August 22, 2007

Pending tribunal decision - CGX upbeat about oil drilling

Staboek News

GEORGETOWN, Guyana - Ahead of a decision by the International Tribunal on the Law of the Sea in relation to the Guyana-Suriname maritime dispute, oil exploration company CGX Energy Inc. has again signalled its readiness to continue drilling and is upbeat about a commercial find in Guyana's waters.

This position was indicated by Vice President - Exploration, Warren Workman at the Guyana Geology and Mines Commission (GGMC) mining conference which opened on Monday at the Tower Hotel as part of the commission's Mining Week activities. 

This year's activities are being held under the theme, "Promoting Exploration, Improved Mineral Recovery, Safety and Environmental Management in Mining."  The commission has planned a series of activities this year, with the major focus being on petroleum.

In 1998, government granted CGX, a Canadian company, a concession to drill for oil offshore but before drilling started a Surinamese air force plane spotted the rig and Surinamese gunboats ordered it out of the area in June 2000.

In 2004, the Guyana Government, took the dispute to the International Tribunal of the Law of the Sea in Hamburg, Germany, which is to issue a decision shortly.

Since then the development of the disputed area, the Guyana-Suriname Basin, has been stalled pending the decision.

Workman addressed delegates at Monday's session and noted that the company was committed to the exploration of the Guyana-Suriname basin because of its potential.

Using a power point presentation, he outlined the prospects but cautioned that his statements and projections involved risks and uncertainties.

He pointed out, however, that in the Suriname-Maracaibo basin, located north west of Venezuela, a huge amount oil was generated and the Guyana-Suriname basin has very good potential.

To this end, he noted that the main challenge was to find quality reservoirs. Speaking with this newspaper after his geological and technical explanations to the delegates, however, Workman explained that while prospects were still positive there was more that would have to be done locally since the oil and gas business in Guyana will be the way of the future.

He said he was confident that there would be oil and gas discovered and produced in commercial quantities in the Guyana-Suriname Basin.  But he said he believed there is need for more individuals to pursue studies in geological engineering.  "I would recommend and encourage students to pursue studies in geology, geo-physics and petroleum engineering so they could understand the nature and business side of oil/gas exploration and production," he said.

He advised too that the oil and gas industry required different kinds of services and supplies, labelling it a "sophisticated industry with many requirements."

However he is optimistic that though it will take Guyana some time to develop such services "this will be the way of the future."

"In the future there will be oil and gas discovered and produced in commercial quantities in the Guyana-Suriname basin...What we don't know are the specifics ...how successful we will be," he said.

The CGX vice president has however estimated a 20% to 25% chance of success on a single well. "You see once we have a discovery then we can build equipment in order to extract oil out of the sea floor and produce it to take it to market and likely provide gas and oil from Guyana ," he explained.

He noted however that the company would be looking at different means to cut operational costs.

Representative Allan Keane of Repsol-YPF, a Spanish exploration company, also made a presentation to delegates at the conference. His presentation was based on reducing risk in frontier exploration in the George-town block.

Repsol, too, is awaiting the tribunal decision, since they are also exploring possibilities in the Guyana-Suriname basin.