Should the company drill here, it would join Canadian oil exploration companies Groundstar Resources and CGX Energy, which plan this year, to drill on their respective onshore and offshore blocks.
Tullow’s local subsidiary holds a 30% interest in the offshore Georgetown Block. Last year CGX completed a 3-D seismic survey over the 1839 sq km Georgetown Petroleum Prospecting Licence (PPL). CGX holds 25% of the Georgetown PPL while joint venture partners include Repsol (15%) and its subsidiary, YPF Guyana (30%), and Tullow Guyana BV (30%). Business News Americas says that the gross upside estimate for Guyana is 1,000 million barrels.
CGX had announced last year that it is scheduled to drill on its 100% owned Corentyne PPL during the second half of this year, while Groundstar plans to begin drilling in its Takutu PPL in May.
Yesterday, CGX said there could probably be 2.8 billion barrels of oil in three prospects on its offshore Corentyne PPL. In a press release, CGX said that an independent resource assessment has been completed by Gustavson Associates LLC of Boulder, Colorado, US for three prospects on the company’s Corentyne PPL. “Using probabilistic analysis, Gustavson calculated a total best estimate Prospective Resource as of February 1, 2010 in three prospects to be 2.8 billion barrels of oil”, the company said. The best estimate of the prospective oil resource of the three prospects; the Eagle Lower Turonian; the Eagle Upper Turonian and; the Eagle Tertiary were 1,269, 1,241 and 315 million barrels, respectively.
The release said that the Report is limited to an estimate of the potential undiscovered oil and gas prospective resources underlying the Corentyne PPL that covers approximately 9180 square kilometres net to CGX. As of February 1 this year, CGX held an interest in four Petroleum Agreements (PA), covering 34,723 square kilometres gross (approximately 28,197 square kilometres net) offshore and onshore Guyana. Each PA corresponds to a separate PPL, with the exception of the Corentyne PA, that is split into three PPL’s, the Corentyne Offshore PPL, the Corentyne Annex PPL, and the Berbice Onshore PPL. CGX Energy Inc. has a 100% working interest in the Corentyne Offshore PPL, the Corentyne Annex PPL and the Pomeroon PPL; a 25% WI in the Georgetown PPL; and a 62% WI in the Berbice PPL through its subsidiary ON Energy Inc.
The release said that the Gustavson resource estimates were prepared in accordance with the requirements of Canadian National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities.
It noted that no commercial discoveries have been made in the offshore Guyana basin and hence there have been no reserves found. Historic well data, regional geology and 2D and 3D seismic were reviewed by Gustavson to prepare a probabilistic Prospective Resource Estimate of that portion of the prospects lying entirely within the Corentyne PPL, it said. Prospective Resources are those quantities of oil and gas estimated to be potentially recoverable from undiscovered accumulations. If discovered, they would be technically and economically viable to recover.
However, there is no certainty that the Prospective Resources will be discovered. In its assessment, Gustavson gave Low Estimates, Best Estimates and High Estimates. The Best Estimate is considered to be the best estimate of the quantity that will actually be recovered from the accumulation. “This term… in this case reflects a 50% confidence level where the successful discovery will have a 50% chance of being more than this resource estimate”, the statement said. The Low Estimate is considered to be a conservative estimate of the quantity that will actually be recovered from the accumulation while the High Estimate is considered to be an optimistic estimate of the quantity that will actually be recovered from the accumulation.
It was noted that these distributions do not include consideration of the probability of success of discovering and producing commercial quantities of oil, but rather represent the likely distribution of the oil deposits, if discovered.
“We’re very happy to have this independent concurrence of our work by Gustavson Associates” Warren Workman, Vice President Exploration for CGX was quoted as saying. “Subsequent to a prior Report by Gustavson that was filed on January 3, 2008, CGX shot, processed and interpreted 505 square kilometres of 3D seismic yielding better clarity on the geology and extent of the specific Prospects.
Our former Eagle Shallow Fan Prospect is now the Eagle Tertiary Prospect. A series of traps in the Upper Cretaceous we called the Eagle Deep West Prospect and Eagle Deep East Prospect are now our Eagle Lower Turonian Prospect, our Eagle Upper Turonian Prospect and our Eagle Campanian Lead. The Eagle well we plan to drill in Q4 2010 will test each of the three Prospects, plus Leads in the Campanian and Maastrichtian. Gustavson has not estimated Prospective Resource for these Leads, nor for additional Leads on the Corentyne Offshore PPL that include the Wishbone Tertiary Lead, and two Leads in the Albian Carbonate, Kabukalli and Crabwood.
As interpretation proceeds and new data becomes available, our goal is to upgrade these five Leads to Prospect status. In the January 3, 2008 Report, the Low, Best and High Estimates for the Sum of Prospects were 1.13, 2.75; and 6.23 billion barrels respectively, a similar probability distribution of Prospective Resource as contained in the new Report,“ he stated.
Gustavson is a global consulting firm consisting of geologists, geophysicists, engineers, land and contracts managers as well as economists and financial experts who solve problems on all aspects of natural resource evaluations. This work ranges from the first steps of prospecting to design and assessment of production facilities. The release stated that Gustavson has acted independently in the preparation of the Report.
CGX has been wrapped up in the quest for oil here for over a decade. In June 2000, its rig was chased out of Guyana’s waters by Suriname gunboats as it was about to embark on drilling a well in the most promising area. This led to a diplomatic crisis between Guyana and Suriname and years of futile talks.
The deadlock was broken when Guyana took its case to the UN Law of the Sea tribunal and secured a ruling largely in its favour in 2007. Since then, expectations have been high over CGX resuming its oil search. It however signalled that it had to do further seismic work.
