Home' Trinidad and Tobago Guardian : May 16th 2013 Contents MAY 2013 • WEEK THREE www.guardian.co.tt BUSINESS GUARDIAN
NEWS | BG9
Speaking at an energy conference
in the Dominican Republic at
the end of January 2013, I was
impressed by the urgency that
Dominican officials and the
CEOs of energy companies place
on finding new sources of energy for the country
in deepwater exploration.
They are not alone!
At present 14 countries in the Circum-
Caribbean region, including the Guianas, have
opened their territorial waters to deepwater
exploration for oil and gas. A number of inter-
national oil companies (IOCs) and state com-
panies are rushing to tie up acreage in bid rounds
in the expectation that their investments will
eventually pay off.
In the past, only Venezuela and the islands
of T&T have exploited, with limited success, the
deepwater (ranging from 1,000 to 4,000 metres).
Today the technology and improvements in
platform construction make it possible to drill
and recover oil and gas from these depths. But
the reality is that so far the dash for these "frontier
provinces", with one or two notable exceptions,
has produced nothing more than dry runs.
Here is a snapshot of the state of play at the
moment starting from the southern Caribbean
and looking north.
French Guiana is the country that inspired
the Caribbean current momentum in deepwater
exploration. It began following the discovery of
the "Zaedyus" well by United Kingdom explo-
ration company Tullow Energy in late 2011. The
Zaedyus well substantiated the theory of Tullow
geologists that the geological features offshore
Ghana (where the huge Jubilee field had been
discovered in 2007) are replicated on the opposite
side of the Atlantic, in the now-named
Guyana/Suriname/French Guiana basin. French
Guiana is actually the hottest of the frontier
provinces at the moment. The P10 (ten per cent
probability) reserve estimate in Zaedyus is 840
million barrels of oil equivalent (boe). The outlook
for French Guiana seems excellent.
Following on the Zaedyus success IOCs have
rushed to tie up acreage. Norway s Statoil Hydro,
Murphy Oil, Kosmos Energy, and Chevron have
taken blocks or farmed into existing blocks. As
of now there is no deepwater exploration but
Tullow expects to drill the first well in 2014.
Suriname s oil production is a mere 16,000
barrels per day from three onshore wells under
the control of the state company Statsolie. Can
French Guiana s success be replicated in Suri-
A number of offshore deepwater blocks are
licensed in Guyana. Some of the companies
involved are Pacific Rubiales (Canada), CGX
Energy, Tullow, Shell, Repsol, Exxon Mobile and
Anadarko. Obviously, the "Zaedyus" stimulus
is evident here. The bad news is that exploration
so far has produced only negative results. Two
wells (Jaguar 1 and Eagle 1) have come up dry.
But hope springs eternal.
T&T is the most mature oil province in the
Caribbean with 105 years of production. Deepwater
exploration is ongoing. There are 39 deepwater
blocs (12,000 feet or more). In 2006, bpTT sank
the Ibis Deep well to 19,068 feet subsea in the
south east coast tapping the crustaceous horizon.
EOG Resources sank its own deep well, Pelican
Deep, to around 17,000 feet, in the same block
Neither found the productive zones for which
they were looking. Estimates today are that at
least 500 million barrels of oil equivalent exist in
the southern basin deep water as well as substantial
reserves of natural gas. In 2012 T&T had a very
successful deepwater bid round. The majority of
the blocs were taken by BHP Billiton. A new deep
water bid round begins in April 2013. The potential
for success in the deepwater is good.
The Dominican Republic has large areas of
sedimentary basins but a very sporadic history
of exploration since 1904. In February 2012
Gazprom International SA announced that it
would begin offshore oil and gas exploration in
the deep water. In the meantime, the country
has tried to improve its energy mix through
renewable energy projects and incorporating
natural gas (most of it imported as LNG from
T&T). It is trying to change its status from being
a market for energy to a producer of energy.
