The Caribbean - An Upcoming Region in the Hydrocarbon Industry?

The Caribbean - An Upcoming Region in the Hydrocarbon Industry?

Caribbean Overview

The exploration and production of hydrocarbons in the Caribbean has been somewhat overlooked in recent times despite its close proximity to major oil producing areas such as Venezuela, Colombia and the Gulf of Mexico. However, with recent significant discoveries being made in the region and attraction from companies such as ExxonMobil, BP and Equinor, the Caribbean is looking to put its name on the map as more than just a holiday destination.

During my 10-week internship with MapStand, I have worked with and developed spatial data to help provide location intelligence to the exploration and production industry. The Caribbean was a particular region that I researched and with this blog I aim to showcase some of the relevant and new developments that have taken place in the Caribbean region, boosting its recognition in the world of petroleum.

Cuba Licensing Round 2018

Cuba’s national oil company, La Union Cuba-Petróleo or CUPET, are introducing a formal bid round at the 2nd Cuba Energy, Oil and Gas Conference due to take place in Havana this December. The bid round comes just after the completion of BGP Marine’s 2D multi-client seismic survey carried out offshore in the Cuban Exclusive Economic Zone. Over 25,000 km of pre-stack time migration (PSTM) and pre-stack depth migration (PSDM) data are available from BGP. The event includes a data-room and workshops to showcase the newly acquired data ahead of the bidding round. Current licences are held by companies such as Melbana and CUPET. The bid round will focus on Cuba’s offshore licences in which six wells have been drilled by the likes of Repsol and Petronas.

Cuba

Cuba map showing the current and open licences for the upcoming bid round and the 6 offshore wells (Source: MapStand Limited)

With new prospects having been identified in Block 9 such as Alameda, Zapato and Piedra, Melbana Energy has announced three exploration wells to be drilled by July 2020. Lying within a proven hydrocarbon system and within close proximity to other discoveries including the Varadero field with over a billion barrels of original oil in place, Block 9 shows the prospectivity of Cuba’s oil and gas resources ahead of the upcoming bid round.

Failed Bahamas Farm-Out

Bahamas

BPC current licences in the Bahamas (Source: MapStand Limited)

Bordering Cuba's NE median line lies the Bahamas. A review carried out by Moyes & Co proposed that there is between 1.6 and 3.3 billion barrels of oil that could be recoverable from the Bahamas' licences. Back in May this year, Bahamas Petroleum (BPC), announced they had entered a confidentiality and exclusivity agreement with a ‘major international oil company’ over the acreage in the Bahamas. The agreement stated that BPC would receive $250,000 USD a month for an initially agreed 3-month period and a further $250,000 for every additional month. The agreement looked promising for the development of the Bahamas and caused BPC’s share price to treble. However, the exciting deal came to an end in August when it was announced that the ‘major oil company’ had decided not to extend the exclusivity agreement any further. BPC are said to have made $1 million USD from the deal.

Moving clockwise from the Bahamas round the Caribbean Sea brings us to Guyana...

Orinduik Block, Guyana

The Orinduik block, offshore Guyana, contains numerous identified leads, making it an active area to watch. The block is situated in the Suriname Guyana basin, 5-10 km up-dip from ExxonMobil’s Liza and Hammerhead oil discoveries. In early 2016, Eco Atlantic Oil & Gas signed a petroleum agreement with Tullow Oil to acquire a 40% interest, with Tullow remaining the operator at 60% interest. Western Geophysical acquired 2550 sq km of 3D seismic for the partnership in 2017. In September 2018, Eco Atlantic published a CPR report highlighting the prospectivity and exploration potential of Orinduik, containing an estimated 2.9 MMBOE at best estimate across 10 leads and prospects.

Guyana

Orinduik block and its proximity to the Exxon discoveries (Source: MapStand Limited)

After the publication of the CPR, Total exercised their farm-in option, an earlier agreement made with Eco, to acquire a 25% working interest from Eco. The money from the deal will supply Eco with the funds for at least two wells. Currently, Orinduik is held by Tullow Oil (60% and operator), Total (25%) and Eco Atlantic (15%). The close proximity of Orinduik to the Exxon discoveries in the neighbouring Stabroek block is a promising factor and will assist in de-risking the prospectivity.

Aruba Drilling

Spanish energy company, Repsol, have begun exploration offshore the small island of Aruba, located about 17 miles off the northern coast of Venezuela. In 2012, Repsol signed a Production Sharing Contract (PSC) with the Aruban public oil company, Compania di Petroleo Arubano (CAP) with 100% interest and operatorship going to Repsol and an estimated total exploration cost of $150 million if successful. Since the signing of the PSC, 2D and 3D seismic surveys have been carried out offshore Aruba as phase one and two of a four phase programme. The block PSC is now between Repsol and Total at 50/50. Earlier this year Repsol, along with partners Total, contracted Seadrill’s West Capella drillship to carry out the drilling of their new-field wildcat well, Bon Bini-1.

Aruba

The island of Aruba with the Bon Bini-1 offshore well location (Source: MapStand Limited)

This deepwater well was drilled into the South Caribbean Deformed Belt. Drilling began in early July for a duration of 30 days. Three previous wells have been drilled offshore Aruba in the 80’s and 90’s, all of which had gas shows. The proximity of Aruba to Venezuela’s gas field Perla gives hope that an active system could source gas to the Bon Bini prospect. The outcome of Bon Bini-1 has not yet been released by Repsol, increasing the interest into what the success of this well could mean for Aruba and the Caribbean.

