CGX Energy demobilising well in Corentyne Block

…amid swelling drilling costs for Kawa-1 well

Canada-owned oil company CGX Energy, which spud the Kawa-1 well earlier this year, is making moves to demobilise its exploration wells in the Corentyne block offshore Guyana by December 31.

The MODU Maersk Discoverer drill rig being used in demobilisation activities

According to a notice from the Maritime Administration Department (MARAD), the demobilisation activities will continue and conclude on December 31, using drill rig MODU Maersk Discoverer.
Earlier this year, CGX Energy had said that its drill campaign, which was scheduled to kick off in the second half of 2021 with two wells being drilled in the Corentyne and Demerara Blocks, was expected to cost the company some US$90 million.
According to CGX Energy, the estimated total cost of US$90 million for its 2021 exploration programme was based on presently available information, an indication that this sum could change.
However, only recently, CGX Energy and its joint venture partner, Frontera Energy Corporation, had announced that drilling costs for the Kawa-1 well were expected to increase, since the drilling operations were taking longer than expected.
The companies had said in their update that the cost estimate for the Kawa-1 well was now expected to be between US$115 million and US$125 million. And at the time of the update, approximately 90 per cent of the planned footage had been drilled.
The Kawa-1 well, one of the two wells that were earmarked for the Corentyne Block, was supposed to be drilled to a depth of approximately 6500 metres in 370-metre-deep water.
“The primary target is a Santonian age, stratigraphic trap, interpreted to be analogous to the discoveries immediately to the east on Block 58 in Suriname. The prospect is named after the iconic mountain overlooking the village of Paramakatoi in the Pakaraima Mountains of Guyana,” CGX had said at the time it announced the US$90 million figure.
Meanwhile, the other Makarapan-1 exploration well was to be drilled in the Demerara to a total depth of approximately 3500 metres in a water depth of approximately 1000 metres, significantly deeper water than the Kawa well.
CGX and Frontera Energy had previously commissioned an independent report, which had revealed that they are potentially sitting on 4.9 million Barrels of Oil Equivalent (BOE) in the Demerara and Corentyne, Guyana oil blocks.
However, the report had hastened to add that there is no certainty that the company can recover the oil, or that it is even commercially viable. According to the report, there are a total of 32 prospects in the two blocks, 27 in the Corentyne Block and five in the Demerara Block.
These prospects potentially have 4.940 million BOE un-risked and 884 million BOE in them. An unrisked prospect, however, is one where the volume of oil is predicated on the basis that everything goes as planned and the oil is commercially viable and recoverable. The report makes it clear that it cannot give such certainty.
Last year November, CGX had announced that the Government, following discussions on the drilling delays in the Corentyne oil block, had agreed to give CGX a one-year extension until November 27, 2021, by which time the companies are expected to commence drilling in the Corentyne Block.
Additionally, the company had also revealed its decision to relinquish 24.96 acres of land at the estuary of the Berbice River that was earmarked for its deepwater project, following negotiations with the Government of Guyana.
Back in May 2019, the former Government had approved a Strategic Joint Venture between CGX Energy Inc and Frontera Energy Corporation to farm into two shallow-water offshore Petroleum Prospecting Licences for the Corentyne and Demerara Blocks – both of which are adjacent to ExxonMobil’s Stabroek Block, where multiple discoveries have been made.
The farm-in joint venture allowed Frontera to acquire a 33.333 per cent working interest in the two blocks. (G3)