Trinidad Leaseholds Ltd foretold the Crown Jewel of CARICOM

In 1944 Hans Kugler, father of Trinidad geology, prophesied the oil of life in the offshore, petroleum province, predicting the new oil era 75 years ago after Trinidad Leaseholds Ltd relinquished the first exploration licence to explore the risky frontier basin in 1938 -1942.

In 1975 Royal Dutch Shell relinquished exploration licences gained in 1965. In 2009 Shell acquired a 25 percent share in Stabroek offshore exploration licence from Exxon Mobil, relinguishing it for USD1 in 2015  before IOC Exxon struck oil in the elephant Liza field on Stabroek Block After Shell departed, only Hess Corporation and PRC CNOOC//NEXEN joined the exploration campaign before the ExxonMobil-led Consortium made 13 massive crude discoveries on Stabroek.

USGS

In 2002 the US Geological Survey assessed the Guyana-Suriname basin at 13 billion barrels of oil. USGS oil and gas assessment agency will reevaluate it next year. The basin appears to be characterized by excellent quality reservoirs in deep and shallow water, leading to standard development options in the event of discoveries.

Ratio Petroleum – “Guyana Basin similar to Leviathan basin ”
Since 2012, Senior Vice President of Exploration and Production, Eitan Aizenberg of Israel- based Ratio Petroleum sensed the potential of the petroliferous Guyana basin, three years before the Liza find.

Geologist Aizenberg entered the Guyana basin with acquisition of the Kaieteur Block, where Exxon is Operator, Ratio was a partnership between pioneering Landau and Rotlevy business families known in Israel for their contribution to development. Exploration and production started as a joint venture with the clans in 1992 to explore for hydrocarbons in Israel which lacked commercial discoveries with hundreds of dry wells.

Ratio drilled onshore Israel with no significant achievements. Wells were dry or not commercial. In 1999 Believing that potential for hydrocarbons lay offshore in deep water, based on his study of the Levant Basin offshore Israel and decades of experience in Israel, Egypt and the U.S, Aizenberg led Ratio efforts offshore in the deepwater of the Levant Basin in acreage of British Gas which identified two promising prospects, Dalit and Tamar.

Failing to find international drilling partners, British Gas relinquished less promising areas, including one where Aizenberg identified the potential before BG relinquished it and where he found the Leviathan field.

Ratio was granted a licence along with the Ratio Yam permit from Israel. Noble Energy and Delek joined Ratio to drill the Leviathan prospect, based on his work, leading to the discovery of the field, equivalent to over 3.6 billion barrels of oil, three times the size of Liza field.

Seeking promising opportunities for a similar success story he then identified the Guyana-Suriname Basin. Ratio focussed on the high risk Basin where exploration efforts produced over 40 dry wells . Noting similar deepwater geology there to that of offshore Israel, using the lessons that led to the discovery of Leviathan, Aizenberg determined to acquire exploration rights in the Guyana-Suriname Basin.

An application for the Kaieteur Block in 2012 was approved. by the Guyana Geology and Mines Commission (GGMC).

The systems of the Guyana-Suriname and Leviathan Basins appear different. Aizenberg observed the supply of sands to the deep waters of the Eastern Mediterranean Levant Basin, which shares significant similarities with the geology of the deep water of the Guyana-Suriname Basin.

Following discovery of the giant Leviathan gas field in 2010 which validated his insights, he sought underexplored basins where these insights could be implemented. In 2011, he recorded similarities in the Guyana-Suriname Basin and the Levant Basin. A reservoir,, usually a sandy layer in the sub-surface which can carry and accumulate oil reserves, is a key element in oil exploration.

Examining the reservoir sands, he correlated Crystalline rocks of the Arabian-Nubian Shield, in the East Mediterranean, with the Guiana Shield, excellent sources for sands. The Old Berbice River, the mechanism transporting the sands from their source to the sink offshore, is the equivalent of the ancient Nile River, Both moved sands over several hundred kilometers.

The critical time of the old Nile was 6-25 million years ago, while the old Berbice river was activet 65-100 million years ago; indicating different times but the same mechanism. Aizenberg was confident Guyana was a sure investment destination. The geology spoke for itself. Kaieteur Block is operated by Esso Exploration and Production Guyana Limited (35%) with partners Ratio Guyana Limited (25%), Cataleya Energy Limited (25%) and Hess Guyana Exploration Ltd. (15%).