Only one well has ever been drilled in the
Barbados deep water--by ConocoPhillips in
2001, 70 miles off the south west coast. It was
dry. Now BHP Billiton is about to try taking two
blocks in the Barbados deepwater. It is very deep
water and the potential is as yet unclear.
The United States Geological Survey has esti-
mated a 95 per cent probability of finding 554
million barrels of oil offshore The Bahamas; a
50 per cent probability of 1.59 billion barrels and
a five per cent probability of 4.3 billion barrels.
The Previous government had declared a ban on
offshore drilling following the Macondo well
blowout in the Gulf of Mexico on April 20, 2010
in which 11 workers on the Deepwater Horizon
drilling rig operated by BP lost their lives. Bahamas
Petroleum (BPC) is mandated to commence actual
exploration by April 2013, but the government
is weighing environmental concerns and the pro-
tection of its tourism industry before deciding
if it will permit exploration for oil and gas.
Cuba has so far proved to be a disappointing
deepwater "frontier province." It has identified
59 blocks in its exclusive economic zone (EEZ),
and there is significant hydrocarbon exploration.
However, Repsol, Petronas, Gazpromneft and
PDVSA all drilled dry (or not commercially fea-
sible) exploration wells during 2012.
Venezuela s PDVSA and Angola s Sonangol
were expected to drill wells again by the end of
2012 but the results have not been publicised.
Cuba is the second largest oil producer in the
island Caribbean (after T&T) producing 52,000
barrels per day from land and shallow water.
Cuba s most promising areas appear to be towards
the Gulf of Mexico and Southwest coast of Flori-
da, and the foreland basin from the
Yucatan Straits to the Western Florida Straits.
Estimates are that Jamaica has Reserves poten-
tial of about three billion barrels in three blocks
off the southeast coast. However, no commercial
levels of hydrocarbons have been found. When
23 blocks were put up for bids in 2010-2011, no
acceptable bids were received. It will offer some
again in the near future. To this point, the finish
line for Jamaica seems very distant.
In conclusion, some of the takeaways from this
brief snapshot are as follows:
A brand new oil province has been opened
up in the Guianas basin sparking a dash for deep
water "frontier" exploration in all countries in
the wider Caribbean. David Renwick, the eminent
founder of Caribbean energy journalism, who
has written widely on this topic, suggests that
by some estimates there is a half dozen more
Zaeydus-type traps adjacent to French Guiana.
Neighbouring countries are hopeful.
The geological hydrocarbon connection prob-
ably extends across the mid-Atlantic to offshore
northern South America. The Caribbean region
could become a "hot spot if other countries
experience the same success as French Guiana.
But all we have seen is little success and no
At another level, the interests relating to tourism
and the environment in all of the countries will
have to be negotiated and reconciled.
The potential of the new provinces has been
a boost for T&T energy services expertise in the
Guyanas and in other potential frontier provinces
such as Grenada. The lesson here is that even
if some countries do not find oil and gas, the
demand that the sector creates in the region for
offshore services, transhipment, storage refining
and downstream spinoffs is huge.
In the event that more substantial resources
are discovered in the region, will these windfalls
be a blessing or a nightmare? Will newly enriched
countries be able to avoid the "resource curse"
in the way in which Norway, Ghana, Alaska or
T&T (to name a few) have done? Can they expe-
rience the potential but also overcome the chal-
lenges presented by associated political and tech-
nological risks? Can a proper regional energy
policy provide some safeguards for energy secu-
rity? That is a debate for another time before
we can see the finish line.
Prof Anthony T Bryan consults on energy geopolitics
and energy security for US-based political and economic
risk firms. He writes frequently for international energy
and business publications. He is an associate of the
Trinidad-based Association of Caribbean Energy Spe-
WHAT'S AT THE FINISH LINE?
The dash for deepwater oil and gas as in the Caribbean:
ANTHONY T BRYAN
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