Testing the Atlantic Mirror Theory Justin T
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April 2013 ® Testing the Atlantic Mirror theory Justin T. Stolte, Latham & Watkins LLP, Houston With editorial contributions by Michael P. Darden, Latham & Watkins LLP he task of an explorer is difficult and demanding. Shareholders and Given the current state of management, along with the broader market, expect—and, in some depressed natural gas—and, recently, Tcases, mandate—the relentless generation of prospects located in natural gas liquids—prices and the regions of the world that are stable, both politically and fiscally, at entry costs significant cost and time requirements that are relatively insignificant (i.e., limited signature bonuses, limited work associated with LNG projects, the commitments, and/or limited promotes). task is further burdened with the expectation that such prospects will be oil-bearing. This task has proved Fig. 1: Suriname – Guyana Basin somewhat daunting to explorers 60˚ W 55˚ W in recent years, given the lack of Atlantic Ocean “white-space” currently available to international oil and gas companies that satisfy such expectations. Nonetheless, as the US Suriname – Guyana Basin unconventional land-rush shifts to a development stage, explorers have refocused, or, for some companies, enhanced, their efforts towards identifying prospects in parts of the Onshore world that, for a host of reasons, GUYANA Suriname Guyana borderproducing elds Suriname French Guiana border have been under-explored by the industry. Frontier basins in isolated portions of the world have been 5˚ N the recipients—and, in most cases, beneficiaries—of such efforts. One Area SURINAME FRENCH such area, the Equatorial Margin shown GUIANA of offshore Guyana, Suriname, and French Guiana in South America (the “Guianas Equatorial Margin”), has seen a great deal of attention, as several companies have recently SOUTH 0 Miles 124 become very active in the area. It is AMERICA Brazil the belief of many in the industry that 0 Km 200 the petroleum geology of the area closely resembles that of West Africa. The basins of the Guianas Equatorial Margin, which are Suriname, Guyana, and French Guiana comprised of offshore and onshore portions, encompass the coastal areas may soon share electrical interconnection of Guyana, Suriname, French Guiana, and small portions of Venezuela and our major international energy plan detailing critical action areas Brazil. This article briefly reviews the companies jointly with the for the short, medium, and long- offshore petroleum geology, recent FAgence Française de Dével- term development of the project. offshore activity, and legal and fiscal oppement (AFD) and the Inter-Amer- The Northern Arc Project has the regimes of Guyana, Suriname, and ican Development Bank (IDB) have potential to improve the quality of French Guiana. joined forces to explore an electrical life of people living in the Northern interconnection among the South Arc area. Electricity supply sys- Petroleum geology American countries of Suriname, tems are isolated from each other The Guianas Equatorial Margin Guyana, French Guiana, and the and have difficulty providing clean includes two sedimentary northern Brazilian states of Amapá and reliable energy at competitive basins—the Guyana-Suriname (capital Macapá) and Roraima (capi- prices. Infrastructure develop- Basin and the Foz do Amazonas tal Boa Vista). Coincidentally, these ment in the context of this project Basin (collectively, the “Guianas countries have recently entered into would contribute to the sustainable Basins”)—which are separated by petroleum contracts with a number integration of the Northern Arc the Demerara Plateau, a structurally of oil and gas companies for explo- countries and provide the basis for high, thick succession of Jurassic ration, development, and produc- increasing economic growth and and Lower Cretaceous carbonate- tion rights in the Guianas Basin, the social well-being of the region. rich sediments. onshore and offshore, which have The project would increase the The Guyana-Suriname Basin the potential for transforming their countries’ energy security and the lies to the west of the Demerara economies. reliability of the electricity supply. Plateau, along the coastal regions As part of a Memorandum of The Northern Arc Project is of Guyana and the central and Understanding (MOU) signed March framed within the IDB’s Latin western parts of Suriname. A thick 15 for the Northern Arc Project, pre- America and the Caribbean Sustain- succession of Jurassic to recent- feasibility studies will be planned to able Energy for All initiative (LAC age sedimentary rocks of alluvial identify and evaluate electricity de- SE4ALL). The objective of the initia- to deep-marine origins, along with mand and power