Guyana Basin-the dat of reckoning approaches
A frontier basin attracting growing interest
The Guyana Basin is considered to be one of the most prospective exploration areas in Latin America, and indeed the world. Back in 2000, a USGS study estimated potential reserves of 15 billion barrels of oil and around 40 tcf of gas.
While this figure is considered by most observers to be optimistic, the presence of some of world’s leading E&P
companies in the basin suggests that its potential should be taken seriously. Indeed, a number of farm-in deals in 2009
have provided further momentum to the exploration efforts, with Shell and Total both picking up acreage. The addition of
these heavyweight companies to a cast already including the likes of ExxonMobil, Repsol YPF and Tullow Oil, lends the
basin’s potential further credibility.
The basin does currently produce commercial quantities of oil, but this is limited to the relatively modest onshore operations of Staatsolie, the state oil company of Suriname, which produces around 15,000 b/d of heavy crude from its Tamebaredjo Area operations. However, the offshore is where the real potential is believed to lie and this will be tested over the next two to three years, with a series of exploration wells planned.
High-risk but hopefully high reward
The prospectivity of the Guyana Basin has long been speculated on, particularly offshore. However, the offshore is very under-explored with just 36 wells drilled in total, none of which have been successful. The first offshore wells were drilled in the 1950s, and most drilling took place during the 1960s/1970s. The most recent wells were CGX Energy’s Horseshoe West well (2000) on its Corentyne Block in Guyana, and Repsol YPF’s West Tapir well (2008) on Block 30 in Suriname.
Historically, most the wells have tested structural targets. This is no surprise given the seismic imaging technology available back in the 1960s/1970s. However, the belief now is that much of the exploration potential across the basin lies in stratigraphic traps. There is still considered to be structural potential, but this tends to be located in the deeper waters.
Regional geology
The Guyana Basin is predominantly an offshore basin, located off the northeast coast of South America. It covers a total area of approximately 350,000 km2, and stretches across three ountries, Suriname, Guyana, and French Guiana (a Department of France, and therefore subject to French law, including its petroleum regulations)1. The Guyana Basin is an area that is open to private investment and offers attractive fiscal terms. In total, almost 184,000 km2 are currently licensed across the basin, representing approximately 52% of its total area.
The basin is considered to be part of what is known as the Equatorial Atlantic Margin play, which it shares with the countries of West Africa (Ghana, Liberia, Sierra Leone and the Ivory Coast) and has its origins back to when the African and South American continents started to drift apart. Companies have achieved tremendous exploration success on the African side of the Atlantic over the last few years (e.g. Tullow Oil’s Jubilee discovery), and the hope is that this success can be replicated on the South American side.
The source rock of the Guyana Basin is the Canje Formation of Cenomanian to Turonian age. Located offshore in the deep waters close to the Guyana/Suriname border, it is considered to be a world-class source rock. From there, hydrocarbons have migrated southwards in an updip direction towards the onshore, where the Tamebaredjo area fields in Suriname are located. Many of the wells drilled to date have had oil shows, indicating that oil has passed through the area.
Much of the potential across the basin is believed to exist in stratigraphic targets in Tertiary turbidite sandstones and deeper Cretaceous basin floor fan systems, analogous to the proven basins of Angola and Sierra Leone. There is also some structural potential. The biggest risk is that there is an absence of offshore traps, with the result that all the oil has migrated to the onshore area where it has either been trapped, or has already seeped away.
Prospectivity
Although the most recent offshore well was a disappointment (Repsol YPF’s 2008 West Tapir dry hole in Suriname), the
basin is still considered to hold multi-billion barrel and multi-tcf potential. At the same time, this is a frontier basin and there has been no offshore exploration success to date; therefore, any drilling campaign should be considered high-risk at this stage and indeed, not everyone views the basin with equal optimism. For example, Maersk Oil & Gas elected to relinquish its position in Block 31 in Suriname in October 2008. While the company was confident that discoveries would be made, it did not consider the production potential to be sufficiently high to justify staying.
