Latin America: Great expectations

Elaine Maslin

March 1, 2016

Brazil and Mexico are not the only games in town in Latin America. The deepest water well ever drilled is lined up for offshore Uruguay and Exxon is set to test Liza offshore Guyana. Elaine Maslin reports.

The newly minted Maersk Venturer drillship. Photo from Maersk Drilling.

International explorationists’ eyes will be on South America this year. The region was home to the biggest offshore oil discovery last year – ExxonMobil’s Liza discovery offshore Guyana. This year the world’s deepest water oil well is set to be drilled by Total offshore Uruguay.

But, while these frontier areas are causing an international stir, for many it will remain just that, a stir, as spending remains under tight reins and frontier exploration an unpopular topic for those setting budgets, says Julie Wilson, upstream analyst at Wood Mackenzie in Houston.

“The main problem these small countries face, and the companies in them, will be getting budget to drill, especially in areas that are high risk. Frontier drilling is out of favor with the people setting the budgets. But, last year it was the frontier wells that caused the biggest excitement.”

Uruguay

You don’t get much more frontier than Total’s planned Raya (meaning stripe in Spanish) exploration well, offshore Uruguay. It will not only be the first deepwater exploration well offshore Uruguay, but also the deepest water exploration well ever drilled, Wilson says. Total is operator with 50% interest. Its partners are ExxonMobil (35%) and Statoil (15%).

Uruguay has three offshore basins: the Punta del Este Basin, in the west, the Pelotas Basin to the east and the Oriental del Plata Basin to the south in ultra-deep waters. The only two offshore wells drilled in the offshore were in the Gaviotin-1 and Lobo-1 wells in the Punta del Este Basin in 40-50m water depth by Chevron in 1976. Both were declared dry.

Total will be testing the Raya exploration prospect using the Maersk Oil’s newbuild Maersk Venturer drillship in block 14, which covers 6690sq km in the deepwater Pelotas basin, about 200km offshore, in the South Atlantic Ocean. 

The block, which was awarded to Total in 2012, and was the only commitment well as part of the second offshore licensing round, is in 1850-3500m water depth. The well will be in 3400m water depth, Wilson says.

“All eyes are on this well because it is very high-risk,” she says. “The structure looks enormous, but it is if all the elements are there to make it work.”

Uruguay currently has no domestic production according to the International Energy Agency (IEA), but following Uruguay’s second licensing round in 2011-12, a string of operators were awarded deepwater blocks. They were: BP (areas 6, 11 and 12), BG Group (areas 8, 9 and 13), Total (area 14), Tullow Oil and Inpex (area 15). However, BP has since been reported to have relinquished its areas, which could reappear in the next round. YPF also operates area 3, where it had been a partner with Shell, which has also pulled out, and GALP. Area 3 was awarded in the 2009 round. Going to press, Statoil, which took a stake in area 14 early February, agreed to acquire a stake in Tullow’s area 15.

About 38,500sq km of 3D seismic has been acquired offshore Uruguay between 2012-2014, by PGS, WesternGeco and Polarcus. In addition, 13,000sq km of 3D CSEM has been acquired by EMGS. Uruguay Round 3 is due to be launched this year, offering shallow water areas and some deepwater frontier areas, further offshore than those already awarded.

Guyana

Fred Olsen’s Bolette Dolphin drillship, which is drilling offshore Colombia for US independent Anadarko Petroleum. Photo from Fred Olsen.

Attention is also picking up offshore Guyana, where, in 2015, ExxonMobil announced what Wood Mackenzie described as last year’s biggest oil find.

Guyana has never had a commercial petroleum discovery, although there are a number of wells that had oil and gas shows both onshore and offshore. “For the past 15 years, Guyana has been locked up by ExxonMobil,” Wilson says. “They have the giant Stabroek block, which is that vast majority of the acreage.”

Exploration offshore Guyana along the border with Suriname was also on hold from 2000 to 2008 during a border dispute. Similar issues emerged between Guyana and its other maritime border neighbor Venezuela, resulting in a seismic vessel contracted by Tullow Oil being run-off by the Venezuelan navy. (OE: January 2014).

ExxonMobil’s Liza-1 well, in the Stabroek block, encountered more than 295ft of high-quality oil-bearing sandstone reservoirs. It was the first well on the 6.6-million acre Stabroek Block, 120mi offshore Guyana, and drilled to 17,825ft. Wood Mackenzie’s estimate for the field’s resource is about 400 MMbbl, but it could easily be a lot more than that, Wilson says. Excitement around the find was encouraged by a photo of a well log being leaked. Guyana Minister of Governance Raphael Trotman estimates the reservoir probably holds in excess of 700 MMbbls of oil. “Liza was the biggest oil discovery made last year in the world. The upside is very big,” Wilson says. But, it’s complicated geology, Wilson says, with overlapping fans.

After waiting 15 years to drill on its Guyana block, ExxonMobil was expecting to start drilling an appraisal well on Liza discovery as we went to press. “It is up against the clock,” Wilson says, because its license expires in 2018, when it will need to decide which areas to relinquish. She expected 2-3 appraisal wells on Liza will be drilled with an exploration well elsewhere on the block.

