Thursday 28th April 2005

 

Southern Basin ripe for fresh ‘assault’

 
 
 
 
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Energy Minister Eric A Williams’ announcement last week that the oil-rich Southern Basin of Trinidad had been formally divided into six areas and the “bases of production” identified is a key element in his re-invigorated assault on this 97-year-old hydrocarbon province.

He is clearly of the view that Trinidad’s land region, which has yielded well over two billion barrels of oil since production first began there, has been relatively neglected in recent years but still has the potential to add to the country’s total output of oil—and perhaps even gas, as the Central block has proved.

Favourable results are expected from exploratory drilling shortly to take place in the Eastern block and we had hoped to hear good news by now from Dr Krishna Persad about the South West Peninsula block, where the Habanero exploratory well was spudded in late January but, beyond that, there is extensive acreage still left for further drilling activity.

Counting State company, Petrotrin’s designated “core area” of around 154,400 acres, there is something like 670,000 acres of territory in the Southern Basin which is regarded as potentially hydrocarbon-prone.

What the Energy Minister presumably means by establishing the “bases of production” is making a formal determination in the new licences of which he speaks of the exact depth to which a licensee’s rights go, thus leaving the ministry free to award drilling rights to companies for exploration below that depth.

Even in Petrotrin’s “core area,” a company in future may be granted the right to explore, say, below 18,000 feet, leaving all horizons above that as Petrotrin’s property.

This is a novel approach as far as Trinidad is concerned and what it will do is open up opportunities for a large number of different companies, or consortia, to undertake much more exploratory work that has been the case in the past, where an Exploration and Production (E and P) licence more or less gave the holder access to hydrocarbon plays at whatever depths he could find them.

Petrotrin itself might specifically wish do deals with joint venture partners in its “core area” that targeted deeper horizons where it perhaps did not have the budget to explore on its own.

The Eastern block lease already enjoins operator Talisman to drill two out of its three obligatory wells to deeper levels in search of the elusive Cretaceous geological zone on land.

But making a distinction between shallow and deep rights would not achieve much in the absence of geological information and the licence re-organisation initiative is being supported by Williams’ long-desired major 3D seismic survey over the Southern Basin. This is likely to be tendered for in June if all goes well, and is going to be far and away the costliest exercise of its kind ever conducted either on or offshore T&T—a figure of as high as US$300 million has been quoted.

Since that kind of expenditure is unlikely to be affordable by any company on its own, the ministry expects a consortium will be put together to fund it which, in turn, would have the right to explore in deep and shallow areas afterwards.

By formally defining the depth to which a company can lay claim to hydrocarbons, the ministry will be free to issue licences that relate either to one of the other but probably not to both.

If the consortium gets the chance to bid for both types of licences, it will effectively squeeze any company—other than those already in place—out of the running for exploration acreage in future and the ministry will have to find some way of avoiding that—after all, the idea is the more companies that are interested in T&T, the merrier.

Leaving expensive deep drilling to the majors which can afford it is one thing but presumably the ministry will want to attract medium-sized and small companies to join the fray as well—including medium- sized and small local companies.

Or perhaps the thinking may be to confine them to alliances with Petrotrin in the area to be left in its hands which will also benefit from the result of the 3D shoot. We shall see.

Petrotrin will be up to its ears in reserves development commitments as this bold exercise proceeds because it will also be entitled to a 20 per cent interest in any development of hydrocarbons that proceeds from the 3D seismic and exploration effort outside of its own “core area.”

This will theoretically include any development of oil or gas at deeper levels, so Malcolm Jones and Wayne Bertrand would be well advised to start looking around for large sums of money from now.

You might think that the shallower horizons of south Trinidad had been so extensively drilled-up over the years that the likelihood of new oil would be slim.

Apparently, not so. According to Minister Williams, “traditionally, mature areas can yield at least ten per cent new reserves when 3D seismic data is applied.”

The deeper areas should produce much more since they have largely been unexplored over the years.

Integrated 3D data is clearly regarded by the ministry as the key to squeezing the last drop of commercially recoverable oil and gas out of the Southern Basin.

There are blocks which have already had 3D seismic shot over them in recent years—notably the Central block, the Eastern block and the South West Peninsula block.

The Moruga West block, which is in the hands of Neal and Massy Energy Resources, is due for 3D anytime now.

But the basin-wide effort is expected to go one better and give all concerned the “big picture” of what might really lie under the earth in south Trinidad.

As energy ministry senior geologist Helena Inniss-King points out: “The areas surveyed by individual companies were too small to really benefit from the use of 3D technology. You had very short lines and it was not possible to image the structures at depth properly.”

The mammoth 3D effort envisaged will rectify that weakness and, who knows? Lead to a whole new life for a basin that was the mainstay of the T&T oil industry until first Soldado in the Gulf and then the East Coast Marine Area (ECMA) opened up in the 50s and early 70s, respectively.

 

 

 

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