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Anthony T. Bryan : Oil and gas
in the Caribbean: What’s at the finish line?



The Dash for Deepwater Oil and Gas in the Caribbean: What’s at the Finish Line?

Speaking at an energy conference in the Dominican Republic at the end of January 2013, I was impressed by the urgency that Dominican officials and the CEOs of energy companies place on finding new sources of energy for the country in deepwater exploration. They are not alone! At present 14 countries in the Circum-Caribbean region, including the Guianas, have opened their territorial waters to deepwater exploration for oil and gas. A number of international oil companies (IOCs) and state companies are rushing to tie up acreage in bid rounds in the expectation that their investments will eventually pay off. In the past, only Venezuela and the islands of Trinidad and Tobago have exploited, with limited success, the deepwater (ranging from 1000 to 4000 meters). Today the technology and improvements in platform construction make it possible to drill and recover oil and gas from these depths. But the reality is that so far the dash for these “frontier provinces” with one or two notable exceptions has produced nothing more than dry runs. Here is a snapshot of the state of play at the moment starting from the southern Caribbean and looking north.


French Guiana is the country that inspired the Caribbean current momentum in deepwater exploration. It began following the discovery of the “Zaedyus” well by UK exploration company Tullow Energy in late 2011. The Zaedyus well substantiated the theory of Tullow geologists that the geological features offshore Ghana (where the huge Jubilee field had been discovered in 2007) are replicated on the opposite side of the Atlantic, in the now named Guyana/Suriname/French Guiana basin. French Guiana is actually the hottest of the ‘frontier provinces’ at the moment. The P10 (10% probability) reserve estimate in Zaedyus is 840 million barrels of oil equivalent (boe). The outlook for French Guiana seems excellent.


Following on the Zaedyus success IOCs have rushed to tie up acreage. Norway’s Statoil Hydro, Murphy Oil, Kosmos Energy, and Chevron have taken blocks or farmed into existing blocks. As of now there is no deepwater exploration but Tullow expects to drill the first well in 2014. Suriname’s oil production is a mere 16,000 barrels per day from three onshore wells under the control of the state company Statsolie. Can French Guiana’s success be replicated in Suriname?


A number of offshore deepwater blocks are licensed in Guyana. Some of the companies involved are Pacific Rubiales (Canada), CGX Energy, Tullow, Shell, Repsol, Exxon Mobile and Anadarko. Obviously the “Zaedyus” stimulus is evident here. The bad news is that exploration so far has produced only negative results. Two wells (Jaguar 1 and Eagle 1) have come up dry. But hope springs eternal.


Trinidad and Tobago (T&T) is the most mature oil province in the Caribbean with 105 years of production. Deepwater exploration is ongoing. There are 39 deepwater blocs (12,000 feet or more). In 2006, bpTT sank the Ibis Deep well to 19,068 feet subsea in the South East Coast tapping the crustaceous horizon. EOG Resources sank its own deep well, Pelican Deep, to around 17,000 feet, in the same block in 2010. Neither found the productive zones for which they were looking. Estimates today are that at least 500 million barrels of oil equivalent exist in the southern basin deep water as well as substantial reserves of natural gas. In 2012 T&T had a very successful deepwater bid round. The majority of the blocs were taken by BHP Billiton. A new deep water bid round begins in April 2013. The potential for success in the deepwater is good.

BARBADOS : Only one well has ever been drilled in the Barbados deep water--by ConocoPhillips in 2001, 70 miles off the south west coast. It was dry. Now BHP Billiton is about to try taking two blocks in the Barbados deepwater. It is very deep water and the potential is as yet unclear.


The Dominican Republic has large areas of sedimentary basins but a very sporadic history of exploration since 1904. In February 2012 Gazprom International SA announced that it would begin offshore oil and gas exploration in the deep water. In the meantime the country has tried to improve its energy mix through renewable energy projects and incorporating natural gas (most of it imported as LNG from Trinidad and Tobago). It is trying to change its status from being a market for Caribbean energy to a producer of energy.


The U.S. Geological Survey has estimated a 95% probability of finding 554 million barrels of oil offshore The Bahamas; a 50% probability of 1.59 billion barrels and a 5% probability of 4.3 billion barrels. The Previous government had declared a ban on offshore drilling following the Macondo well blowout in the Gulf of Mexico on April 20, 2010 in which eleven workers on the Deepwater Horizon drilling rig operated by BP lost their lives. Bahamas Petroleum (BPC) is mandated to commence actual exploration by April 2013 but the government is weighing environmental concerns and the protection of its tourism industry before deciding if it will permit exploration for oil and gas.


Cuba has so far proved to be a disappointing deepwater “frontier province.” It has identified 59 blocks in its exclusive economic zone (EEZ), and there is significant hydrocarbon exploration. However, Repsol, Petronas, Gazpromneft and PDVSA all drilled dry (or not commercially feasible) exploration wells during 2012. Venezuela’s PDVSA and Angola’s Sonangol were expected to drill wells again by the end of 2012 but the results have not been publicized. Cuba is the second largest oil producer in the island Caribbean (after Trinidad and Tobago) producing 52,000 barrels per day from land and shallow water. Cuba’s most promising areas appear to be towards the Gulf of Mexico and Southwest coast of Florida, and the foreland basin from the

Yucatan Straits to the Western Florida Straits.


Estimates are that Jamaica has Reserves potential of about 3 billion barrels in three blocks off the southeast coast. However, no commercial levels of hydrocarbons have been found. When 23 blocks were put up for bids in 2010-2011 no acceptable bids were received. It will offer some again in the near future. To this point the finish line for Jamaica seems very distant.

In conclusion, some of the takeaways from this brief snapshot are as follows:

A brand new oil province has been opened up in the Guianas basin sparking a dash for deep water “frontier” exploration in all countries in the wider Caribbean. David Renwick, the eminent founder of Caribbean energy journalism, who has written widely on this topic, suggests that by some estimates there is a half dozen more Zaeydus-type traps adjacent to French Guiana. Neighbouring countries are hopeful.

The geological hydrocarbon connection probably extends across the mid-Atlantic to offshore northern South America. The Caribbean region could become a “hot spot’ if other countries experience the same success as French Guiana. But all we have seen is little success and no guarantees.

At another level, the interests relating to tourism and the environment in all of the countries will have to be negotiated and reconciled.

The potential of the new provinces has been a boost for T&T energy services expertise in the Guyanas and in other potential frontier provinces such as Grenada. The lesson here is that even if some countries do not find oil and gas, the demand that the sector creates in the region for offshore services, transhipment, storage refining and downstream spinoffs is huge.

In the event that more substantial resources are discovered in the region, will these windfalls be a blessing or a nightmare? Will newly enriched countries be able to avoid the “resource curse” in the way in which Norway, Ghana, Alaska or T&T (to name a few) have done? Can they experience the potential but also overcome the challenges presented by associated political and technological risks? Can a proper regional energy policy provide some safeguards for energy security? That is a debate for another time before we can see the finish line.

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Professor Anthony T. Bryan consults on energy geopolitics and energy security for U.S. based political and economic risk firms. He writes frequently for international energy and business publications. He is an Associate of the Trinidad-based Association of Caribbean Energy Specialists (ACES).

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Petroleumworld News 04/11/2013


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