Latest update October 6th, 2024 12:59 AM
Mar 07, 2022 News
– appraisal works to continue in the future
Kaieteur News – Following a release by CGX Energy Inc. on Friday last that it had engaged in decommissioning activities at the Kawa-1 well which recorded a discovery at the Corentyne block, various industry stakeholders were under the impression that the company had essentially walked away from what was deemed a historic find. Fueling those perceptions as well were statements by CGX that it had “plugged and abandoned” the well as it was “never intended to be an active well.”
The Canadian exploration conglomerate noted however that its statement should not be interpreted to mean that it has walked away from Kawa-1. In fact, it was explained that CGX intends to do further appraisal works in the future for Kawa. Expounding on this issue, Jennifer Budlong, Exploration Manager at CGX reminded that Kawa-1 is a discovery with 200 feet of net pay.
Budlong said, “Our work with an independent third party laboratory to determine the nature of the hydrocarbons encountered in the pay zones in Kawa-1 is very encouraging…”
In this regard the Exploration Manager articulated that cutting samples from 12 reservoir zones in the Kawa-1 well are being analyzed with a variety of geochemical methods to evaluate in situ hydrocarbons. The CGX official said too that preliminary data from four pay intervals in the Santonian show consistent fingerprints which provide confidence in the interpretation and mitigate mud contaminants by overcoming the presence of Synthetic Oil Based Mud (SOBM) in the cuttings. Kaieteur News understands that a technique called Low Temperature Hydrous Pyrolysis (LTHP) was utilized to analyze the cuttings to preserve volatile hydrocarbons.
Importantly, the Exploration Manager categorically stated that the company “abandoned” or walked away from the opportunity unlocked by the Kawa-1 well. “It is the opposite; CGX is indeed very excited to pursue the development opportunity unlocked by Kawa-1. Kawa-1 was always planned as a ‘finder well’ vs ‘keeper well’– finder wells are the norm for offshore exploration wells that have no previous nearby subsurface penetrations or offset wells,” explained the CGX official while adding, “The goal of a finder well is to test the hydrocarbon generation, reservoir presence and trap models, and establish preliminary prospectivity regarding subsurface conditions (pressures, temperatures, fluids, reservoir quality).”
The Exploration Manager said Kawa-1 was a finder well that has successfully been declared a discovery. She said the outcome supports further appraisal of the Kawa-1 discovery as well as further exploration of the Corentyne block. She explained too that appraisal wells are drilled after a discovery, to confirm the size of a hydrocarbon deposit. She said these wells may be used normally to run drill stem tests, gather core or fluid samples or other evaluations.
Further to this, the Exploration Manager noted that the decision to drill Wei-1, an exploration well that will be drilled in the second half of this year on the Corentyne block, was motivated by the discovery at Kawa-1. As for Kevin Lacy, CGX’s Drilling Director, he was keen to note that oftentimes, companies will not make a clear statement about the end of well status. He noted however that “CGX wanted to be completely transparent as to final well status especially since it was part of the original plan. That plan was safely executed, eliminating any future liabilities or requirements to return to the well.”
Mike Stockinger, Vice President of Operations also outlined that the preliminary plan for plug and abandonment was provided by CGX to the Environmental Protection Agency (EPA) the required Environmental and Management Plan (EAMP) submission in May 2021, then reviewed again after EPA approval for the EAMP, in the required Intent To Drill (ITD) meeting with EPA, the Guyana Geology and Mines Commission (GMCC) and Ministry of Natural Resources (MNR) in July 2021. Kawa-1 was then drilled in August. Overall, the CGX team said it is extremely pleased with the outcome at Kawa-1 while noting in no uncertain terms that it remains, “a transformative discovery.”
About CGX
CGX is an oil and gas exploration company headquartered in Toronto, Canada and was incorporated in 1998 for the primary purpose of exploring for hydrocarbons in Guyana, South America. In partnership with Frontera Energy Corporation, CGX holds an interest in three Petroleum Agreements (PA) known as the Corentyne, Berbice and Demerara Blocks covering approximately 11,005.2 km2 (approximately 9,748.2 net km2) offshore and onshore Guyana.
