CALL: 1-876-927-1779 | CARIBBEAN PETROLEUM UPDATE : JUNE 2016
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CARIBBEAN Petroleum Update A Publication of the Caribbean Energy Information System (CEIS)
June 2016 ISSUE
Offshore Exploration
in Jamaica: Oil and Gas Frontier In the past, only Venezuela and the islands of Trinidad and Tobago have exploited their deep-waters (ranging from 1000 to 4000 meters) for gas and oil and have had successful results. Other countries such as Bahamas, Cuba and Guyana have also been exploring deep waters. Today the technology and improvements in platform construction make it possible for other countries in the Caribbean region to drill and recover oil and gas from these depths. Guyana recently discovered more than 90 meters of highquality oil-bearing sandstone reservoirs. The well was safely drilled to 5,433 meters off the Stabroek Block some 120 miles offshore. With Guyana’s example of continued persistence yielding an oil find of close to 1.4 billion oil
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equivalents offshore, there may be a “silver lining” over the horizon for other Caribbean countries like Jamaica. In this issue of the Petroleum Update, we will look at the exploratory efforts of Jamaica for oil and gas resources offshore and its current status. Without even looking at the numbers, onshore or offshore exploration is expensive. Countries solicit investments from international oil companies that would bid in what is called bid rounds and given the right combination of expectations and return on investment, a contract is awarded. With oil prices rising and the demand for energy surging, it would be
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Offshore Exploration in Jamaica: Oil and Gas Frontier encouraging to believe that with the explorations taking place there is a possibility the region could one day become a net exporter of oil and gas. Jamaica has had its fair share of trials where oil and gas exploration is concerned. The first oil and gas exploration in Jamaica took place around 1956-1983 where 11 wells were drilled both onshore and offshore, only one of which revealed deposits of oil and gas although not found to be commercially viable. The deepest, Arawak #1, had been drilled offshore in 1982, 100 km south-west of the island, off the Pedro Bank. There were gas shows and reported seeps and several hundred meters of super-rich Eocene source rock cores. There were indications of the presence of oil and gas but still not in commercial quantity. Since 1983, no further exploration took place until bid rounds in 2004. In 2004 JEBCO UK and GeoInsight Ltd. were invited to assist with Jamaica’s 1st Round, and with the support of PCJ produced a petroleum geological review that has become the basis of all recent exploration. The exploration programme attracted two small companies Sagres Energy from Australia and Finder Exploration from Canada. Working with existing seismic data bank, they carried out additional seismic and geological work where potential resources were identified on the Pedro Banks. Unfortunately, the companies did not have the funds to
drill further and abandoned the effort. However, seismic data had revealed even clearer hydrocarbon indications and the potential for commercial production. In 2007 PCJ had seismic data for Morant and Formigas basins to the east of Jamaica. In addition, Australia’s Flow Energy, Calgary based Rainville (now Sagres Energy) bid and won acreage positions in this round. Both Flow Energy and Sagres Energy have mapped giant sized prospects in the Walton Basin and beneath the Pedro Bank. Also,in 2009 Wavefield Inseis, now part of CGGVeritas, collected 6,118km of seismic over the open areas and 2,594km for Sagres Energy. The deep water geology revealed several barrel potential structures. In 2010-2011 Jamaica formally offered 19 offshore and four onshore blocks for licensing for oil and gas exploration, however none was received. In September 2010 Canadian firm Sagres Energy, the parent of Canadian firm Rainville Energy, had the rights to explore three blocks offshore Jamaica for oil, as they identified “seismic bump” that could have oil. An extension was granted to Sagres Energy up to April 2012 to seek a drilling partner in its quest for oil off the shores of Jamaica. However, their exploration licence was later revoked as a consequence of the company’s failure to meet its financial obligations and, after granting previous extensions.
JAMAICA’S OFFSHORE BLOCK MAP
www.foxdrilling.com
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However, in November 2014, Tullow showed interest in offshore Jamaica. The company signed a new Production Sharing Agreement for a large prospective acreage position which includes exploration of 10 of Jamaica’s 31 blocks which have been marked for oil and gas exploration, plus a portion of Block 1. These blocks are all located to the south of Jamaica and cover approximately 32,065 square kilometres in water depths ranging from 20 metres to 1,000 metres. Tullow is expected to invest about US$60 million to explore the blocks for oil. It is envisaged that if the company progresses to a production phase, the Government of Jamaica will earn first through royalties and then by production split.
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and the countries in which it works; stating that while the oil and gas industry tends to be cyclical, this is a good point at which to be seeking medium and longterm exploration prospects.
