction and operating
agreements, are focused on the Brasil storage field and Terranova Energia
pipeline.
The pipelines proposed are (A) the Occidente Section comprised of: (1)
a pipeline from the Brasil Storage field to Nuevo Progresso, proposed
international pipeline crossing into the U.S., (2) a pipeline from Brasil
storage to Station 19 up to Arguelles which is another proposed international
pipeline crossing into U.S.; and (B) the Oriente Section from the offshore
regasification station to Norte Puerto Mezquite proceeding to the Brazil storage
field. The Occidente Section will include approximately 323 kilometers of
pipeline and the Oriente Section will contain approximately 149 kilometers of
pipeline. Our long term goal includes the construction of the offshore LNG
regasification station.
The proposed international pipeline crossings into South Texas are the
Donna Station and Arguelles and VGP station. At the Donna station our potential
interconnects into Texas are with TETCO, TGPL and Texas Gas Services. At the
Arguelles and VGP station our potential interconnects are with HPL, Calpine and
Kinder Morgan. The Terranova pipeline capacity is estimated at 1.2 BCFD (billion
cubic feet per day).
The Terranova pipelines have been designed for 30 and 36 inch diameter
with bi-directional flow. The pipeline from the proposed LNG regasification
terminal to the Brasil field is a 36 inch diameter pipeline and from the Brasil
field to Monterey and international crossings are 30 inch diameter pipelines.
We submitted the permits for the Terranova pipeline Occidente and
Oriente sections to the CRE, the Mexican energy regulatory entity, on March 18,
2005 and they were accepted for full review on June 14, 2005.
The proposed underground natural gas storage facility will be located
in the depleted reservoir at the B1 Horizon-Brasil Field and include above
ground facilities. Our design proposal for the use of this depleted reservoir as
a storage facility was prepared by Netherland Sewell. Netherland Sewell, after
geological and mechanical modeling, reported the reservoir at the B1 horizon as
suitable for natural gas storage. The design capacity of the storage field
contemplates incremental increases in capacity over three seasons. The first
season capacity is 25 BCF (billion cubic feet), second season capacity is 40 BCF
and third season onward is 50 BCF. The design proposes that natural gas be
injected into the reservoir at 350 MMCFD(million cubic feet per day) at
pressures from 2,400 psi up to 3,200 psi. Extraction flows of natural gas will
be kept at 500 MMCFD to maintain structural integrity of the reservoir. The
storage facility plans call for 22 injection and extraction wells. The above
ground facilities will include compression stations.
We submitted the storage permit to the CRE on August 5, 2005 and it was
accepted for full review on October 14, 2005.
The proposed Offshore LNG Regasification Station will be based on
technology developed by the Norwegian company Remora Technology. It utilizes an
unmanned floating station called a HiLoad. It has a peak capacity of 1.4 BCFD
(billion cubic feet per day). This technology permits any LNG carrier vessel to
connect and carry out regasification operations without any vessel
modifications. It utilizes LNG vaporizers of the shell and tube type, with sea
water as the heating medium. The LNG station will be located no less than 40
nautical miles from the coast at a depth of 450 feet. A support station with a
power generation system and central control will be located on-shore. A buoy
will support the mooring of the LNG carrier vessels. Electrical power cables,
control umbilicals and pipelines will connect the HiLoad to the on-shore support
station.
There are significant challenges for the natural gas supply to the
power generation industry in Northeastern Mexico. We believe the CFE has taken a
proactive role in this region with a view to substantially improving the
reliability, flexibility and pricing of the natural gas supply. Presently, there
are three LNG regasification projects permitted in this region at Altamira,
Rosarito and Manzanillo. Additionally, there new electrical generation plants
and associated pipelines under construction. The CFE has forecasted natural gas
demand growth in the region from 2004 through year 2013. The CFE forecasts gas
demand will increase from 1.7 BCFD in 2004 to 4.2 BCFD in 2013. Natural gas
storage facilities in northern Mexico will provide a reliable, flexible gas
supplies while creating conditions for competitive natural gas pricing.
Forward Looking Statements:
We have included forward-looking statements in this report. For this
purpose, any statements contained in this report that are not statements of
historical fact may be deemed to be forward looking statements. Without limiting
the foregoing, words such as "may", "will", "expect", "believe", "anticipate",
"estimate", "plan" "propose" or "continue" or the negative or other variations
thereof or comparable terminology are intended to identify forward-looking
statements. These statements by their nature involve substantial risks and
uncertainties, and actual results may differ materially depending on a variety
of factors. Factors that might cause forward-looking statements to differ
materially from actual results include, among other things, overall economic and
business conditions, demand for the Company's products, competitive factors in
the industries in which we compete or intend to compete, natural gas
availability and cost and timing, impact and other uncertainties of our future
acquisition plans.
Sovereign Risk:
The risk of indirect or regulatory actions by local, state or federal
authorities in Mexico which may inhibit, delay, hinder or block projects under
development in Mexico is very high given the history of operations conducted by
past businesses other than the Company in Mexico. There is a substantial risk
that a set of actions taken by commission or omission by the various actors in
the public, private, nongovernmental and/or social sectors could negatively
impact a project or investment in Mexico. The legal system employed in Mexico is
dramatically different in its structure and method of operation compared to the
common law foundation present in the United States of America. The level of
legal protection afforded investors by the North American Free Trade Agreement
has not materially improved from a foreign investor's viewpoint.
There can be no assurance that a commercially viable project will be
completed due to the above factors which could result in commercial competitors
trying to circumvent the market system through the exploitation of undocumented,
extra-official channels of influence that constitute unfair competition.
Federal, state and local authorities are not well coordinated in their legal
protections and improper influence and competition may arise from any level of
government to disrupt or destroy the commercial viability of investments by
foreign investors. While the Company has taken precautions to limit its
investments to prudent levels, there is a continuing risk of adverse activities
arising from the above sources that could impair or result in the entire loss of
investment in otherwise commercially viable projects initiated by the Company in
Mexico.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TIDELANDS OIL & GAS CORPORATION
Dated: October 27,2005
/s/ Michael Ward
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By: Michael Ward
Title: President