Nevertheless, multiple opportunity types have been identified across the basin, ranging from small onshore prospects to
deepwater offshore targets that could yield a billion barrels or more. For example, numerous prospects have been
identified across the Guyane Maritime licence in French Guiana. These range from stratigraphic leads analogous with
West Africa, through to the large, Matamata structure that could yield up to a billion barrels (it’s worth noting that Tullow
Oil only rates the chances of success at Matamata at 10%). In Suriname, Murphy Oil has identified prospects that could
deliver hundreds of millions of barrels, while in Guyana, CGX Energy is very bullish regarding the prospects on its
Corentyne Block, which it claims could hold anywhere from a hundred to a billion barrels.
Operational challenges
The remote location of the basin presents several obvious challenges to any development, should exploration prove to
be successful. The oil industry across the area currently has only a minimal presence, largely restricted to the onshore operations of Staatsolie in Suriname. The combined population of the three countries within the basin amounts to only 1.5 million people and the logistical infrastructure does not exist to support a significant and sustained offshore drilling campaign. By way of example, all engineering planning and logistical support for the drilling of Repsol YPF’s West Tapir well in 2008 came from Trinidad & Tobago.
Furthermore, the industrial base of the countries is limited. While this is not a major issue in the event of oil being discovered, the lack of local market could cause problems for the monetisation of any discovered gas. Ideally, sufficient gas would be found to allow exports, either through LNG or even CNG.
The corporate landscape
There are currently 16 companies with positions in the 24 blocks that are currently licensed across the Guyana Basin, both onshore and offshore (see Chart 1). The full range of companies is represented, from the largest of supermajors down to the smallest of juniors, an indication of the different opportunities that are available
.
Net acreage position by company in the Guyana Basin
ExxonMobil 20%
CGX Energy 15%
Shell 13%
Staatsolie 12%
Tullow 10%
INPEX 8%
Repsol YPF 6%
Total 5%
Murphy 5%
Noble 3%
Petro-Hunt 1%
Others 2%
Total Acreage = 183,903 km2
Source: Wood Mackenzie
Supermajors
• ExxonMobil: It has the largest net acreage position in the Guyana Basin, through its 75%-operated stake in the Stabroek Block in Guyana. The blocks extends It extends across the entire deepwater maritime area. An undisclosed quantity of 2D seismic was acquired over 2008/2009.
• Shell: It entered the basin for the first time in February 2009, acquiring a 25% stake in the Stabroek Block. It followed this by taking a 33% stake in the Guyane Maritime Block in French Guiana from Tullow Oil. Shell has the option to acquire a further 12% at a later date.
• Total: Entered the basin in December 2009, acquiring a 25% stake in the Guyane Maritime Block from Tullow. The company has previously been active in French Guiana, drilling the shallow water Sinnamary-1 dry hole in 1975.
Internationals
• Repsol YPF: Operates two blocks in the basin. In Guyana it operates the Georgetown Block with a 45% stake. A 1,880 km2 3D seismic survey was completed in early-2009. Lower Tertiary and Upper Cretaceous turbidite targets have been identified and drilling could start in late-2010. In Suriname, it has a 40%-operated interest in Block 30, where it drilled the unsuccessful West Tapir well in 2008. The well targeted a Tertiary, tratigraphic prospect and although there has been no official announcement, it is thought that there were migration issues. The well was drilled
in 91 metres of water and cost US$60 million. Evaluation work is currently ongoing and a second well could be drilled in late-2010.
• Tullow Oil: The only company with a presence in all three countries in the basin, it gained a foothold through the acquisition of Hardman Resources in January 2007, which had positions in French Guiana and Suriname. Tullow expanded into Guyana in November 2008. Tullow has already achieved excellent exploration success with its offshore West African operations, and it is looking to replicate that success in a basin that shares a very similar geology.
In French Guiana, Tullow operates the Guyane Maritime Block with a 39.5% interest (it successfully farmed down its interest to Shell and Total during 2009). A number of targets have been identified. In the northwest lies the Matamata prospect, a high risk 4-way structural target with billion barrel potential. In the south, a number of stratigraphic-type leads have been identified, analogous to the Jubilee field in Ghana. A 3,000 km2 3D seismic
acquisition programme started in late-September 2009 over the southeastern part of the block.
