Oil companies signal interest in Takutu Basin

There is renewed interest in exploring onshore for oil and gas in Guyana’s Takutu Basin, with the United Kingdom’s Tullow Oil being one of two companies expressing interest in the acquisition of blocks in the basin, Minister of Natural Resources Raphael Trotman says.

However, at this time, government is mindful of potential environmental impacts on land and says it will focus on offshore developments as it maps a course of action.

“There has been interest shown by two companies in returning to the basin and these applications are pending,” Trotman told Sunday Stabroek  when asked for an update on activity in the basin.

“Emphasis is being placed by government on preparing for first oil and managing the development of the offshore Guyana Basin as a priority. A secondary consideration for Takutu is the environmental one and so caution has to be exercised and the likely impacts on the environment weighed before proceeding,” he added.

According to data provided by the Guyana Geology and Mines Commission (GGMC), there has been interest in the area dating back to 1980.

A summary of the basin’s exploration activity shows that in 1980, Home Oil drilled the Lethem 1 Well but it was a dry one and that project was abandoned.

Two years later, in 1982, the company drilled another well, called the Karanambo 1, which produced a low Sulphur, low wax oil of very good quality. However, GGMC’s records state that the well was proven to be non-commercial and it was also abandoned.

The area would remain without activity for another decade until 1992, when Hunt Oil and partners Yukong Ltd. and Sunkyong Group, two South Korean companies, drilled the Turantsink 1. That well was dry and it was abandoned.

Sources told Sunday Stabroek that the then government, under the leadership of now deceased president Desmond Hoyte, had assurances from Hunt Oil that it would aggressively pursue the operations. This was because the cost of oil had skyrocketed due to First Gulf War from 1990 to 1991. However, the company turned its focus and investments to Yemen, where it had other operations and where it was assured profits.

The following year, in 1993, Hunt Oil relinquished its concession.

Twelve years later, in 2005, Groundstar Resources Inc. acquired the Takutu Concession and immediately commenced gravity survey work in Eastern Rupununi. It is unclear what happened during the next four years but the records show that in 2009, Canacol was also listed as an operator for the Takutu Concession. Groundstar Resources Inc. also changed its name to Takutu Oil and Gas Inc. (TOGI). Canacol Energy Ltd held a 90% interest in the Takutu Petroleum Prospecting Licence (PPL) while TOGI had the remaining 10% working interest.

There is no annual update on the companies’ activities but in 2011, the two partners drilled a well, called Apoteri K-2.

Canacol the year before had completed a farm-out agreement with Sagres Energy Inc, whereby Sagres acquired a 25% interest in the exploration agreement by agreeing to fund 30% (US$1.25 million) of costs of drilling the K-2 exploration well, bringing Canacol’s net working interest to 65%. Under the terms of the agreement, the Corporation and Sagres would carry Groundstar’s 10% remaining working interest until first commercial oil production.

The Apoteri K-2 well was drilled to a total measured depth of approximately 11,000 feet. Although the well had some oil and gas, it was proven to be non-commercial and was also abandoned by the company.

In 2015 Canacol/TOGI relinquished the Takutu Concession, leaving the area currently vacant and under government’s control.

GGMC states that the area currently is not awarded but since the discovery of oil offshore, there has been renewed interest, including two applications—one by the UK-based Tullow Oil and the other by a local consortium of companies.

And as with the current remaining offshore blocks, a decision on the onshore Takutu concession will be made after an international firm is hired to guide the process for allocation.

It was Trotman who told this newspaper that an international firm would advise the Guyana Government on how to market the country’s remaining unassigned oil blocks.

Asked for an update last week, Trotman said government has “compiled a long list of credible international firms to choose from and this is a matter on the agenda for next ‘quintet’ meeting. No further steps have been taken except that no direct one and one negotiations are anticipated and are unlikely and government is likely to use the firm to represent it.” The quintet refers to  ministers Dominic Gaskin, Joe Harmon, Winston Jordon, David Patterson and Trotman.

“The firm will advise on the best menu of options that government can choose from to determine how to continue the process to maximise economic benefits, local content development and environmental safeguards, whilst achieving strategic objective of protection of sovereignty,” he added.

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