CAN TULLOW EMULATE EXXONMOBIL'S GUYANA EXPLORATION SUCCESS?

CAN TULLOW EMULATE EXXONMOBIL'S GUYANA EXPLORATION SUCCESS?

Guiana Basin Overview 6

The Guiana Basin (which was previously called the Guyana-Suriname Basin) extends from Venezuela in the north-west to French Guiana and into Brazil in the south-east and is a half-graben Atlantic-margin basin on the north-east coast of South America. In 2002 the US Geological Survey ranked it as the second most attractive under-explored basin in the world, with the potential for around 15 Bboe of undiscovered resources, which is very impressive for a basin with no offshore discoveries. This is because the basin has the world class Cenomanian - Turonian Canje (CTC) mature source rocks which can be up to 550m thick in the central part of the basin and have up to 30% organic carbon content (both kerogen and bitumen). The main reservoir targets, Upper Cretaceous and Lower Tertiary basin floor fans and shelf-margin deposits, directly overlie the source rocks further enhancing the basin potential.

As ExxonMobil prepares to put the Liza field in Guyana onstream in Q1 2020, companies on both sides of the Atlantic Ocean, as well as many of the 780,000 inhabitants of Guyana and its neighbour Suriname are keen to see if their exploration success can be replicated by other explorers, most notably Tullow Oil and Repsol in Guyana, and by Apache Corp. in Suriname.

Frontier exploration success is undoubtedly helped by longer time frames and larger budgets, something which has traditionally been the preserve of the Supermajors. Independent explorers play a higher risk game, steered by short- to medium-term market and shareholder expectations. Smaller exploration budgets and a need for rapid monetization, mean that they have to rely on exploration skills, experience and knowledge to shorten the exploration time frame.

ExxonMobil’s Stabroek block lies approximately 190 km offshore and extends northwest to southeast across the Guyana’s entire maritime area, in waters that are 800-2000m deep. Around 15% of the block lies in waters that are contested with Venezuela and exploration has tended to focus in the central and southwestern areas (the maritime boundary with Suriname was agreed in 2007). Liza-1 encountered over 90m of high-quality oil-bearing Cretaceous sandstone reservoirs and was rapidly followed by 12 more oil discoveries (Payara, Liza Deep, Snoek, Turbot, Ranger, Pacora, Longtail, Hammerhead, Pluma, Tilapia, Haimara and Yellowtail). With more than 5.5 Bboe of gross recoverable resources and a success rate of over 80%, by 2018 Stabroek had become the most prolific exploration acreage in the world and the US Geological Survey’s assessment appeared vindicated.

Tullow Orinduik Block

Map showing planned wells offshore Guyana and Suriname (Source: MapStand Limited)

Tullow’s first of two wells, Jethro Lobe-1, was spudded on the Orinduik Block, offshore Guyana on Thursday 4 July 2019 using the Stena Forth drillship. The well is being drilled three years after Tullow was awarded the block in 2016. Fast work compared to ExxonMobil, which spent seven years imaging, investigating, interpreting and understanding the Stabroek block, before drilling the Liza-1 discovery in 2015.

Tullow would love to replicate ExxonMobil’s success and is drawing on its experiences in French Guiana and Ghana to accelerate the exploration timeline. The Orinduik block in Guyana lies directly inboard of Stabroek, up-dip from the giant Liza field and on-strike with ExxonMobil’s Hammerhead-1 (2018) discovery in water depths of approximately 600 – 1300m. The licence was awarded in 2016 and covers 1800 sq. km in water depths of 700-1400m. By 2018, Tullow had identified at least 16 drillable, mostly Tertiary, prospects on the block. Interest in the Orindiuk licence is split between Tullow (60% + operator), with Eco Atlantic Oil & Gas (15%) and Total (which acquired a 25% interest in September 2017).

Jethro Lobe -1 is expected to have multiple Tertiary (primary) and Cretaceous (secondary) targets, similar to ExxonMobil’s Hammerhead discovery, which encountered approximately a 60 m oil column in a high-quality clastic reservoir. Tullow’s partner Eco Atlantic has said the Miocene, stratigraphically trapped canyon turbidite sandstone play has many similarities with Tullow’s TEN (Tweneboa, Enyenra, Ntomme) fields in Ghana. The prospect is estimated to have pre-drill P50 resource estimate of 214.5 million boe with a 44% chance of success. Tullow’s second prospect, Joe, will investigate an Upper Tertiary play in a water depth of 650m, which partner Eco has reported as having a pre-drill P50 resource estimate of 150 million boe and a 43.2% chance of success. Tullow is also a partner in Repsol’s Kanuaku block, which has contracted the EnscoRowan EXLII to drill one well in Q3 2019. The well will target the >200 mmboe Cretaceous, Carapa prospect and lies in a water depth of around 70m.