In Guyana, Tullow farmed in for a 30% stake in the Repsol YPF-operated Georgetown Block in November 2008 (see
Repsol YPF). In Suriname, Tullow’s presence is restricted to its 36.5% stake in Paradise Oil, an onshore joint venture with Staatsolie (60%) and minority partners. Paradise Oil is exploring the Coronie and Uitkjiik Blocks, located on the coastal plain, and latest reports suggest that a discovery of around 7 million barrels has been made.
• Noble Energy: A partner with Repsol YPF in Block 31 in Suriname, it holds a 45% stake. It used to hold a 100% stake in Block 32, but it elected to relinquish this in early-2009, an indication that the basin prospectivity is limited in parts.
• Petro-Hunt: It holds the 15% balance in Block 31 in Suriname.
• Murphy Oil: It operates Block 37 in Suriname with a 100% stake. The company is currently processing the 1,500 km2 of 3D seismic acquired across the block. It has a two-well commitment and drilling is expected to commence in Q4 2010. A number of Tertiary and Cretaceous stratigraphic targets have been identified, with potential running into the hundreds of millions of barrels. The waters are shallow (generally less than 100 metres), allowing for the use of jack-up rigs. The average well cost is estimated at US$30 million.
• Inpex: It operated Block 31 in Suriname with a 100% stake. A number of four-way dip closures have been identified through the seismic work that had been carried out previously, and in June 2009, Inpex completed the acquisition of 1,500 km2 of 3D seismic, including the Aitkanti prospect, located in just 57 metres of water. An exploration well might be drilled over 2010/2011 and is expected to cost around US$50 million.
Small players
• CGX Energy: It is most exposed to the basin, with its entire business focused on Guyana. Onshore, the company
holds a majority stake in the Berbice Block, through the ON Energy joint venture (owned 62.5% by CGX Energy,
37.5% by local investors). However, exploration results on the block have been disappointing, with three dry holes drilled in 2005. It also has a 100% stake in three offshore blocks, Corentyne, Corentyne Annex and Pomeroon.
Initial activity will focus on the Corentyne Block, where over 500 square kilometres of 3D seismic has been acquired.
The main target is Tertiary stratigraphic turbidites, although there are also some shallower structural targets. Drilling could kick-off in late-2010 and CGX is currently seeking a partner. The company also holds a 25% stake in the Georgetown Block (see Repsol YPF).
• Staatsolie: The state oil company of Suriname holds the greatest number of licences in the basin. The heartland of the company’s operations is the Tamebaredjo Area, located on Suriname’s coastal plain. This area produces approximately 15,000 b/d of relatively heavy oil, the sole commercial production from the basin. The company has an active onshore exploration programme as it tries to expand its resource base by 64 million barrels by 2012. It is looking to expand offshore, and operates the nearshore, although no work has been carried out to date. Longerterm, the company may look to expand its regional presence.
There are a number of other, very small players in the area. The Australian duo of Key Petroleum and Portsea Oil & Gas are minority partners (each holds 1.75%) in the Paradise Oil joint venture in Suriname, alongside Staatsolie and Tullow Oil. Northern Petroleum and Wessex Petroleum are a pair of UK-based juniors that hold minority positions (each holds 1.25%) in the Guyane Maritime Block in French Guiana.
With exploration activities gathering pace, these companies are currently in negotiations with each other regarding the possibility of rig-sharing during the forthcoming drilling campaign.
Conclusion
The next few years are going to make or break the Guyana Basin as a new hydrocarbon producing province in Latin America. The bulk of the prospective acreage has been licensed to a wide variety of companies, including some of the world’s leading E&P players, and they are gearing up to kick-start exploration drilling. The risks are undoubtedly high and there has been no offshore exploration success to date. However, with analogies being drawn to the geology found offshore West Africa and the world-class discoveries that are being made there, hopes for the Guyana Basin are high.