If the oil and gas exploration programme is successful, it can tremendously impact the country in extraordinary ways. With the Pedro Banks holding an estimated three billion barrels of oil and a projected value of US$8 billion, the country would be able to change its debt profile and reduce the heavy dependence on imported oil for energy. Additionally, Jamaica stands to develop a modern oil and gas industry that will necessitate training of Jamaicans. Furthermore, immediate jobs could There have been oil or gas shows in 10 of the 11 on- come in custom brokerage, vessel support during seisshore and offshore wells drilled in Jamaica to date. The mic studies and the use of local facilities and services. offshore area to the South of the island has been identified as having good frontier exploration potential en- Conclusion compassing three geological provinces, the Pedro Bank In hope of finding commercially viable deposits of oil, carbonate platform and the Walton and “Southern” sub the government of Jamaica has embarked on explorabasins. A bathymetry survey has been completed over tion and production operations offshore. If commerthe 32,056 sq km Walton Morant Blocks. Drop core, cially viable deposits of oil and gas are found on the thermal and environmental baseline studies have also offshore basin of the island, the country would benefit been completed in the area. A 2D seismic survey was greatly from opportunities such as lower cost of procompleted in the first quarter of 2016 and the results duction, the emergence of upstream and downstream are currently being analysed to identify potential acindustries, increased revenues for infrastructural detions to be taken. velopment and the potential for a bright future. RealisHowever, there were concerns surrounding the possi- tically, no-one is of the expectation that the Caribbean ble implications of the recent decline in oil prices for will become oil rich like Venezuela, but it is something exploratory activities in 2016, however the company worth envisioning. emphasized its long-term approach both to exploration
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CALL: 1-876-927-1779 | CARIBBEAN PETROLEUM UPDATE : JUNE 2016
Prices at the Pump JUNE 2016
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Retail prices for Regular Unleaded Gasoline in the thirteen Caribbean countries reviewed at the end of June 2016 showed increases in prices. Price increases were recorded in Bahamas, Barbados, Cayman Islands, Grenada, Guyana, Jamaica and St.Lucia between 2.6% and 12%. The highest price increase was in St.Lucia of 12% while prices were stable in the remaining countries. The average retail price at the end of June 2016 was 2.9% higher when compared to the period ending May 2016.
Unleaded Gasoline: Regular : Average Retail Price – January - June (US$/Litre) 2016 COUNTRIES ANTIGUA/ BARBUDA BAHAMAS [91 OCT] BARBADOS BELIZE [87 OCT] CAYMAN ISLANDS DOMINICA GRENADA (95 OCT) GUYANA JAMAICA 87 Octane[E10] MONTSERRAT ST. LUCIA ST. VINCENT/ GRENADINES TRINIDAD/ TOBAGO [92 OCT]
1.60
JAN 1.11 1.01 1.36 1.07 1.08 0.80 1.06 0.95 0.91 0.87 0.86 0.87 0.42
FEB 1.03 0.95 1.35 1.03 1.08 0.78 1.04 0.85 0.86 0.76 0.80 0.78 0.42
MAR 1.03 0.97 1.32 1.09 1.03 0.74 1.01 0.85 0.88 0.76 0.78 0.78 0.42
MAY 1.03 1.05 1.36 1.23 1.06 0.76 1.10 0.88 0.98 0.92 0.82 0.78 0.42
JUN 1.03 1.09 1.42 1.23 1.12 0.76 1.13 0.90 1.03 0.92 0.92 0.78 0.42
6 Mths AVG 1.04 1.00 1.37 1.13 1.07 0.77 1.07 0.88 0.93 0.86 0.83 0.79 0.42
Comparative Retail Pump Prices Regular Unleaded Gasoline June 2016 vs. 6 Mths Avg (Jan-June 2016)
1.40
JUN
1.20 US$/Litre
APR 1.03 0.94 1.39 1.16 1.03 0.76 1.05 0.85 0.91 0.92 0.82 0.78 0.42
6 Mths AVG
1.00
NOTE: *US Gallon = 3.785 L *Imperial Gallon = 4.546 L *As at November 1, 2009 MTBE was phased out from all gasoline blends in Jamaica and replaced with 10% Ethanol.
0.80 0.60 0.40 0.20 0.00
13 Caribbean Countries
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International OIL PRICES
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60.00
Average Weekly and Monthly Crude Oil Prices April to June 2016 50.18
50.00 US$/Bbl
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47.89
40.00 36.72
30.00 20.00 10.00 0.00 Period WK1
Apr-16
WK3 May-16
WK4
MTH AVG
Jun-16
Average Monthly Crude Oil Prices 2013-2015 120.00
106.61
105.78
100.00 US$/Bbl
Analysis of International Crude Oil Prices from April to June 2016 period showed an average price of US$48.95/bbl . This average price was 25% higher than the price seen in April 2016 and 5% higher than the average price in May 2016. The highest weekly price seen in June 2016 for the commodity was US$50.18/ bbl-reflected in week two while week three accounted for the lowest price of US$47.89/ bbl. Overall, the lowest price recorded for the period was US$36.72 recorded in week two of April 2016. The average price reported in June 2016 was 18% lower than the average price recorded in June of the previous year.
WK2
80.00 60.00
59.91
40.00 20.00
2013
2014
2015
0.00
Period
FEATURED OFFERS: P E TS TATS - t h e Ca r i b b e a n E n e rg y I n fo r m at i o n System (CEIS) primary report of historical annual petroleum energy statistics provided for 18 Caribbean Countries. Included are data on total energy production, consumption, and trade; overviews of petroleum, natural gas, electricity, as well as financial and environmental indicators for over twenty years.
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