A Southern Caribbean Deepwater Vision

There are currently four drillships operating in the waters of Suriname, T&T and Guyana. All four are exploring for hydrocarbons in water depths > 1000 meters. In June 2018, BHP Billiton resumed deepwater exploration drilling in TTDAA 5 when it spudded the Victoria 1 well. BHP has reported that, Victoria 1 encountered hydrocarbons (most likely natural gas) but apart from that not much more is known.

BHP’s exploration campaign stands on the back of a 20,199 square kilometre 3D seismic survey which, at the time of its completion in 2015, was the largest ever done by an International Oil Company. It has since been eclipsed by a 30,000 square kilometre survey done by Anadarko in Colombia. The current exploration campaign in T&T also stands on the back of nine deepwater production sharing contracts all signed between 2012 to 2014 during which period the Ministry of Energy ramped up efforts to attract investment in deepwater exploration. T&T’s deepwater province is based on an upper Cretaceous source rock and Miocene reservoirs in the southern blocks and possible Oligocene reservoirs in the blocks to the North East of Tobago.

The 2016 Le Clerc discovery proved that there are significant hydrocarbon resources in T&T’s deepwater. The question of course is commerciality. Commerciality requires large discoveries. In the Eastern Mediterranean there have been large discoveries of natural gas in deepwater, Egypt and in deepwater, Israel. In 2015, the Italian company Eni discovered the Zohr field in Egypt. That field has 30 trillion cubic feet of natural gas in place. Production from Zohr commenced in a rapid two and a half years. Prior to production from Zohr, Egypt’s natural gas output was in decline and they had gone from exporting to importing LNG.  Today, the conversation in Egypt has flipped. Egypt is once again talking about exports of LNG. There are many parallels between Egypt’s natural gas industry and ours. Let’s hope the parallels continue.

Closer to home what is happening in Guyana is well known. There are now two drillships operating simultaneously in Guyana’s deepwater. In the last three years ExxonMobil has drilled fifteen wells in Guyana’s Stabroek Block. Some of these wells have been exploration wells and some have been appraisal wells. Only two out of Exxon’s fifteen wells have been unsuccessful. The outcome, thus far, has confirmed over 4.0 billion barrels of oil equivalent in recoverable reserves and more will be added. Putting that into perspective, Trinidad and Tobago has produced 8.9 billion barrels of oil equivalent from 1908 to 2017.

ExxonMobil will commence oil production in Guyana in March 2020 at a rate of 120,000 barrels per day. That rate will ramp up to 500,000 barrels per day by 2025 as two other phases (Liza 2 and Payara) are brought into production. Norway’s Rystad sees the production increasing to around 700,000 per day by 2030. The numbers related to Guyana are all mind boggling. The country is on the path to joining Qatar and Kuwait as one of the highest producers of oil on a per capita basis.  By comparison, T&T produces 670,000 barrels of oil equivalent (boe) per day 90% of which is natural gas.

Suriname is also actively exploring its own deepwater but has had a string of disappointing exploration wells. Suriname shares the Guyana Basin with its neighbours French Guinea and Guyana. In recent months Tullow and Kosmos have drilled exploration wells Araku and Ananpai respectively but both have been unsuccessful. It is my view that it is just a matter of time before Suriname discovers commercial quantities of oil and gas in its deepwater. Exploration efforts are being led mainly by Kosmos, Tullow and Apache but ExxonMobil and Statoil of Norway are also lined up to explore in the future. Woodmac has estimated the potential recoverable reserve in Suriname to be 1.6 billion barrels of oil.

The level of exploration activity in the Southern Caribbean and the discoveries in Guyana, French Guinea and Trinidad point to the emergence of a regional deepwater province that possibly stretches from Barbados to French Guinea. The exploration and development of petroleum in this region will change the industry as well as the societies and economies of host countries. We as an industry must be aware that this is a regional event. It will require skills and services that are largely, now, available in T&T but can be quickly developed in Guyana and Suriname. It will require policy, regulation and infrastructure. The infrastructure required to support the Guyana deepwater industry is already taking shape. As the new regional industry emerges, we must think about how T&T can emerge as the regional maritime services hub. We have the natural advantages of the Gulf of Paria and infrastructure at Labidco, Chaguaramas, Point Lisas and Galeota.