CGX Energy Inc V.OYL

CGX spuds 1st well in Corentyne Block

[Devanand1]

Canada-based oil company CGX Energy Incorporated, which was given a November 2021 deadline to drill its first well in the Corentyne Block by the Government of Guyana, has finally spudded its first exploration well.

The MODU MAERSK Discoverer

According to a Maritime Administration Department (MARAD) notice, CGX would have started drilling on the Kawa-1 well as of July 2 in the Corentyne Block, within Guyana’s Exclusive Economic Zone (EEZ).
The notice went on to inform that the MODU MAERSK Discoverer will be conducting the drilling activities, 90 nautical miles from the coast of Guyana and over an area of 4.7 square nautical miles.
The drilling, MARAD informed, will conclude on December 15, 2021. As is usually the case with offshore oil exploration sites, mariners were advised to stay clear of these vessels and to exercise extreme caution when in the vicinity.
Last year November, CGX Energy Incorporated had announced that the Government, following discussions on the drilling delays in the Corentyne oil block, had agreed to give CGX a one-year extension until November 27, 2021, by which time they are expected to commence drilling in the Corentyne Block.
Back in May 2019, the former Government had approved a Strategic Joint Venture between CGX Energy Inc and Frontera Energy Corporation to farm into two shallow-water offshore Petroleum Prospecting Licences for the Corentyne and Demerara Blocks – both of which are adjacent to ExxonMobil’s Stabroek Block, where multiple discoveries have been made.
The farm-in joint venture allowed Frontera to acquire a 33.333 per cent working interest in the two blocks. The agreement should have seen CGX’s Utakwaaka well in the Corentyne Block being drilled by November 27, 2019, with an additional exploration well being drilled by November 27, 2022.
In the Demerara Block, an exploration well was supposed to have been drilled by February 12, 2021, with a further exploration well being drilled by February 12, 2023. But with CGX not having started its drilling at the time, the Government had expressed concern over the situation. This is even as a number of new companies have expressed an interest in Guyana’s oil blocks.
Additionally, the company had also revealed its decision to relinquish 24.96 acres of land at the estuary of the Berbice River that was earmarked for its deep-water project, following negotiations with the Government of Guyana.
CGX and Frontera Energy had commissioned an independent report which had revealed that they are potentially sitting on 4.9 million Barrels of Oil Equivalent (BOE) in the Demerara and Corentyne, Guyana oil blocks under their control.
However, the report had hastened to add that there is no certainty that the company can recover the oil or that it is even commercially viable. According to the report, there are a total of 32 prospects in the two blocks, inclusive of 27 in the Corentyne Block and five in the Demerara Block.
These prospects potentially have 4.940 million BOE un-risked and 884 million BOE in them. An un-risked prospect, however, is one where the volume of oil is predicted on the basis that everything goes as planned and the oil is commercially viable and recoverable. The report makes it clear that it cannot give such certainty.