CANADIAN-based CGX Energy Inc. remains upbeat about drilling next year for oil offshore the Guyana-Suriname basin which has been indentified as a major new frontier in the industry.
In an update yesterday, Mr. Kerry Sully, CGX CEO and President, said the cost estimate to drill the Eagle Deep Well has been reduced significantly to below US$70 million from US$90 million.
He said this was as a result of the industry-wide downturn, service sector price reductions and CGX's rig sharing initiatives with other operators in the area.
“As the seismic processing nears completion, CGX plans to reopen its data room for potential joint venture partners who would fund the drilling of a well to test both the Eagle Deep play in the Cretaceous and the original Eagle Tubidite in the Tertiary", he reported.
At a media presentation at the Pegasus Hotel in Georgetown in May this year, Sully said the company was confident it will make a drilling commitment to the Guyana Government and expects to see wells in the offshore basin next year.
The company reported that as of June 30 last, it remains well financed with working capital of $18.3 million.
It said that during the first half of this year, its principal activity has been processing the seismic data acquired on the 505 sq km 3D seismic survey on its 100% owned Corentyne Petroleum Prospecting Licence (PPL) and on the 1,839 sq km 3D seismic survey on CGX's 25% Georgetown PPL.
Joint venture partners in the Georgetown PPL include the operator, Repsol (15%) and its subsidiary, YPF Guyana (30%), and Tullow Guyana BV (30%).
Mr. Warren Workman, CGX Vice President of Exploration, said the conventional processing of the 3D (three-dimensional) programme, the first shot offshore Guyana, is nearly complete.
“We are encouraged by the time and depth images and our initial interpretation. Compared with the 2D, the 3D data is providing superior depth modeling, better detail at the prospect level, and identifying new leads. By September, CCG Veritas will have completed Pre-Stack Depth Migration (PSDM) of the 3D seismic to give a better image of the depth and geometry of targets, he said.
He said that to further advance its interpretation, CGX has retained international experts to extract technical attributes from the dataset.
Data Modeling Inc. from Calgary is using proprietary artificial intelligence to solve for acoustic velocity of the rock layers.
In addition, CGX has engaged Rock Solid Images from Houston to estimate the reservoir properties of lithology, porosity and pore fluid from the seismic data within the identified targets.
In the middle and upper Cretaceous formations of West Africa, Rock Solid Images rock physics and seismic inversion experience has been effective in achieving these goals", he said.
Guyana has the second most under-explored basin in the world according to the United States Geological Survey (USGS) and Sully said in May that it is well-located in what the industry calls the `Golden Triangle.
He noted that there has been very little offshore exploration here in the past 50 years and the challenge is to move from resource to reserves, estimated to be about 15.2 billion barrels of oil and 42 trillion cubic feet of natural gas.
Offshore Guyana is in a proven hydro carbon system and there is current incredible activity in the area, he said.
Big oil companies in the area include Shell, Exxon and Spanish-based Repsol.
CGX Energy Inc. is a Canadian-based oil and gas exploration company focused on the exploration for oil in the Guyana basin.