supply options. In tive, which is coordinated with the a limited number of carbonates, addition, the studies will assess the United Nations (UN) SE4ALL global are found in the basin. At least political, institutional, regulatory, initiative, is to end energy poverty two world-class source rocks of technical, economic, environmental, in the Latin American and the Carib- Middle and Upper Cretaceous and social implications of a poten- bean region by providing universal age, sometimes referred to as the tial electrical interconnection of the access to modern energy, expand- “Canje Formation,” are found in Northern Arc countries. ing renewable energy generation, such sedimentary packages. To the The partners, NV Energiebed- and implementing energy efficiency east of the Demerara Plateau lies rijven Suriname (EBS), Guyana measures. During the Rio+20 meet- the western extension of the Foz do Energy Agency (GEA), Électricité ings in June 2012, the energy/ Amazonas Basin, which is located de France (EDF), Centrais Elétricas electricity utilities companies of the along the coastal regions of French Brasileiras SA (Eletrobras), the AFD, Northern Arc countries that were Guiana and the western part (west and the IDB will obtain recommen- present acknowledged the Northern of the Amazon Delta) of Brazil. dations from the studies on the best Arc Project as an important contri- The Foz do Amazonas Basin alternatives to satisfy the electricity bution to the LAC SE4ALL initiative. contains a similar succession of needs of the region along with a sediments to that found in the Guyana-Suriname Basin. A large portion of the Guianas Basins package of the Guyana-Suriname Basin alone could potentially hold 15.2 is located offshore, where the billion barrels of oil. sediments thicken as the water The petroleum system of the Guianas Basins is believed to be a mirror- depth increases. In its World image—labeled the “Atlantic Mirror” theory—of the petroleum system Petroleum Assessment 2000, the present in West Africa, where several large petroleum accumulations US Geological Survey estimated (e.g., the Jubilee discovery in the Tano Basin, offshore Ghana) have that the Upper Cretaceous sediment been discovered in recent years. The Canje Formation was deposited Fig. 2: The “Atlantic Mirror” theory of the Zaedyus-1 well in offshore French Guiana. The Zaedyus-1 well substantiated the theory, in part, WEST AFRICA by finding approximately 236 feet of net pay in two turbidite fans of SIERRA ault Oceanic Transform f LEONE Cenomanian-Turionian age, which are COTE D’IVOIRE believed to contain 500 to 850 million 4 3 LIBERIA barrels of recoverable oil equivalent. GUYANA Equatorial GHANA FRENCH SURINAME Atlantic transform GUIANA margins Recent activity 2 1 While few wells have been drilled in rm fault the Guianas Basins, there has been a Oceanic Transfo Fields/Discoveries recent wave of drilling in the region: 1 Mahogany, Teak & Akasa (i) in Guyana, the Jaguar-1 well and 2 Jubilee, Tweneboa, Enyenra & Ntomme the Eagle-1 well were drilled on the 3 Venus, Mercury & Jupiter 4 Zaedyus Georgetown Block and the Corentyne SOUTH AMERICA Block, respectively, in 2012; (ii) in Suriname, wells were drilled on Block 31 in 2011 and Block 37 in 2010 and 2011; and, (iii) in French Guiana, the Zaedyus-1 well and Zaedyus-2 well “In its World Petroleum Assessment 2000, the US Geological were drilled on the Guyana Maritime Survey estimated that the Upper Cretaceous sediment package block in 2011 and 2012, respectively, of the Guyana-Suriname Basin alone could potentially hold 15.2 with a third well spud on the block in billion barrels of oil.” January 2013. In addition, several companies have recently completed, or will Fig. 3: Drilling in the Guianas Basins soon complete, significant seismic acquisition programs in the Trinidad and basins, which will likely lead to the Tobago identification of additional prospects in the region. Companies with investments in the region include: Pomeroon PPL Anadarko, Apache, Chevron, CGX Demerara PPL Venezuela Source kitchen Energy, ExxonMobil, INPEX, Kosmos Energy, Murphy, Repsol, Guyana Shell, Statoil, TOTAL, and Tullow. Source kitchen Although it does not appear that Corentyne PPL any of the above-referenced wells Zaedyus well (other than the Zaedyus-1 well) will Suriname be deemed commercial successes, the CGX properties 100% working interest Oil & Gas show (P&A) Plug and abandon (P&A) wells, collectively, have provided the Shared interest Gas show (P&A) Oil discovery French industry with encouraging results Drill locations Oil show (P&A) Proven source kitchen Guiana CGX Shell INPEX Total Statoil 0 Miles 124 because they positively identified EXXON Kosmos Tullow Oil Murphy 0 Km 200 certain attributes of a significant petroleum system. In particular, the presence of a hydrocarbon source