Esso Exploration and Production Guyana (ExxonMobil) holds 45% interest in Stabroek. Hess Guyana Exploration holds 30% and CNOOC Nexen Petroleum Guyana holds 25%.

Others with interest offshore Guyana include: Repsol (Kanuku block, partnered with Tullow), Anadarko (Roraima block), Ratio Oil Exploration (Block B) and CGX Resources (the Demerara and Corentyne blocks and Berbice).

BGP was shooting 3D over 3100sq km for CGX in 2014, with results and prospect identification expected last year. CGX has until July 2016 to drill its first commitment well, expected on Corentyne, but it’s yet to be seen if it has the cash.

In January 2016, Tullow Oil signed a Petroleum Agreement for the Orinduik block offshore Guyana. Orinduik covers 1800sq km in shallow water, 170km offshore Guyana in the Suriname Guyana basin, close to the Liza discovery. It is understood that other companies are also negotiating for concessions in the offshore Guyana area.

Fred Olsen’s Bolette Dolphin drillship; Photo from Anadarko

 

Suriname

Neighboring Suriname, south of Guyana, is yet to make its mark, but there are interesting players in the basin who could quietly ramp up their exploration activity, Wilson says. In Suriname, Tullow has blocks 47 and 54, Murphy/Petronas has block 48, Kosmos/Chevron blocks 42 and 45, Petronas/RWE block 52, Inpex/Tullow has block 31 and Apache/CESPA block 53. But, it could depend on cash being available for exploration.

Colombia

Despite being a large oil exporter, there was only one operating field offshore, the large Chuchupa gas field in the Guajira basin, operated by Chevron, according to a 2014 PWC report.

However, that could change as Anadarko is currently shooting phase II of the largest ever seismic survey off Colombia.

Interest picked up in the country when, in December 2014, Petrobras made the Orca-1 discovery, in the deepwater of Tayrona block offshore Guajira. It wasn’t actually what it had been looking for, which has meant geological models have had to be revisited, which could have delayed follow-up drilling on the find, Wilson says.

Then, last July, Anadarko made the “play-opening” Kronos-1 well discovery, in the Fuerte block, 53km offshore, at 3720m depth, in 1584m water depth, in the south Caribbean area, according to 50% partner Ecopetrol. The well, drilled using the Bolette Dolphin, encountered 40-70m net pay thickness of gas bearing sandstones. Wood Mackenzie estimates Kronos-1 to contain some 176 MMboe. Anadarko was also testing a deeper target.

The Bolette Dolphin then drilled the Calasu-1 well in the Fuerte Norte Block, 145km north east of Kronos-1. It encountered non-commercial quantities of pay, according to Anadarko.

In Q4 2015, Anadarko completed the Esmerelda survey phase I, in the Colombian Caribbean, covering 16,000sq km over the Col-1 and Col-2 blocks, using CGG’s Oceanic Sirius and Oceanic Vega vessels. Acquisition of Phase II of the Esmeralda 3D survey, approximately 13,000sq km was expected to start this quarter (Q1 2016).

Anadarko operates and has 50% interest in the Fuerte Norte, Furte Sur, Purple Angel, Col 5 and Ura 4 areas, and 100% interest in the Col 1, Col 2, Col 6 and Col 7 areas.

Ecopetrol (Colombia’s national oil company), Petrobras, Repsol, Shell, Equion and Statoil are also involved in areas offshore Colombia. Wilson says she expected Repsol to drill in shallow water offshore Colombia this year. In fact, Repsol is also looking at acreage offshore Aruba, an island offshore Venezuela, not far from Orca and with a similar petroleum system to Perla, offshore Venezuela, as well as Suriname, Guyana and Colombia.

Elsewhere in South America, Venezuela has potential but is unlikely to offer much activity offshore, due to current difficulties investing there.

Nicaragua could be of interest, Wilson says. The country, south of Honduras, has been a focus for BG Group. Noble Energy drilled offshore Nicaragua in 2013, and while it was unsuccessful, interest has remained with a number of blocks awarded to Shell, which now owns BG Group, and Statoil, last year. Statoil’s four licenses lie off the county’s Pacific coast, covering some 16,000sq km in the Sandino Basin.

Deepwater offshore Trinidad could prove an active area, with BHP Billiton eying potential. The company shot the largest ever 3D survey by a non-national oil company at the time offshore Trinidad. While it is a big gas province – BP and BG Group’s operations there fuel huge LNG trains – Wilson thinks BHP Billiton, which also has gas production there already, might be looking for oil.

Tullow Oil started a 2D seismic acquisition campaign offshore Jamaica in January, using BGP’s BGP Challenger. The Bahamas has also been a focus for exploration, but Wilson thinks it is unlikely any time soon.

Of course there is also the Falkland Islands, or Malvinas according to Argentina. Read more about Premier Oil’s plans for the Sea Lion discovery here.