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Matthew Smith

Matthew Smith

Matthew Smith is Oilprice.com's Latin-America correspondent. Matthew is a veteran investor and investment management professional. He obtained a Master of Law degree and is currently located…

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Guyana's Oil Revolution Boosted By More New Discoveries

  • CGX Energy announced promising oil discoveries at the Wei-1 exploration well in the Corentyne Block, following the 2022 Kawa-1 discovery, bolstering Guyana's position in the global oil market.
  • The new discoveries confirm the oil fairway within the prolific Stabroek Block extends further than initially thought, possibly reaching offshore Suriname.
  • These developments offer hope for other energy companies like Repsol, which is looking to make viable oil discoveries in neighboring blocks, and lend support to the idea of substantial oil potential in Guyana's shallow territorial waters.

For a country of under one million, former British colony Guyana has emerged as a fossil fuel powerhouse. A series of more than 30 high-grade oil discoveries in the offshore Stabroek Block by energy supermajor Exxon have catapulted Guyana into the big league ending it with over 11 billion barrels of oil resources. While the Exxon-operated Stabroek Block is responsible for the South American country’s emergence as what analysts are calling the world’s hottest offshore oil play, the story isn’t only about that block. Guyana continues to experience new oil discoveries, with the latest reported by CGX Energy at the Wei-1 exploration well in the Corentyne Block. That followed the 2022 Kawa-1 discovery in the same block, boding well for Guyana’s oil boom to gain further momentum. 

CGX, in mid-June 2023, announced the discovery of oil with the troublesome Wei-1 wildcat well. According to the driller, 71 feet of net oil pay was found in the secondary reservoir targets in the Maastrichtian and Campanian intervals. CGX, on June 28, 2023, announced that the Wei-1 encountered 210 feet of hydrocarbon-bearing sands in the Santonian horizon. While the wildcat well made what is a promising oil discovery, many of the details are still being confirmed due to technical glitches which forced CGX to drill a bypass well. For that reason, the driller-stated rock and fluid samples from the Santonian interval are being evaluated by an independent third-party laboratory to determine the net oil pay and characteristics of the reservoirs discovered. CGX anticipates this will take two to three months to complete.

This came on the back of the earlier discovery at the Kawa-1 well announced during January 2022. CGX stated that:

“The Kawa-1 well encountered approximately 177 feet (54 meters) of hydrocarbon-bearing reservoirs within Maastrichtian, Campanian and Santonian horizons based on initial evaluation of Logging While Drilling (LWD) data.”

The driller went on to explain that:

“These intervals are similar in age and can be correlated using regional seismic data to recent successes in Block 58 in Suriname and Stabroek Block in Guyana.”

Those results support the assumptions that the Corentyne Block contains considerable hydrocarbon resources. These, in an earlier independent 2021 resource evaluation by McDaniel & Associates Consultants Ltd, were determined to be 1.5 billion to 7.3 billion barrels for the northern section of the Corentyne Block. The entire block is estimated, in the same report, to contain prospective resources of 1.7 billion to 10.7 billion barrels of oil equivalent. 

Wei-1 is the 45th oil discovery in Guyana’s territorial waters since 2015, and it is an important milestone for the oil-rich former British colony, which is on track to become a major petroleum producer and explorer. The two discoveries made by CGX and partner Frontera Energy, which holds a 68% non-operated working interest in the Corentyne Block and 77% of CGX, are a particularly important development for Guyana’s offshore oil boom. Especially so for Frontera, which after accounting for its ownership of CGX, has a nearly 93% consolidated interest in the Corentyne Block.

The Corentyne Block discoveries confirm that the oil fairway contained within the prolific Stabroek Block, where U.S. supermajor Exxon has made over 30 discoveries and found more than 11 billion barrels of oil, extends further than originally believed. There is speculation that this petroleum trend extends through the northern part of the Corentyne Block and into Block 58 offshore Suriname where TotalEnergies and 50% partner Apache have made five discoveries.

The Kawa-1 and Wei-1 discoveries bode well for Spanish energy major Repsol and its efforts to find oil in the neighboring Kanuku Block. Repsol, which is the operator with a 37.5% working interest along with Tullow Oil and TotalEnergies, holding 37.5% and 25%, respectively, has failed to make any commercially viable discoveries on the Kanuku Block. The last exploration well drilled, Beebei-Potaro, which was completed during August 2022, discovered oil but was capped and abandoned because the reservoirs were found to be water-bearing. CGX’s discoveries are encouraging for Repsol, which is considering conducting a field survey so as to maximize the chances of successfully making an oil discovery in the Kanuku Block.

The Wei discovery also supports the view that Guyana’s shallow territorial waters contain considerable oil potential. For Guyana’s latest oil auction, which was launched in December 2022, there are 14 blocks on offer, comprised of 11 shallow water and 3 deep water blocks. The date for submissions was pushed back until mid-July 2023. This has triggered considerable speculation that the volume of oil contained in the Guyana Suriname Basin could be far greater than originally anticipated. This includes the view that the geological body contains more oil than the 2.8 billion to 32.6 billion barrels estimated by the U.S. Geological Survey.

CGX’s oil discoveries bode well for offshore Suriname, where TotalEnergies, the operator, and Apache made five commercial discoveries. Poor drilling results, including dry wells, sparked speculation that the deepwater trend in Block 58 is not as significant as initially thought. It was that, along with conflicting seismic data and a high gas-to-oil ratio, that saw the final investment decision or FID for Block 58 delayed. The discoveries in the Corentyne Block, which is contiguous with Block 58, indicate Block 58 possesses the oil potential originally envisioned when the first discovery was made in 2020. That, along with successful appraisal drilling and flow testing at the Sapakara discovery, where over 500 million barrels of oil have been identified, bodes well for the development of Block 58. Those factors will assist with progressing the stalled FID with a decision expected in 2024.

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By Matthew Smith for Oilprice.com

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