Kaieteur News

GEORGETOWN
EnergiesNet.com 03 31 2022

 CGX Resources Inc. recently disclosed to the Environmental Protection Agency (EPA) that it proposes to drill the Wei-1 exploration well in the Northern portion of its Corentyne Block in the May to August 2022 period. Wei-1 is pegged to cost approximately US$93,000,000. This sum would be recoverable should CGX move to production on the heels of a commercial discovery.

The site of the proposed Wei-1 well is approximately 200km from Georgetown in a north easterly direction in the Atlantic Ocean. The area is bordered by the Stabroek and Kanuku Blocks on the north and west, respectively and Suriname on the east.

Kaieteur News understands that the Wei-1 well will be drilled as a vertical well utilising a semi-submersible rig. CGX said it secured an option to use semi-submersible rig Maersk Discoverer, a mobile offshore drilling unit (MODU) from Maersk Drilling.

The Canadian explorer said the Maersk Discoverer was selected because of its potential to drill Wei-1 effectively and safely. It explained that the rig is designed to sustain extreme environmental conditions and is certified for offshore operations. Additionally, it is fully equipped to handle all the drilling operations as its blowout preventer (BOP) and well control systems exceed all well control requirements.

CGX also told the EPA that the project will involve onshore facilities and marine/aviation services in Guyana to support the exploration, drilling and decommissioning activities. Laydown areas, pipe yards, warehouses, fuel supply, heliport, and waste management facilities are planned to be part of the support. The company said it will consider Trinidad and Tobago for back-up service activities if not available in Guyana.

It was noted that CGX is in discussion with G-Port Inc. for standard offshore Rig support logistics, PSV mooring and other Shore base services in Georgetown. The company is also in discussion with Tiger Rentals Guyana for non-hazardous and hazardous waste management disposal services and PSV mud tank cleaning services at the GYSBI Inc. location at Houston, Guyana.

Furthermore, CGX said a “Cradle to Grave Waste Analysis” is being prepared for the project and will include waste profile generation, transportation, treatment, storage, and disposal process stream diagrams, associated volumes, related safety data sheets (sds), and other applicable waste profile details.
It was keen to note however, that there are challenges facing the country regarding waste management and therefore committed to delivering the most practical solutions with the most up to date available technologies. It noted in this regard that it is committed to ensuring the minimisation of the amount or hazardous nature of waste entering the waste streams.

Kaieteur News previously reported that the prospect Wei is named after the tallest and hottest mountain close to the villages of Paramakatoi and Kurububaru in the Pakaraimas. Wei mountain has commanding visibility over all the surrounding terrain, so it was used as a sentinel post by the Patamona people to guard against attacks.

Wei-1 is also the second prospect following Kawa, currently being drilled (September-December 2021), that has been identified in the Northern Corentyne area for exploration drilling.

Kaieteur News previously reported that 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.

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 percent, 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 percent 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 of 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 percent of CGX’s Corentyne PPL and 100 percent 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 programme 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 percent 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 recognised 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.

kaieteurnewsonlines.com 03 30 2022