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July 16, 2012
Tullow stops Guyana drilling on safety concerns, second well talks begin
Demerara Waves

British explorer Tullow Oil PLC said it stopped drilling a well off the coast of Guyana due to safety concerns, adding that it had already discovered some oil in the shallower parts of the well.

The Guyana government on Monday announced that they are in talks on the possibility of a second well.

Tullow and its partners on the well, Canada-based CGX Energy, a division of Argentina's YPF, and Spain's Repsol , were hoping the Jaguar well would strike oil and help open up a new oil province in South America.

"The decision to stop drilling at this point was unanimously agreed by all partners based on safety criteria," said Tullow in a statement on Monday.

Tullow said the well, which it had been drilling for five months and which is on an exploration licence where it has a 30 percent stake, was stopped from going deeper due to the high levels of pressure encountered which the well could not handle.

The Jaguar well was a "high pressure, high temperature" well, the same sort of well as BP's well which caused an explosion in the Gulf of Mexico in 2010 and led to the worst offshore oil spill in U.S. history.

Samples of light oil were recovered from the well even though it did not reach its deeper main target, Tullow said.

The government in a subsequent release on Monday stated that progress with the well had been steady.

"However, down-hole conditions became very challenging and despite the resort to technical and engineering solutions by the consortium, Government accepts the consortium’s decision to close operations, safety being the primary consideration.

It added that the Guyana Geology and Mines Commission has been mandated to work with all related parties on a full analysis and determinations from information gathered so far even as it noted that evidence of petroleum occurrences was encountered.

"Government and operator for the consortium Repsol, continue to be engaged on the way forward, which could include a second well to achieve the intended objective of the Jaguar #1. These discussions have started as it is our intention to see an early restart of early exploration drilling by all the approved parties."

Last year, Tullow made a big oil discovery to the east of Guyana, off the coast of French Guiana, and it hopes to prove its geological theory that the oil-rich West African rocks of Ghana will be replicated across the Atlantic in South America.

Shares in Tullow were down 1.3 percent to 1,414 pence at 1227 GMT, underperforming the European Oil & Gas index which was 0.2 percent lower.

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