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ENERGY Caribbean newsletter (April 2014 • Issue no. 72)

The final edition of the ENERGY Caribbean newsletter


SURINAME Major exploration programme is under way And the next round of bidding is in progress too Staatsolie, Suriname’s national petroleum company and only oil producer, confidently expects another wave of offshore exploration after March 2015, when it will award yet more blocks based on the outcome of the “nomination” process now under way. The company has adopted a new approach to acreage awards, which mimics what Trinidad and Tobago has done for some time in relation to the deep water: potential explorers indicate which open blocks specifically interest them, and that information is used to decide which ones will be offered for auction. Fifteen demarcated offshore blocks are available, their 1.2 million acres representing about 66% of the marine area under Suriname’s control, so the exploration potential is clearly substantial. So far, blocks northwest of Suriname’s coastline have proved of most interest to companies now operating there, which leaves most of the 15 on the northeast of the marine area, abutting the delimitation line with French Guiana, open for bids. Staatsolie will be hoping that the offshore discoveries in that French department will be a spur to the nomination, and subsequent takeup, of acreage. More to come So far, the belief that the geology of AUCTION SCHEDULE February 2014 March 2014 June 1, 2014 July 2014 August 2014 January 30, 2015 March 2015 4th quarter, 2015 EXPLORATION Company Block Wells Timeframe Inpex 31 1 April 2015 Kosmos/Chevron 42 1 tba Kosmos/Chevron 45 2 2015 Tullow Oil 47 1 2014 Q4–2015 Q1 Murphy Oil 48 1 tba Petronas (Malaysia) 52 1 April 2015 Apache/Kepsa 53 1 by April 2015 Tullow Oil/Statoil (Norway) 54 tba tba the Guyana/Suriname/French Guiana basin mirrors that of west Africa, where Tullow Oil made its famous Jubilee discovery in Ghana, has been proved correct only in the case of French Guiana itself, with the Zaedyus find of about 840 million barrels in 2011. The four wells drilled in Suriname’s blocks 37 and 31 in 2011, by Murphy Oil and Japan’s Inpex respectively, were not successful. Nor was recent exploration offshore Guyana. But the possibilities have not been exhausted by any means, and there is an ongoing drilling programme by existing block holders in Suriname which will see extensive offshore exploration activity (see box). And there will be much more to come, towards 2017 and beyond. Nominations from companies for blocks of interest to them began in February. On the basis of US$50,000 data packages, they will have until June 1 to put forward their choices. Staatsolie Block nominations open Data packages Deadline for nominations Nominations evaluated Selected blocks announced; bids open Bids close Successful bidders announced Seismic acquisition begins requires companies to “briefly indicate the reasons” for their selections, but if a company declines to nominate, it can still bid in the subsequent auction. Process In July, Staatsolie will be evaluating the acreages nominated, including whatever leads/prospects may have been identified, and will assess companies according to their technical expertise, resource management record, and health, safety and environmental reputation. The selection of blocks for production sharing contracts will be governed by their commercial potential, strategic fit with Staatsolie’s vision, the information available, and the degree of interest that has been expressed. The blocks chosen for auction will be announced on August 1, and will be open for bids until January 30, 2015. Successful bidders will be revealed in March 2015, and are likely to be companies that have offered a participating interest to Staatsolie, with maximum work obligations, which have a good operating record and demonstrate a sound grasp of the geology. Staatsolie expects the companies chosen to get moving on exploration activity quickly and begin seismic acquisition by as early as the fourth quarter of 2015. 4

TRINIDAD & TOBAGO Major drilling to resume on land Twelve exploration wells planned for Rio Claro, Ortoire and St Mary’s Exploration activity on land in Trinidad should ramp up by late 2015, now that the successful bidders for three blocks offered in 2013 have been announced. As formally confirmed by the ministry of energy and energy affairs in February, the 75,089-acre Rio Claro block in southeast Trinidad, which extends to the Atlantic Ocean, was awarded to Lease Operators (LOL); the 44,674-acre Ortoire block, which also abuts the Atlantic, to Canada’s Touchstone Exploration; and the 37,895-acre St Mary’s block, further west, to the Anglo-Australian firm Range Resources. These companies have committed to collectively acquiring 295 line km of 2D seismic and 60 sq km of 3D, and thereafter sinking 12 exploration wells, all at a cost of US$55 million. If they find commercial reservoirs and decide to develop them, a further US$945 million could be spent. The onshore therefore joins the current shallow water and deep water offshore exploration initiatives in one of the busiest periods of exploration activity in decades. Energy minister Kevin Ramnarine has been quick to point out that the land is now bracketed with the offshore as a focus of exploration activity only because the ministry sanctioned the “first dedicated onshore bid round in 15 years.” The energy ministry sanctioned the “first dedicated onshore bid round in 15 years” He also pointed out that all three blocks are next to and on trend with existing hydrocarbon sources, including the Barrackpore field (130 million barrels), Rock Dome/ Catshill/Inniss (25-30 million barrels) and Carapal Ridge (20-500 million cubic feet of gas and condensate). Touchstone Touchstone Exploration, whose chair-man and CEO is Paul Baay, has wasted no time in moving to finalise the exploration and production licence for Ortoire, which was expected by early March. The company’s vice president for geosciences, James Shipka, sees Ortoire as “an incredible opportunity for Touchstone, as it is an extension of the well-known southern basin and presents exploration and development opportunities in a number of different horizons. As with the company’s existing budget, the commitments associated with the bid are expected to be funded through future cash flow.” Jim Krissa, Touchstone’s Trinidad and Tobago country chairman, speaks of the “high impact potential” of Ortoire, which gives the company access to a significant amount of exploration acreage “that will be immediately integrated into our long-term operational plan in Trinidad and Tobago.” Krissa says that this additional acreage (Touchstone now holds a total of 63,000 acres on land in Trinidad and 5,000 acres nearshore in the Gulf of Paria) enables the company “to move forward as a leader in onshore exploration and development in Trinidad.” Range Resources Range Resources seems happy to have acquired St Mary’s, since it is “contiguous to its existing Morne Diable farmout block licence and the Guayaguayare Shallow and Deep Horizon blocks, held by Niko Resources, in which Range farmed in 2013.” The company has identified several geological horizons in which it hopes for exploration success once drilling begins, including “Pliocene Deltaic sands, Miocene Herrera sands, Cretaceous sands, and the source rock itself.” Minister Ramnarine had previously suggested that around 590 million barrels could be present in the Miocene Herrera sandstone “in several accumulations, each ranging in size between 15 and 150 million barrels of oil.” Lease Operators Lease Operators has been silent on the significance of its acquisition, but it is clear that, as a strictly local company with no access to international corporate connections, it has its work cut out for it, especially since it has taken on the biggest block by far, and the one with the fewest portions excised because of licences earlier granted to others. In its favour, however, is that the owners, the Brash family, also control the largest local drilling company, Well Services Petroleum (WSP), so equipment availability should not be a problem when that stage is reached. Anthony Brash, son of company patriarch Charlie Brash, is quoted as saying that the company has five rigs available for onshore work, but they all seem to be contracted to LOL rivals, including, ironically, Touchstone, Trinity Exploration and Production (in which the Brashes are shareholders), Fram Exploration, Leni Gas and Oil, and Petrotrin. He does point out, however, that LOL will have use of WSP’s Rig 2, Rig 20 and Rig 70 at various times during 2014. Energy Caribbean April 2014 5

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