About Corentyne Block
The original Corentyne PA covered approximately 11,683 km2 under two separate Petroleum Prospecting Licences (PPL). The Annex PPL (4,047 km2) was held 100%, as was the offshore portion of the Corentyne PPL (6,070 km2), while the onshore portion of the Corentyne PPL (1,566 km2) was held net 62% by CGX through ON Energy, its subsidiary.
The original Corentyne PA was awarded to CGX in 1998, following which the company began an active exploration programme consisting of a 1,800 kilometre seismic acquisition and preparations to drill the Eagle well. The Eagle drilling location in 2000 was 15 kilometres within the Guyana-Suriname border. However, a border dispute between Guyana and Suriname led to the company being forced off the Eagle location before drilling could begin. As a result of that incident, all active offshore exploration in Guyana was suspended by CGX and the other operators in the area, including Exxon and Maxus (Repsol, YPF).
On September 17, 2007, the International Tribunal on the Law of the Sea (“ITLOS”) awarded a maritime boundary between Guyana and Suriname. In the decision, ITLOS determined that it had the jurisdiction to decide on the merits of the dispute and that the line adopted by ITLOS to delimit the parties’ continental shelf and exclusive economic zone follows an unadjusted equidistance line. The arbitration was compulsory and binding. CGX had financed a significant portion of Guyana’s legal expenses at a cost of US$9.8 million. The decision was beneficial for CGX, as it concluded that 93% of CGX’s Corentyne PPL and 100% of the Georgetown PPL would be in the Guyana territory.
Because CGX was prevented from gaining unhindered access to a portion of the original Corentyne PPL area during the seven year resolution, the term of the contract was extended to June 2013. In 2008, CGX was the first company to commit to acquire 3D seismic in Guyana when the Company acquired a 505 square kilometre 3D seismic programme to enhance its interpretation of its newly defined Eagle Deep prospect, a large stratigraphic trap in the Cretaceous. The cost of the seismic program was approximately $8 million. Processing and interpretation of the 3D seismic was completed in 2009.
Based on the interpretation of the 3D seismic volume and concurrent activities on both sides of the Atlantic margin, CGX interpreted numerous prospects on the Corentyne PPL. One significant prospect was a Turonian sand at approximately 5,600 metres. Because the offset Jaguar-1 well on the Georgetown PPL was testing another Cretaceous Turonian prospect, the Corentyne commitment well was targeted to 4,250 metres to test the Tertiary Eocene and Cretaceous Maastrichtian trend.
The Eagle-1 well spudded on February 13, 2012 and was initially budgeted for 60 days of drilling, but experienced weather delays and mechanical issues which extended operations to 107 days. The initial cost estimate for the Eagle-1 well was US$55 million. However, due to additional time for drilling and additional logging of potential reservoir sands, the final costs associated with the Eagle-1 well were approximately US$89.4 million. In May 2012, the Company completed the analyses of the results of its Eagle-1 well on the Company’s 100% owned and operated Corentyne PPL, offshore Guyana. The well was declared a dry-hole after encountering hydrocarbon shows in three formations, but the potential reservoir sands proved to be water-bearing. The Company recognized the total cost of Eagle-1 well as a dry hole expense in the financial statements for the years ended December 31, 2013 and 2012.
As of March 19, 2013 and effective December 31, 2012, an Independent Resources Evaluation was completed by DeGolyer and MacNaughton of Dallas, Texas, USA (the “D&M Report”). In the D&M Report, the total best estimate (P50) of Prospective Resources for six oil and gas prospects within the Corentyne PA are 779 MMbbl of oil, 743 MMbbl of condensate, 6,943 Bcf of sales gas plus 696 billion cubic feet of solution gas.
The D&M Report has been filed on CGX’s website at www.cgxenergy.com. The D&M Report was prepared in accordance with the requirements of Section 5.9 of National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities. On November 27, 2012, the Company received a new Corentyne PA, offshore Guyana, renewable after four years for up to six additional years. That New Corentyne PA applied to the former offshore portion of the Corentyne PPL, covering 6,212 km2.
On December 15, 2017, the Company was issued an addendum to the November 27, 2012 PA. Under the terms of the addendum to the new Corentyne PA beginning November 27, 2017, during phase two of the first renewal period the Company has an obligation to drill one well.
That well was drilled last year August with Kawa-1. Additionally, the addendum to the New Corentyne PA resulted in a reduction of acreage to 4,709 km2.
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