Despite its two oil finds to date, the United Kingdom-headquartered Tullow Oil says it has not yet determined if the discoveries are in commercial quantities and wants Guyana’s expectations of it to be tempered until additional exploration and data analysis.
It also cannot make commitments on local content since the first two phases are not labour intensive.
“I should stress that they are great results but we are still at the beginning of our exploration campaign. I think it is important for us to be clear and I want to manage the expectation of Guyanese as well to say …we are still at the beginning of the process…we haven’t decided what to do yet,” Tullow’s Head of Communications, George Cazenove told the Sunday Stabroek in an interview last week. The second find for the company in less than six weeks was announced in a statement from the Ministry of the Presidency last month. Tullow’s first discovery, at the Jethro-1 was made in August and the Joe-1 last month.
The wells were drilled on the Orinduik licence by Tullow’s wholly-owned subsidiary Tullow Guyana B.V. Tullow Guyana B.V. is the operator of the Orinduik block with a 60 per cent share. Total E&P Guyana B.V. holds 25 per cent with the remaining 15 per cent being held by Eco (Atlantic) Guyana Incorporated.
Head of the Department of Energy Dr. Mark Bynoe has said that the second find, made in the Upper Tertiary play type, further de-risks the western area of the Orinduik block, where a significant number of Tertiary and Cretaceous age prospects have been pinpointed.
Bynoe had stated, too, that Tullow and its partners will first evaluate data from the Joe-1 discovery alongside data from the Jethro-1 discovery and await the results of the Carapa well, to be drilled by Spanish company, Repsol in November to determine the appropriate follow-on exploration and appraisal programme.
‘Haven’t decided’
Cazenove reiterated this point but added that in 2020, the company will be looking to see what else is around the Orinduik licence. “We have committed to drilling in 2020 but we haven’t decided what the programme will be. Before you drill your wells, you try to ensure that your footprint is as small as possible because if you are unsuccessful, all that money is gone, it is gone. So you try to keep as small a footprint as you can …If we hadn’t been successful with these two wells, we probably might have drilled next year but we might have (also) decided to exit as we have with other licences. That is what it takes; you drill two wells, you take stock of what you want to do next year and then plan for that.”
“Next year will be about exploration still. We are very much in that early phase. We are still in that introductory phase,” he added.
‘Not overnight’
And while the company plans to establish its first shorebase here next year, Cazenove said that local content capacity expectations have to be addressed since moving from exploration to production is a process.
He pointed to Ghana, West Africa, where the company believes operations are similar to Guyana, saying that it “was not built overnight” and requires locals starting small, training themselves and working up to meet to meet oil and gas supply chain demands.
“Tullow was the first oil company to come in Ghana. We did the first oil developments in Ghana …What we are seeing is that more small and medium-sized companies, that have grown up with Tullow in the past ten years are now able to work with those bigger companies. It is something we are committed to, it takes work, and it is not overnight. When it comes to local content, it is not an overnight fix it takes time for an economy and businesses to get used to the requirements of a major development and all the works that comes with that.
“We have been in Ghana for 12 years and for companies to build up their oil and gas specific services, it takes time. From Tullow’s perspective, local content we are very committed to, it is something we believe in very strongly it would take a development (of an oil well) for that to really happen in a major way. We are just not at that position just yet,” he added.
But unlike Ghana, and to Guyana’s advantage, this country already has a five-year head start in building local content capacity because of ExxonMobil’s work here. If Tullow is to start development here, it would then be in a position to complement those works, even as it positions itself to diversify the sector and to also help small and medium size enterprises to come up to meet the standards which it requires, Cazenove believes.
But he wants to make clear the company has not decided on development plans.
“We are not preparing … a development. We are not at that stage in our programme in Guyana. We have had a great start and we are very excited. We are not planning for development that is not where we are at. We are still in the exploration phase. We are still looking to develop what resources we got. We want everyone in Guyana to understand that we have made a great start to our exploration campaign; two successes and we are very happy about that. We remain at the start of our life in Guyana. So these two successes are really important… terrific and we are really excited but we need to do more work next year, more exploration work, more appraisal of those two discoveries to decide on what we have got. If that goes well, then we can start talking about development but we are not at that stage yet”, Cazenove stated.
He added, “It is not as simple as drilling and saying ‘great’, it is a development. You have to do more technical work. You can’t just drill a well and say ‘that is a massive development’ that is not how it works.
“We are confident that we have a future here in Guyana because we think the potential is massive, but I can’t stress enough that we are still at the start of the campaign,” he said.
French Guiana
Making reference to the importance of analysis of the block before announcing commitments, Cazenove pointed to the company’s operations in French Guiana back in 2011.
“I take you back to a well we drilled in French Guiana in 2011, called the Zaedyus Well. It was an amazing discovery; a fantastic well which found a huge column of oil beneath the surface. And yet when we did the follow up drilling, we found nothing. We could never develop that oil field because we could not find more oil to make it commercial. We are not a cautious company but we are careful,” he stressed.
“I don’t want to mismanage people’s expectations saying this is a guaranteed oil field in five years’ time. At the moment we can’t say that. When you look at the Jethro and Joe release, it doesn’t mention the word commercial. It simply says that we have made an oil discovery. This is where we found it and this is where we drilled it down. We would think of how to follow up with our partners and the government. That’s all they are saying. It is a very methodical process to decide and define the oil fields you may or may not have,” he added.
In the meantime, the company still has corporate social responsibility plans (CSR) for the country and will be announcing those “in the weeks and months ahead”.
“Wherever we work in the world, we make CSR commitments, even if it is exploration and we are not successful we will do CSR programmes. In Guyana, when we drilled back in 2012, the Jaguar well we used to have a programme called ‘The Tullow Group Scholarship Scheme’ and we had some Guyanese scholars that went to the UK under that scheme because we invested in Guyana at the time. So we will have CSR programmes over the next few years while we are doing the exploration programme,” Cazenove said.
