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February 04, 2005
Oil Prospects Have Guyana All Fired Up
David Rendwick, The Trinidad Guardian

'So, since offshore oil potential is ruled out for the time being, you can imagine how excited the Guyanese are by the possibility that they may find oil onshore instead and that is where the resumed effort to discover hydrocarbons in one of the regions poorest countries is now to be concentrated.'

One could not blame the Guyanese for thinking that someone up there does not like them when constant rainfall, disastrous flooding and the evacuation of thousands of people all combine to smother what should be the real focus of attention in that luckless Caricom country these days - the resumption of the 89-year-long search for commercial oil deposits.

This was due to kick off any time now and it would not be at all surprising if the unfavourable weather situation had delayed the eagerly-awaited event.

As my three or four readers will know, Guyana , Caricom's headquarters territory, suffered a major setback when it tried to sink an exploratory oil well in June, 2000.

This was to target a prospect called Eagle in the Corentyne block, 135 kilometres offshore in the Atlantic Ocean. But before the CE Thornton jack-up rig could go into action, a gunboat from fellow Caricom state Suriname, appeared on the horizon and ordered the rig to depart, on the grounds that the waters in which it was operating were really part of Suriname's exclusive economic zone (EEZ), not Guyana's.

Suriname contended then, and is still contending, that the maritime boundary line between the two countries extends from the Corentyne River at an angle of ten degrees to the east, not 33 degrees, as Georgetown insists. That dispute is now before Unclos, to which it was referred by Guyana after it had apparently reached the limit of its patience with the non-existent pace of bilateral discussions.

So, since offshore oil potential is ruled out for the time being, you can imagine how excited the Guyanese are by the possibility that they may find oil onshore instead and that is where the resumed effort to discover hydrocarbons in one of the region's poorest countries is now to be concentrated.

The company involved is actually the same one that was frustrated in the Corentyne block, CGX Energy of Canada or, rather, its new Guyana subsidiary, ON Energy Inc, in which Guyanese investors themselves hold 38 per cent.

CGX's President and CEO Kerry Sully, a Canadian chemical engineer, has shown remarkable faith in Guyana's oil potential. Far from being deterred by the gunboat incident and the subsequent Horseshoe dry hole in the Corentyne block outside the disputed area, he has gone on to acquire the Corentyne Annexe Block, the Pomeroon block and a share in the Georgetown block.

Nothing has actually happened in any of that acreage for the cogent reason that it is all, with the sole exception of the Corentyne Annexe block, held captive to boundary disputes with either Suriname or Venezuela. Which only leaves the on-shore areas as the last resort for an exploration company like CGX and the Berbice block on land is where drilling was due to commence around this time.

Coming back on shore in a sense, brings Guyana full circle in its exploration effort because it was on land, not surprisingly, where its oil search first began.

You will not be particularly taken aback to learn it was a Trinidad company, Trinidad Leaseholds Ltd, which was awarded the first oil prospecting licence, back in 1938 (though 'freelance prospectors' had started drilling in 1916, hence the 89-year time frame mentioned earlier) and it is a Trinidad company, Well Services, owned by the Brash family, that is operating the rig for the current Berbice drilling programme.

Following a 190 kilometre 2D survey over the 764,500 acre block, eight separate drilling targets were identified of which five will be drilled immediately (weather and flooding permitting, of course).

The exercise will cost around US$7 million, which Sully describes as "high" because of the need to "mobilise and de-mobilise drilling services into Guyana and the challenge of transporting drilling equipment and services to the drilling locations, some of which are located a significant distance from the road network."

Like all experienced oilmen, Sully has entered a caveat about the likely outcome of the effort in Berbice.

"Drilling to date in Guyana, both on and offshore, has resulted in dry holes, so the probability of success is low," he warns.

But he did point out in a recent conversation with yours truly that "the seismic showed us we have three or four potential zones per well, so we have multiple chances."

Wells drilled in the Tambaredjo and Calcutta fields next door in Suriname, which is separated from Guyana by the Corentyne river, have generally not penetrated beyond 1,000 feet.

Since the Berbice wells will be deeper, varying between 4,000 to 6,000 feet, Sully notes that "we have about three times as much sediment as they do in Suriname, which is what gives us the potential for multiple zones as we go vertically."

It was Suriname state oil company, Staatsolie's success with both Tambaredjo and Calcutta that tipped the scales in favour of CGX going onshore.

"After seeing the tremendous work Suriname had done we concluded that there were probably some good geologic elements onshore Guyana too," says Sully.

If the Berbice block finally provides the Guyanese with the oil they have long coveted, Sully says this will have the side benefit of making it easier for him to fund his offshore blocks once the border dispute with Suriname, at any rate, has been settled. (Venezuela's claim still hangs in abeyance, though President Chavez has made some encouraging sounds recently).

He notes that the majority of the offshore acreage in which CGX has an interest is, in fact, outside the waters in dispute.

Even if Unclos declared in favour of Suriname, "we would still have a large portion of the Corentyne block within Guyana territory and would then be in a position to decide on our next move."



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