September 11, 2008

Exxon Mobil in deep water oil search off Guyana

Guyana Chronicle

A top official confirmed yesterday that the US giant oil company Exxon Mobil, parent company of Esso Exploration and Production Guyana Ltd., has begun oil exploration in a deep water concession bloc off the Guyana coast.

Industry sources said the company has contracted a vessel to do a seismic search in the concession zone of about 55,000 square kilometres off Guyana's eastern shore from its boundary with neighbouring Suriname.

Mr. Newell Dennison, Manager of the Petroleum Division in the Guyana Geology and Mines Commission confirmed that the vessel, the 'Aquila Explorer', contracted from Fugro-Geo-Team by Petroleum Geoservice (PGS) began the exploration late last month in the Esso concession bloc.

"This is an area where there has been practically no seismic shoot before and they are doing a regional 2D (two-dimensional) seismic shoot in deep water at a depth of between 200 and 2,000 metres", he said.

The confirmation of the Exxon Mobil exploration by Dennison came a day after Canada's CGX Energy announced that it will late this month begin a seismic offshore search for oil closer to the Guyana shore.

Dennison said the vessel contracted by CGX in a joint venture which includes Repsol-YPF should have been here earlier but its arrival has been delayed by the threat from Hurricane Ike which forecasters yesterday said will likely skirt the heart of the U.S. offshore oilpatch before it slams into the Texas coast on Saturday.

Reuters news agency said Ike, which grew to a Category 2 storm with 100 mile-per-hour (155 kph) winds, has left a trail of destruction across the Caribbean after toppling decrepit buildings in Cuba's capital and raking the island.

Projections late yesterday pointed Ike toward the middle of the Texas coast, skirting to the west of the main region for offshore production in the gulf, which provides a quarter of U.S. oil and 15 percent of its natural gas.

U.S. crude oil prices fell more than $3 on Tuesday as traders discounted the possibility of storm disruptions, and rose to nearly $105 a barrel yesterday after the OPEC producer group announced a surprise output cut.

Exxon Mobil began aeromagnetic surveys in its concession zone here in late 1999 but stopped exploration after Surinamese gunboats expelled CGX in June 2000 from drilling in the waters in a territorial dispute with Guyana.

A U.N. ruling a year ago that favoured Guyana in the row opened the way for a resumption of oil and gas exploration that had been frozen for years due to the border controversy.

CGX Energy Inc. on Tuesday formally announced it is resuming the search for crude oil deposits in partnership with another firm in a concession off the Guyana shore with a more modern high-tech programme.

In a statement received here, the company confirmed that a 3D (three-dimensional) seismic programme will begin late this month to better locate huge oil deposits previous surveys have indicated are in the concession bloc.

It said that YPF Guyana Ltd., a subsidiary of RepsolYPF, based in Spain and acting as operator of the venture, has awarded a 1,650 square kilometre 3D marine-seismic contract to Fugro-GeoTeam in the prospecting area.

CGX said its wholly-owned subsidiary CGX Resources Inc., holds a 25 percent interest in the prospecting area known as the Georgetown Petroleum Prospecting Licence (PPL).

CGX President and CEO, Mr. Kerry Sully, last October told an energy conference in Canada, "We're starting a new race and it's time to go forward."

Mr. Warren Workman, CGX Vice-President for Exploration, also told the Guyana Chronicle in a telephone interview then that the "plan is to shoot 3D seismic to clarify these targets to prepare for an exploration well that has the possibility of penetrating several targets with a single well bore."

Sully said in the statement issued Tuesday that Fugro's seismic vessel 'R/V Geo Pacific' will begin activities towards the end of this month.

Sully was reported as saying that the CGX share of the combined programme will be an estimated US$15M which will be funded by CGX from existing working capital.

He added: "The combined programme will result in a 33 per cent saving per square kilometre to CGX through economies of shared mobilisation and longer sailing lines on the previously announced Corentyne programme."

CGX also confirmed that the farm-out programme led by its agent Jeffries, Randall & Dewey of Houston, Texas, has been put on hold during the 3D seismic search period.

According to the statement, Sully said "significant interest" was generated in this joint venture in the concession off the Corentyne coast, but with the 3D seismic acquisition probe about to begin on the Corentyne and Georgetown PPLs, CGX has put the farm-out process on hold until the 3D seismic data has been received and preliminary interpretation completed.

In June, 2000, CGX was forced to halt a drilling programme it had started off the Corentyne coast after gunboats from the Suriname navy ordered the crew and hired rig out of the zone.

Suriname had long claimed part of the border region with Guyana as its territory and after high-level missions led by President Bharrat Jagdeo and then Foreign Minister Clement Rohee failed to convince the government of then President Jules Wijdenbosch to settle the dispute, Guyana took its case to the International Tribunal on the Law of the Sea.

The tribunal sitting in the Hague in the Netherlands, after almost three years of deliberations, last year handed down an award in Guyana's favour, preserving 93 per cent of the CGX Corentyne Licence as being in this country's territory.

An advertisement in local newspapers last month said the Guyana government has licensed CGX Resources Inc., YPF Guyana Ltd., Esso Exploration and Production Guyana Ltd. "to conduct petroleum exploration operations in their respective contract areas."

The government said a seismic acquisition operation is expected to last five months off the Berbice coast bordering Suriname and Demerara off the capital Georgetown.

The operations will involve the towing by vessels including a 12 kilometre long streamer, with sensitive equipment attached, the government said.

President Jagdeo has been urging companies with petroleum concessions offshore Guyana to continue operations.