Westward of Aruba is Colombia where Anadarko had success drilling...

Anadarko's Success in Colombia

Colombia

Map showing Anadarko's blocks, wells and discoveries in Colombia (Source: MapStand Limited)

Anadarko has a working interest in a total of nine offshore blocks across two separate areas in the Caribbean Sea: Grand Col and Grand Fuerte. In Grand Col, Anadarko holds a 100% working interest in the blocks. In Grand Fuerte, they hold a 50% working interest and operator rights with Ecopetrol, Colombia’s national oil company, retaining the remaining 50%. In 2015, Anadarko made their first significant discovery with the Kronos-1 well. The well struck 40-70 metres of net natural gas pay, confirming an active petroleum system as well as confirming geological and seismic interpretations made in this play. Two years later in early 2017, Anadarko announced that a second exploration well, Purple Angel-1, had made another discovery less than 5 km North from the Kronos-1 well. Purple Angel-1 was drilled to a total depth of 4,795 metres and encountered between 21-34 metres of net gas pay, most likely an extension of the petroleum system from the Kronos field. A third exploration well, Gorgon-1, was drilled in the second quarter of 2017. Located 27 km away from the previous discovery made by the Purple Angel-1 well, Gorgon-1 encountered gas sand intervals which total a net pay of 80-110 metres. This seems to be another extension of the Kronos gas reservoir, first discovered by the Kronos-1 well, which has a gas column estimated at 520 m by Ecopetrol.

Tullow Oil's Activity in Jamaica

Jamaica

Tullow Oil's active licence areas, acquired 3D seismic survey outline and the Colibri prospect (Source: MapStand Limited)

Moving northwards from Colombia, Tullow Oil acquired interest in 10 offshore blocks in 2014, which cover three geological areas of interest in southern offshore Jamaica: the Pedro Bank carbonate platform and the Walton and Morant basins. Ten out of the eleven onshore and offshore wells that have been drilled in Jamaica had oil and gas shows. Two sets of 2D seismic data have been acquired together with the wells. Earlier this year in May, Tullow completed the first 3D seismic data acquisition in Jamaica’s history with 2,250 sq km of seismic over the Walton-Morant licence (Tullow Oil 80%, United Oil & Gas 20%), including the 200 mmbbl Colibri prospect. The survey was carried out by the Polarcus Adira vessel. The success of the 3D seismic could lead to the possibility for an exploration well in 2020-2021.

To the SW of Jamaica, Equinor have acquired interest in Nicaragua...

Equinor in Nicaragua

Equinor acquired four blocks off the west coast of Nicaragua in May 2015 in which it holds an 85% interest and operator rights with Empresa Nicaraguense Del Petroleo (Petronic) holding the remaining 15% interest. The four blocks cover an area of 16,000 sq km in the Sandino basin. Equinor predicted that 300 mmbbl sits offshore, which it began to search for in June this year by contracting the vessel Polarcus Asima to carry out a 3D seismic survey. If the results of the survey are positive for Equinor, a first exploration well is planned for 2019.

Nicaragua

Equinor's blocks on the West coast of Nicaragua (Source: MapStand Limited)

Belize's Offshore Ban

North of Nicaragua is the small nation of Belize which first discovered hydrocarbons in 2005 when the Mike Usher-1 well, drilled by Belize Natural Energy Ltd. (BNE), revealed the Spanish Lookout field. In 2009, Belize made their second oil field discovery, Never Delay. These discoveries were exciting developments for Belize and BNE as major oil companies had explored for hydrocarbons since the 1950’s with no success. Current onshore production sits at around 2,000 barrels of oil per day and with further exploration looking to improve this, companies have been looking offshore. However, Belize has made somewhat of a milestone by announcing an indefinite moratorium on all new offshore exploration. The reason for this ban on offshore drilling is down to the country's extensive barrier reef system, the largest in the northern hemisphere, second largest in the world and a listed UNESCO World Heritage site. Despite oil contributing to more than a quarter of Belize’s exports, the tourist industry in which the reef plays a large role, is expected to bring in the region of $200 million to the country per year. Belize has joined Costa Rica on the list of Caribbean nations to ban oil exploration.

Moving northwards...

Mexico's Third Bid Round

CNH, the National Hydrocarbon Commission, announced Mexico’s third licensing round for this year formed of 3 parts: one shallow water round and two terrestrial rounds which include Mexico’s first ever unconventional shale bid round. The shallow water round (3.1) comprised of 35 offshore blocks in the Gulf of Mexico. The round commenced earlier this year and 16 of the 35 blocks were awarded to companies representing 10 countries. The first terrestrial round (3.2) contains 37 onshore blocks up for grabs. The second terrestrial bid round (3.3) is Mexico’s first ever shale bid round comprised of 9 onshore blocks, boasting mainly unconventional resources estimated at 1,161 MMBOE of Upper Jurassic and Upper Cretaceous age. However, bid rounds 3.2 & 3.3 which were due to commence in September 2018 have been delayed by the CNH to February 2019. The reason for the postponement is to allow for a broader industry interest, which was supposedly initially affected by the uncertainty around the 2018 Mexican general election, as well as giving companies more time in the data-room.

Mexico

Available blocks in Mexico's third bid round (Source: MapStand Limited)

With both Cuba and Mexico advertising bid rounds in the upcoming months, it will be exciting to see what interest companies have in the Caribbean. Together with the yet to be released results of Repsol's Bon Bini-1 well and Tullow Oil's activity in Jamaica, we could see the region being developed further in the future.

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