Tullow Oil made the Jubilee discovery in 2007 in Ghana on the African Atlantic Transform Margin. The play was based on the Lower Cretaceous sedimentary basins being formed as the African and American landmasses separated to form the Atlantic Ocean. The high-profile conjugate margin, Zeadyus-1 (GM-ES-1) well on the Guyane Maritime licence off French Guiana in 2011 encountered a 72m oil column in Late Cretaceous turbidites charged by a -Turonian-Cenomanian source rock. Even though the discovery proved that a Jubilee type play existed on the Western side of the Atlantic, the Cingulata Fan system failed to live up to expectations when Zaedyus-2 and Priodontes-1 failed to encounter commercially viable hydrocarbons and several pundits and analysts started to doubt the both the company’s explorers and the country’s petroleum potential. Total drilled Nasua-1 wildcat in 2018-19 on the Guyane Maritime block, which was previously operated by Tullow. The well failed to encounter hydrocarbons and Total will relinquish the block. It will probably be the last well drilled offshore Guyana and the last in French Territorial waters, as President Macron banned the granting of new oil and gas exploration leases in the country and its overseas territories in 2018.

Suriname lies between French Guiana and Guyana, and it is here that the Guiana basin partially extends onshore. Staatolie’s onshore Tambaredjo complex has been producing oil from Paleocene, Eocene and Miocene reservoirs since 1985 and may well have a CTC source rock. Like Guyana, Suriname has attracted several key players, many with Western African experience including Kosmos, Tullow, Hess and Cairn Energy but commercially viable discoveries have so far eluded them.

The mainly offshore Guiana basin partially lies onshore in Suriname where the national oil company Staatsolie operates the onshore Tambaredjo complex of three fields which have been onstream since 1982. Offshore plays lie in Cretaceous and Tertiary post-rift cycles and include carbonate platforms, channel complexes, shallow anticlines, fault traps, turbidites, pinch-outs, and shelf edge channel sand basin floor fans. Subtle geometries and hard to image facies have frustrated many explorers, making cutting-edge 3D acquisition and processing techniques essential tools for interpreting, understanding and de-risking the offshore basin.

Several wells have been drilled in the last two years and, whilst they have certainly helped explorers understand the subtleties of the basin, have failed to encounter commercial hydrocarbons. Kosmos’s Pontoenoe-1 well on Block 42 encountered high-quality water-wet reservoirs and evidence of a working source kitchen but failed due to the lack of an effective trap and its Anapai-1 well on Block 45 also encountered high quality reservoirs but did not find hydrocarbons. Tullow’s 2017 Araku-1 exploration well, on Block 54 did not encounter significant reservoir quality rocks although wireline logging and sampling proved the presence of an active source rock. Both companies remain committed to Suriname and are preparing to drill again in 2020.

Apache operates Blocks 53 and 58 offshore Suriname. It has less recent operator experience in West Africa than many other operators, but still appears to have out-paced ExxoMobil’s exploration program. Apache was awarded 3509 sq. km Block 53 in 2012 and Block 58 in 2015. Block 58 abuts ExxonMobil’s prolific Stabroek block and covers an area of 5,845 sq. km and is located approximately 150km off the Suriname coast in what could be the most prospective part of the basin. Apache has identified and worked up numerous, large drill-ready prospects, which have different play concepts and has contracted the Noble Sam Croft drillship to drill at least one well on the block in Q3 2019. ExxonMobil’s Haimara-1 discovery, which encountered 63m of gas and condensate-bearing sandstone reservoir, lies less than 5km from the international maritime boundary in Guyanese waters and Apache’s first well on Block 58, Maka-1 may well have a similar objective.

ExxonMobil’s exhaustive exploration strategy on Stabroek in Guyana has paid off with unparalleled success rates and in April 2019 announced that they had found 5.5 billion boe estimated recoverable resources on the Stabroek Block. This would suggest that the USGS’s resource estimates from the early 2000’s will surely be exceeded. However, the conjugate margin plays have proved far more challenging than several independent explorers in the basin had expected. Companies like Tullow with West African experience have found that their gamble to accelerate the exploration timeline has been a higher risk than was first envisaged and it is only when they fully understand the subtle geologies of the region that the Guiana Basin will release its prize.

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