LINK: http://oilprice.com/Energy/Energy-General/Guyana-Oil-From-Rags-To-Riches.html
Guyana Oil: From Rags To Riches
By Drilling
Info - May 21, 2017, 12:00 AM CDT 
The Search For El Dorado
The first time I landed in Georgetown,
Guyana, nearly a decade ago, the impoverished former British colony was
grappling with limited economic fortunes. Covered by lush, trackless forests,
and rich in bauxite and gold, Guyana was ironically one of the poorest nations
in the Western Hemisphere. Thanks in large part to a United States Geological
Survey (USGS) report on the Guyana-Suriname Basin, which pegged possible oil
reserves at as much as 15 billion barrels of oil (and 42 TCFG), a handful of
international companies pricked up their ears as the government in Georgetown
threw out the welcome mat. Guyana was worth the gamble.
This was not the first time Guyana had acted as a conduit for
exploration. Even the famed English courtier Sir Walter Raleigh believed that
the golden city of lore, El Dorado, lay somewhere in the deep forests of South
America. Little did Sir Walter ever suspect that El Dorado was actually offshore
below 2,000m of water. Due to the efforts of ExxonMobil (45 percent) and its
partners, Hess (30 percent) and the CNOOC-subsidiary Nexen Petroleum (25
percent), the Liza 1 discovery in 2015 in the Stabroek Block meant that Guyana
would be able to take its place at the table of oil producing nations.
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Economic Windfall
By no means is it a stretch of the
imagination to say that Liza, located about 200 km offshore, has put Guyana at
the center of a new ‘rags to riches’ tale. Three ExxonMobil-operated Liza
wells, and more recent probes like Payara 1 and Snoek 1 drilled in the block,
will create a windfall for Guyana’s rural and mineral export-driven economy.
Even if the most conservative reserves estimates for the Stabroek Block prove
to be correct, the ExxonMobil-led development will eclipse the country’s GDP at
a breath. The current value of all goods and services in the nation stand at
just over US$ 3 billion. “The development of the hydrocarbons sector for Guyana
has the potential to transform the economy into a sustainable path for economic
prosperity,” CEO Bobby Gossai of the newly minted Guyana Oil & Gas
Association said in a statement to Drillinginfo.
But Guyana does not want to repeat the
mistakes of other suddenly rich oil nations. Multilateral lenders like the
International Monetary Fund (IMF) have applauded “the authorities’ plans to
establish a comprehensive legal framework for managing oil wealth.” Moreover,
the IMF said it will support these efforts in Georgetown. “The authorities are
preparing draft legislation for a fiscal regime for oil revenues, and a
sovereign wealth fund. The IMF stands ready to provide technical advice in
these areas,” the Washington, D.C.-based lender says.
Guyana is also looking to take lessons
from beyond its borders and gain insight from established oil producing
nations. “Governance and transparency are important,” says Raphael Trotman,
Minister of Natural Resources. Guyana may take a page from Mexico’s successful
oil opening. The ink is still drying on a recent Memorandum of Understanding
(MOU) that could well pave the way for the Mexican Petroleum Institute (IMP)
members to carry out proposed training in Earth Sciences for incoming Guyanese.
The scope of the MOU also includes building up technical labor in critical
positions such as welders and drill crew supervisors. “The oil and gas sector
must be managed in the most effective manner for the well-being of the people
of Guyana to be improved.
This governance of the new found
natural resource has to be done on levels that involves all stakeholders,
across all sectors of the Guyanese economy. The business opportunities that are
available must be explored by both horizontal and vertical integrations of
institutions and cooperation’s within the public and private sectors,
simultaneously,” said Gossai of the Guyana Oil & Gas Association. A team
from the US Department of State’s Energy Governance and Capacity Initiative
(EGCI) recently met with local officials to discuss the oil and gas initiative.