International law favours Guyana after Venezuelan aggression.

Ratio Petroleum was unaware of claims by Venezuela on Guyana’s territorial sovereignty when it applied for the Kaieteur Block licence. The signing of a Production Sharing Agreement (PSA) between Ratio and Guyana in October 2013 was delayed after the Venezuelan Navy ordered research vessel MV Teknik Perdana out of Guyana’s Exclusive Economic Zone and escorted it to the island of Margarita, to prevent a geophysical survey by Anadarko Petroleum Corporation, the licensed operator for the Roraima Block.

The vessel had at least five US citizens onboard. Since that incident, Anadarko has not resumed exploration activities.  The Roraima Block, adjacent to the Kaieteur Block (Block B), was then known as Block A.   This event was not an intimidating factor for the company. In the risk analysis, Ratio claimed it could live with this risk because international law favoured Guyana. It was ready to sign the Production Sharing Agreement with the Government and start working after all the terms of the PSA were agreed. Much work, effort and time went into the application and negotiation of the PSA.

The Ratio Co-Founder said, “The tricky thing with under-explored basins with no discoveries, like the Guyana-Suriname Basin was at the time of the application, is to build the geological analysis with very little information .. available but with a lot of creativity, out of the box thinking and using the broad industry knowledge and experience .. in-house. This is what we did in Israel and the same in Guyana.”

Ratio’s proposal detailed the work programme, conducting 2D and 3D seismic acquisition, interpretation and leading to drilling of exploration wells on any prospects generated, as on Leviathan.  Amounts for annual rental fees, commitments for training etc. underpinned company plans. The Licence and Petroleum Agreement for Kaieteur were signed in April 2015 after Ratio and the Guyana Government agreed to delay operations until Government expressly permitted.

“We respected that and believed that we would receive permission to start work on Block B (the Kaieteur Block) as we had no doubt that Guyana’s position in the dispute with Venezuela was the just one according to international law as well as with every international parameter and standard we knew.”

After the PSA was signed, a caveat was attached. Based on documents from the Guyana Geology and Mines Commission, the licence was granted on condition that only 40 percent of the Kaieteur Block could be explored due to claims of Venezuela. Former President, Donald Ramotar signed the Side Letter Agreement with Ratio Energy Limited and Ratio Guyana Limited on April 28, 2015. In 2017, the current regime granted the licence holders permission to begin exploration after ExxonMobil farmed into the block and became Operator.

Tullow Oil:  first discovery offshore

The Jethro-1 well is the first discovery on the Orinduik Block and comprises high-quality petroliferous sandstone reservoirs of Early Tertiary age. This is a major development for Guyana. It adds to the further de-risking of the deep and ultra-deep zone and offers significant potential for the diversification of the hydrocarbon production base of the nascent petrostate. The well encountered 55m of net oil pay which supports a recoverable oil resource estimate that exceeds Tullow’s pre-drill forecast. The Department of Energy is encouraged by the prolific rate of discovery and will continue to work conscientiously to extract optimum value from these resources for the country.

This new discovery demonstrates the vastness of Guyana’s natural resources. Guyanese stand to benefit significantly from the oil discoveries and must continue to be aspirational and focused with a transformational mind-set. With this new find, Tullow will now evaluate the data from the Jethro-1 discovery and determine the appropriate appraisal activity.

The Jethro discovery significantly derisks other Tertiary age prospects on the Orinduik Block, which includes the shallower Upper Tertiary Joe prospect where drilling began on 25 August 2019 after the completion of operations at the Jethro-1 well. Joe is an Upper Tertiary feature in 700 m (2,297 ft) of water further west on the northern part of the block, with potential resources estimated at 148.3 MMboe. The same rig drilled the Jethro discovery.

Tullow chief executive Paul McDade said Jethro-1 well will likely hold over 100m barrels of oil. “This substantial and high value oil discovery in Guyana is an outcome of the significant technical and commercial focus which has underpinned the reset of our exploration portfolio. It is an excellent start to our drilling campaign in the highly prolific Guyana oil province. We look forward to drilling both the Joe and Carapa prospects in our 2019 drilling campaign and the material follow-up exploration potential in both the Orinduik and Kanuku licences.”

Ahead of expectations, the discovery means that the Orinduik licence is much less risky.

Tullow Guyana B.V. operates the Orinduik Block with a 60 per cent stake. Total E&P Guyana B.V. holds 25 per cent stake while the remaining 15 per cent is being held by Eco (Atlantic) Guyana Inc.

