CGX and its partners yesterday announced that its six-month drilling operation for the Jaguar-1 well here was brought to an end without any commercial oil discovery because it was not safe to go deeper, but and talks with government already started on re-drilling with a new well-design.
It was also the second offshore well that CGX has participated in this year that has come up dry but the company signalled that light oil samples that were recovered would hold “significant promise” while government said that the evidence of petroleum occurrences was encouraging to all parties.
CGX Energy Inc along with its partners on the Jaguar-1 well announced yesterday that the drilling operations at the Jaguar-1 well on the Georgetown PPL have ended and the well will be plugged at a depth of 4,876 metres without reaching the primary objective in the Late Cretaceous geologic zone. “The decision to stop drilling at this point was unanimously agreed by all partners based on safety criteria and was taken after reaching a point in the well where the pressure design limits for safe operations prevented further drilling to the main objective,” CGX said.
Jaguar-1 was a high pressure, high temperature (HPHT) well which was spudded in February 2012 using the Atwood Beacon jack-up rig. UK newspaper, the Guardian yesterday reported that the decision to cease drilling at the site may well be for the best, because the Jaguar well was similar to the BP Gulf of Mexico operation that led to the catastrophic Deepwater Horizon oil spill which gushed underwater for three months in 2010.
‘New well’
CGX, however, said that while the primary Late Cretaceous objective was not reached, “samples of light oil were successfully recovered” from two Late Cretaceous turbidite sands.
CGX President and CEO Kerry Sully was quoted as saying that based on hydrocarbons recovered during the drilling of Jaguar-1, CGX “is confident that a new well targeting the same prospect would hold significant promise” and it is “committed to seek a re-drill utilizing a new well design.”
Further, company Chairman Suresh Narine, commenting on the plans in the Guyana Suriname basin, emphasised CGX’s near-term goals. “In addition to our commitment well on the Corentyne Block, we are planning a 3D seismic programme later this fall with our ultimate goal being to commit to a rig for a three to five well programme. Added to this would be the re-drill of the Late Cretaceous target addressed by the Jaguar-1 well,” Narine said.
The partners to the Jaguar 1 well are Repsol Exploración S.A (15%), as operator, along with YPF Guyana Limited (30%), Tullow Oil plc (30%) and CGX Resources Inc. (25%).
Meanwhile, the Ministry of Natural Resources and the Environment said that the decision to close the operations was formally communicated to the government through Minister Robert Persaud yesterday.
In a statement, it noted that progress with the well was steady, but down-hole conditions became very challenging. “…Despite the resort to technical and engineering solutions by the consortium, government accepts the consortium’s decision to close operations, safety being the primary consideration,” it added, while noting that the Guyana Geology and Mines Commission (GGMC) has been mandated to work with all related parties on a full analysis and determinations from information gathered so far.
The ministry added that the consortium encountered evidence of petroleum occurrences and that this was encouraging to all the parties. “Government and operator for the consortium Repsol, continue to be engaged on the way forward, which could include a second well to achieve the intended objective of the Jaguar 1. These discussions have started as it is our intention to see an early restart of early exploration drilling by all the approved parties,” the ministry noted.
‘Another setback’
The dry wells have been costly for CGX, with the US stock exchange NASDAQ reporting up to yesterday morning that CGX Energy’s shares had plunged by 46% to a new year low. According to online news sources, share price for CGX Energy Inc plummeted on the news of the cessation of drilling at the Jaguar 1 well. Those reports suggested that CGX shares lost 17.5 cents (US) early yesterday afternoon, trading at 25.5 cents per share as at 12:45 pm. Share prices for Tullow and Repsol shares also dropped as a result of the news yesterday.
Interest in the Guyana/ Suriname basin amplified after explorer Tullow struck oil last year off of French Guiana, raising the prospect of the opening of a major offshore oil producing province in South America and boosting its shares. However, the second drilling result was a further setback for CGX, which first attempted exploration here in 2000.
CGX’s first attempt to drill a well here in June 2000 ended after Surinamese gunboats chased its rig from the drill site.
This led to a protracted territorial dispute between the two countries which ended when Guyana approached the Hamburg, Germany-based International Law of the Sea Tribunal and substantially won its case.
On May 7 this year, CGX Energy Inc announced that drilling at its Eagle-1 location in the Corentyne Basin proved futile and that it was moving on to other locations in its hunt for oil. Further the company had to raise an additional US$20 million to finance the added drilling days spent at that site, after weather delays and mechanical issues extended operations for an additional 30 days.
Sully had then stated, “Although the results of the Eagle-1 well are disappointing for all stakeholders, this test has gathered valuable information that will assist CGX with determining the drilling location for its next well to be drilled on the Corentyne PPL and for other future targets.”
Up to February this year, Repsol had expended US$52 million on its operations for Jaguar-1 and this figure was expected to reach a total of US$180 million.
