CGX continues search for oil

June 2, 2012 | By KNews | Filed Under News - Source

Weeks after its first off-shore attempt came up empty, Canadian oil exploration firm, CGX Energy, has announced plans to drill at least five more in as many years.

Its next well, Eagle-D, is scheduled to be drilled next year.

Canadian High Commissioner, David Devine, making a point during CGX presentation on its oil exploration yesterday at the Pegasus Hotel.

The company, which has exploration licences to operate in the Guyana/Suriname basin, off-shore Corentyne, also faced probing questions during a public presentation to stakeholders, politicians and the business community yesterday at the Pegasus Hotel.

Prominent businessman and Chairman of the Demerara Distillers Limited, Dr. Yesu Persaud, said that should Guyana find oil, it will have to “learn to spend the money”.

He too was of the opinion that it is only a matter of time before oil is discovered but the country will have to start to examine mechanisms to establish special funds, among other things, to manage the proceeds.

Attorney-at-law and senior official of the Alliance For Change, Nigel Hughes, raised the questions about institutional arrangements that the country will have and urged that Guyana look to the examples of other countries to learn from their mistakes.

One official of the newly established Ministry of Natural Resources which oversees the oil and gas sector assured that organizations, including the Commonwealth Secretariat, and governments like Canada, are already helping to craft the legal framework that will be necessary to regulate the oil industry.

According to CGX’s Chairman, Professor Suresh Narine, establishing the necessary regulations to deal with the eventual discovery of oil and gas, is a task for the Guyanese government and people.

Canada’s High Commissioner to Guyana, David Devine, disclosed that his country had visited the North Sea area and the Middle East, to help develop its oil industry. Regulatory bodies were established based on the models seen. He urged that a unified posture be taken from the people to develop the necessary system of control for the industry which is not unknown for being complex and a high risk one.

Officials of the Private Sector Commission and CGX Energy yesterday.

In response to a question by AFC Parliamentarian, Moses Nagamootoo about the possibility of a drop in price as more oil fields are being reserved, Narine noted that while development of the country’s oil industry is a far way from “barrel”, it is a commodity that is susceptible to the vagaries of the market. With Guyana in need of oil, it is the reality that demand has far outstripped supply.

CGX is pinning its hopes to finding oil in the Jaguar-1 well, in which it has a 25 per cent interest with partners Repsol ExploraciÓn (operator), YPF Guyana and Tullow, located about 100 miles offshore Georgetown.  Total depth for the well is projected at 6,500 metres and it is expected that results will be known by August.

According CGX’s Chairman, cost overruns are nothing unusual. The company said that its recent Eagle-1 well went over-budget by around US$20M.

Calling for patience, he noted CGX remained confident of striking oil as it has developed more data for drilling. Drilling offshore is a very difficult and dangerous exercise and not an exact science. Recently the company managed to sign a deal with one of its investors, Pacific Rubiales, for US$30M in financing.

For the next well, the company has already started talks with interested parties.

According to Kerry Sully, President and Chief Executive Officer of CGX, the Eagle-1 well would have meant it is a fifth well for Guyana. CGX has drilled three onshore wells since coming here back in the 90’s.

Explaining the Eagle-1 well, Sully pointed out that it was not a case of no oil. The company has since developed data that will allow its technical team to narrow the search.

In the last 18 months, CGX said it has invested US$135M to find oil since the company entered Guyana.

There are around 80 members of staff employed directly with another 30 indirectly.

Yesterday’s event was organized by the Private Sector Commission and CGX.

With a significant part of the revenues spent on oil imports, Guyana is desperate to make a discovery, especially in light of the fact that neighbouring Venezuela, Suriname and Brazil have found.