Colin Kinley, Chief Operating Officer and co-founder, Eco (Atlantic) Oil & Gas commented:  ‘We are very pleased to have spudded on Sunday our second exploration well on Orinduik. After the discovery made on Jethro in the Lower Tertiary, which greatly derisked that age section throughout the block, we are now moving to an Upper Tertiary target in the Joe prospect where we are targeting over 100mmboe. If a further discovery is made, it will further enhance the value of the block with this shallower play. The estimated chance of success for Joe is the same as Jethro, although it is a completely different play, and we are confident in our 3D interpretation as we were ahead of the Jethro-1 discovery.

‘We look forward to continued success in our exploration efforts as we move forward to define the plays available to us in all the various geological ages and to develop this block.’

Gil Holzman, CEO and Co-Founder of Eco Atlantic stated:  “We are thrilled to report this exceptionally exciting discovery. This is a revolutionary moment for Eco. It has been a long path of hard work for our team, and with today’s announcement we feel our first rewards have justified our journey. We have been very confident in the prospects of the Orinduik since we first decided to make a licence application in February 2014, based on a strong recommendation from our team at Kinley Exploration.

“I always believed that Eco would create exceptional stakeholder value, for our shareholders, and the people of Guyana alike, and I am so proud that we have made this exciting discovery.

“This is a transformational event for the Company, and we now need to strategically plan for an even brighter future. With multiple targets to consider, and Joe as the next prospect to be drilled, we will now pursue our evaluation of the timing for wells to develop the Jethro field and to expediently bring it on production. We are funded for at least six additional wells.

“I want to thank the small but amazing team at Eco, the Board of Directors of Eco Atlantic, our extremely professional partners in Tullow and Total, our investors and shareholders, and the Government of Guyana for their support to date and hopefully into the future as we continue to strive to generate value for all of our supporters and partners.“

www.ecooilandgas.com

Executive Vice-President of the , Tullow Oil, Dr. Ian Cloke described local content as very important to their operations,  both locally and internationally and outlined local content plans for Guyana. Locals  run Tullow Oil operations in Uganda, Kenya and Ghana.

In Ghana over 80% of the workforce comprises Ghanaians. A successful Guyanese business in the future will be led by a Guyanese.

At the exploration stage of operations, Tullow has a small local office manned by an expatriate manager and two Guyanese. As the company moves beyond exploration to a prospective appraisal on the Jethro-1 well, they will establish a shore base.

“We will look to expand the operations here and will be looking for other areas for investment,” he said.

 Tullow will open tenders for future offshoot services to as many local companies as possible.

The discovery of oil reserves at the Jethro-1 well is the fourth for 2019 and brings the total number of offshore wells to 14.

Orinduik demonstrates that the newfound oil sector in The Guianas has a future beyond the Exxon development, which, with 13 oil ‘strikes’ since 2015 and the promise of ‘first oil’ in 2020 will not lose any significance for a country excited over the prospect of a significant transformation of economic fortunes from oil revenues.

Westwood Global Energy Group claims that the Guyana resources position it to “be the country that produces the most barrels per capita [about 450 barrels],” potentially placing its per capita production ahead of Middle Eastern heavy hitters in the global oil industry like Kuwait, Qatar, the United Arab Emirates and Saudi Arabia. High-impact emerging play exploration was dominated by the Upper Cretaceous Liza play offshore Guyana and the Pliocene deepwater clastic play offshore Trinidad.

Jethro-1 yielded a potentially multi-billion barrel block which may not have sparked the jubilation at the May 2015 ExxonMobil disclosure. International media took on a different perspective. In terms of both its local and global industry implications, the recent Tullow find catapults Guyana into the international limelight in the same manner that occurred after the May 2015 Liza discovery. Guyana fills the space between prolific producers Trinidad, Venezuela, Suriname and Brazil.

In the wake of Jethro, upbeat commentary from Rystad Energy rejoiced that Guyana had further “extended its winning streak after dominating the list of major offshore discoveries in 2018.” While local media reported that Tullow Oil could exceed its original estimate of 100 million barrels, the partners could be sitting on a multi-billion barrel block. The difference in perspective between media is clear.