ExxonMobil has a potential multi-FPSO
development solution on the drafting board for the block. SBM Offshore NV has
been tapped for the FEED for the first FPSO to tap the Liza Field in the Phase
1 development, which calls for conversion of a VLCC (Very Large Crude Carrier)
with the capacity to produce an average of 100,000 bbls/d and store 1.6 MMbbls.
Phase 2 would see output grow at an
even higher rate. Given the blocks potentially prolific nature, new discoveries
like Payara (announced in January 2017) and Snoek-1, a multi-FPSO development
solution may be on the cards.
With development just around the
corner, policymakers have been cobbling the regulatory framework together for
ongoing oil and natural gas development. The country’s Minister of
Infrastructure, David Patterson, told Drillinginfo on the sidelines of the Guyana
Oil & Gas’s first ever conference that the government is looking at how it
can use development to fuel growth in other areas of the economy. “The gas
would come from the offshore and fuel a 200 MW power plant,” says Patterson.
Infrastructure Plans
Guyana is also on track to get a major
boost in infrastructure. The President David Granger administration is backing
construction of a US$ 500 million onshore oilfield services hub on Crab Island
on the Berbice River. Moreover, sources say the idea of potentially developing
a deep-water port is back on the drawing board.
Beefing up the country’s vital
transportation links and infrastructure also bodes well for under prospected
areas in Guyana’s onshore, far away from the glamour of the deep water. “There
is still potential for the shallow water and the onshore Takutu Basin,”
Commissioner Newell Dennison, with the Guyana Geology and Mines Commission,
told Drillinginfo at the conference. Brazil shares the basin with Guyana.
More recent plans to drill in the onshore
basin never materialized, though it is important to note that oil shows have
been detected in the basin. Home Oil, for example, made the Karanambo-1
discovery in 1982. Activities in this frontier basin have lain dormant since
then.
Exploration Continues
ExxonMobil and partners have the bragging rights to Liza and the other
discoveries, but companies like CGX Energy and Repsol have been active in the
former British colony for more than a decade. Even so, previous exploration
forays in the frontier basin yielded little in terms of a major discovery. In
2012, CGX’s Eagle 1 well, which reached Upper Cretaceous Campanian sediments at
4,328m, encountered hydrocarbons shows in the Oligocene, Eocene, Maastrichtian
and Campanian zones, indicating an active petroleum system. The well was
P&A untested.
Repsol also drilled a noncommercial
probe with the Jaguar 1. The well’s primary objective was never reached after
encountering unusually high pressures shallower than estimated. In 1975, Shell
drilled the Abary-1, which encountered light oil in two Maastrichtian sandstone
intervals. The well was P&A after experiencing well kicks.
At last report in May 2017, ExxonMobil
had the “Stena Carron” drillship spud the Liza-4 appraisal well in the Stabroek
Block. Liza-4 is located in the east of the Liza Field and is designed to
evaluate the Liza discovery to help define the field development plans. It is
to be followed by the Payara-2 appraisal well in the programme of drilling for
the Stabroek Block.
As for other companies, Eco Atlantic
and its partner Tullow Oil, hold rights to the Orinduik Petroleum Prospecting
License in Guyana’s share of the Guyana-Suriname Basin. Eco Atlantic recently
carried out shares sale to “enhance its seismic exploration programme” on the
Orinduik Block. CGX continues to seek out a partner for its exploration plans.
More immediately, Repsol is focusing efforts on the planned acquisition of
4,000 sq km of 3D seismic in the Kanuku Block. Repsol previously acquired 3,200
sq km of 3D and 860km of 2D seismic over the block, in 2013, using the
“Polarcus Asima” vessel.
Repsol operates the block with 70
percent WI (Tullow 30 percent). One current prospect, Kaieteur, is up-dip from
the (ExxonMobil-operated) Liza discovery, which lies about 50km to the
northeast.
And even though much of its deep water
is under contract, Guyana hopes to lure in more participants in the future,
confirmed Natural Resources Minister, Rafael Trotman on the sidelines of the
Guyana conference.
By Drilling Info