From a vantage point underlined by a limited knowledge of the oil industry, local observers are yet to fully appreciate the high-intensity global attention the second world class oil discovery in under five years attracted. In the aftermath of Jethro, the country can anticipate international media attention with no bearing on its good fortune. The bucolic image of a rural rainforest backwater belies the harsh history of anti-Caucasian racial envy and atavistic plans to exploit a cash cow and divert blessings of wealth-creating oil to reparation for woes of one group.

The election debacle and silence of supranational CARICOM on constitutional violation provoke cynical views of a corrupt regime and a sick president addicted to aid, fumbling to navigate a complex intoxicating petroleum industry and exploit a goose laying golden eggs.

Repsol

Repsol Exploración Guyana chose Peterson as its main logistics contractor for the upcoming shallow-water Carapa 1 exploration well to be drilled later this year on the Kanuku licence, adjacent to Orinduik Block.  Peterson will provide Repsol with integrated supply base operations management, logistics and pipe yard operations from Trinidad and Guyana. Since 2014 the company established an operation in Trinidad and supported various large projects in the region.

The Liza Destiny, first oil production vessel in Guyana arrived at the Stabroek Block offshore.

The Floating, Production, Storage and Offloading (FPSO) vessel completed a 42 day journey from Singapore. The 1,115-foot vessel will lead production during the first phase of development, called Liza Phase 1, starting in early 2020. It is a significant component of the development, which involves four undersea drill centers with 17 wells. (See this months Banner heading. – Picture Courtesy Hess Corporation )

After clearing customs, hookup and installation of the Liza Destiny FPSO will begin production. The Liza Phase 1 development is on track for startup by the first quarter of 2020 and will produce up to 120,000 gross barrels of oil per day. Exxon authorized the $6 billion Liza Phase 2 project expected to start up by mid-2022. A third development, Payara, should be approved soon.

The Stabroek Block is 6.6 million acres (26,800 sq kms). ExxonMobil affiliate Esso Exploration and Production Guyana is operator and holds 45 percent interest in the Stabroek Block. Hess Guyana Exploration holds 30 percent interest and CNOOC Petroleum Guyana, a wholly-owned subsidiary of CNOOC, holds 25 percent interest.

The first batch of local operations and maintenance (O&M) technicians, recruited by ExxonMobil Guyana to work on the Floating Production, Storage and Offloading (FPSO) vessel, embarked on an Advanced Systems Training at the Cape Breton University in Canada.

Over the last several months, the 24 technicians were exposed to basic systems training in four disciplines: electrical, mechanical, instrumentation, and operations. During the next 12 months the focus will be on discipline-specific training in each craft.  ExxonMobil noted the technicians’ optimism about their ongoing training in Canada and they are excited to return home at the end of their exercise in 2020.

Following another year of training in Canada, on-the-job training will continue on the FPSO. The company’s development model for operations and maintenance employees is designed for trainees to advance from Technician I to III over time.  The intent is to enhance their capacity to such a level that they can replace an experienced international worker.

A key element of the company’s local content strategy is the employment and training of nationals as part of a multi-tiered approach which also includes supplier development and strategic community investments.

ExxonMobil aims to develop a “diverse and skilled workforce that can meaningfully contribute to our Guyana operations while being part of a global pool of talent capable of meeting our future business needs wherever we operate”.

Westmount Energy

The company raised a further £0.57m from a share issue to advance its prospects in Guyana.  New shares in the company were issued at 13p each.

Benefits of oil

Mid-Year report records $3.9B growth in withholding tax

Intense economic activity and significant taxes generated by the energy sector are creating wealth in the oil hub, with petroleum production months away.  In its s 2019 Mid-Year Report the Ministry of Finance records that for the first half of the year, withholding tax grew by $3.9B, or 65.9 per cent, reflecting payments from companies within the oil and gas sector.

Personal income tax collections grew by $2B, or 16.4 per cent, when compared with the same period in 2018. Companies operating in the oil and gas sector accounted for $1.2B  or 61 per cent, of the collections. The upturn from economic activity lifted VAT from domestic goods by $2B, due to higher payments from manufacturing, distribution, services and oil and gas sectors.

An expansion in foreign direct investment (FDI), of 60.5 per cent to US$826.4M was largely supported by petroleum exploration, which accounted for US$354.6M of the amount. Imported capital goods rose from US$155.2M to US$423M, attributed to a substantial expansion in mining machinery supported by oil and gas business.

The energy sector contributed to growth in finance and insurance activities, transportation, storage and other services. Spillover effects boosted construction of commercial and residential properties to service the oil and gas sector. Rebasing of the GDP, currently underway and expected to be completed before the end of the year, will better allow for a quantification of the impact of oil and gas activities on economic growth.
Guyana is on the verge of becoming the world’s newest petrostate and potentially the richest.

“In 2015, Exxon Mobil Corp. made what a ‘fairytale’ discovery in the vast Stabroek exploration block off the Guyana coast. Since then, it’s found so much oil that by the mid-2020s Guyana, with a population of about 778,000, will probably produce more crude per citizen than any other country,” Kevin Crowley wrote in his article ‘The World’s Newest Petrostate Isn’t Ready for a Tsunami of Cash.’

Guyana’s reserves would make it OPEC’s 12th-largest member after Angola. IOC ExxonMobil first projected 5.5 billion barrels of oil equivalent in the Stabroek Block based on the finds but that was upgraded to 6 billion barrels. Based on 2018 statistics, Venezuela has the largest barrels of oil reserves with 302.8 billion followed by Saudi Arabia with 267 billion barrels and Iran with 155.6 billion barrels.

Guyana took centre stage at Exxon’s Investor Day at the New York Stock Exchange in March. “It’s not hard to see why. Senior Vice-President Neil Chapman – who described the Stabroek find as a “fairytale” – pointed to …estimates from Wood Mackenzie….. that Exxon’s Guyana wells will be the most profitable of all new deep-water projects by major oil companies.”

With a per-capita income of $5,194, the middle-income country, covered by dense forest and fertile arable lands, abounds in natural resources. Gold, bauxite, sugar, rice, timber and shrimp are among its leading exports.

ECLAC – US$459M in foreign investments

The Economic Commission for Latin America and the Caribbean (ECLAC) in its report on Foreign Direct Investment in Latin America and the Caribbean 2019 stated that Guyana banked US$495 million in Foreign Direct Investments (FDI) in 2018, more than double what it gained in 2017.

The hydrocarbons sector accounted for 77 per cent of total FDI, much of which was invested in the development of oil fields discovered by ExxonMobil. In the first phase of this venture, the Liza oil field is expected to begin producing up to 120,000 barrels of oil per day by 2020. The company estimates these oil reserves at 6 billion barrels.

The Economist reported that in a decade from now, Guyana could become the second-largest oil producer in Latin America and the Caribbean, after Brazil. FDI inflows to sectors other than the oil industry, accounting for nine per cent of the total, also grew. Movie Towne, of Trinidad and Tobago, invested US$50M in an entertainment centre which opened in 2018.

Guyana, over the years, averaged FDI flows of US$135M between 2005 to 2009; 2011 US$247M; 2012 US$294M; 2013 US$214M; 2014 US$255M; 2015 US$122M; 2016 US$58M and 2017 US$212M. FDI flows to the Caribbean totalled US$ 5.623B in 2018. This reduction of 11.4 per cent relative to 2017 was due to a poor showing in the Dominican Republic which accounted for 44 per cent of the sub region’s total FDI followed by the Bahamas with 18 per cent, Jamaica 14 per cent and Guyana 9 per cent, which marked up a 20-year high in FDI inflows.

The Private Sector Commission and Georgetown Chamber of Commerce recorded slow spending and a decline in the economy since the Coalition Government took office. At the end of the first half of 2019, net domestic credit of the banking system grew by 14.1 per cent over the same period last year, to $33.4B, supported by expansion in both private and public sector credit. Total credit to the private sector increased by 5.7 per cent to $238.8B over the review period, faster than the past three years.

With a vibrant oil and gas industry on the horizon, the economy will start growing by double digits from next year, thriving on the success of various sectors and the advent of petroleum. The country’s potential and acceleration was proven when the Nasdaq reported that Guyana has the fastest growing economy in the world.

The New York-based stock market noted Guyana’s projected growth rate of 16.3 per cent during the four-year period 2018-2021 in its report.
With a Gross Domestic Product (GDP) size of $3.63 billion (2018 Rank: 160), a growth rate of 4.1 per cent in 2018 and 4.6 per cent in 2019, Guyana’s economy is expected to grow by 33.5 per cent and 22.9 per cent in 2020 and 2021 respectively.

 

OBITUARY

Conrad Gorinsky, 1936 – 2019.

Born in Rupununini, his father was Polish and mother Amerindian.

He graduated in science at University of London and was a fellow of  Green College, University of Oxford. He founded Survival International.