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Natural Gas concerns among key reasons for Suriname’s delayed oil production – TotalEnergies

Mar 01, 2023 News

Kaieteur News – Neighbouring Suriname has been touted as an oil and gas producer in the coming years but despite the discovery of some 6.5 billion barrels of oil, in its Block 58 offshore field, the amount of Natural Gas being discovered in addition to other complications, such as a mismatch in understanding its surveys has led to repeated delays in production.

One such operator in Suriname—TotalEnergies—recently reported a string of dry wells and sub-commercial discoveries in Block 58, which sparked considerable concern for the company. Among the most recent was the August 2022 announcement that the Dikkop wildcat well had struck water-bearing sandstone but had to cap and abandon it. That was followed by Awari exploration well drilled in the northwest of Block 58 where the oil discovered was deemed to be non-commercial.

At the end of last year, TotalEnergies’ Chief Executive Officer (CEO), Patrick Pouyanne had said the poor drilling results combined with conflicting seismic data saw the company baulk at proceeding with the Final Investment Decision (FID) during 2022, as originally anticipated, until further testing was conducted.

“A lack of confidence in understanding the reservoirs discovered to date, driven by a mismatch between what seismic data shows and the results of the delineation wells,” he said.

As it relates to Natural Gas concerns, it was noted that in addition to the stated uncertainties there are large amounts of natural gas being found in many of the discoveries, which complicates things further. “Environmentally damaging flaring, which is a major industry producer of carbon emissions, is not an option for emission-sensitive oil companies seeking to significantly reduce damaging carbon discharges from their operations. For that reason, TotalEnergies, as the operator, must find an alternate means of disposing of the gas produced adding to the costs and complexities associated with developing as well as operating oilfields in Block 58.” the CEO said.

It was noted that rising uncertainty as to the volume of commercially exploitable oil in place and growing complexities associated with field development are weighing on whether a FID will be eventually made by TotalEnergies and Apache.

Those concerns are amplified by the fact that will take up to US$10B to bring Block 58 to production, which is a significant investment for an unproven offshore region.

It should be noted that while Suriname treats with Natural Gas as a reason for concern, Guyana is forging ahead to develop an industrial zone at Wales, West Bank Demera using Associated Gases piped to shore by ExxonMobil Guyana.

In Suriname, it was reported by TotalEnergies that taking into account the complications there, the planned first oil from Block 58 has been delayed by at least two years, with analysts estimating it will not occur until 2027, compared to 2025 in earlier forecasts.

Additionally, it was noted that there is also the potential for the growing risks surrounding Block 58 to derail Suriname’s oil boom and much anticipated petroleum windfall altogether. Pouyanne, in the company’s February earnings report, indicated the FID may not even be made during 2023 because of the substantial risks identified, especially with earlier appraisal drilling not finding the volumes of recoverable oil anticipated. “If that occurs, it will potentially herald the end of Suriname’s nascent oil boom before it truly begins.” Another of the oil company’s principals did note however, however, it is not all doom and gloom with Apache indicating that Block 58 potentially possesses the substantial oil potential initially believed.

Earlier this month, the U.S. based driller announced the second successful flow test at the Sapakara South oil discovery in Block 58. The Sapakara South-2 appraisal well encountered 118 feet, or 36 meters, of net oil pay with flow testing indicating a resource of over 200 million barrels of oil in place. Apache CEO, John J Christmann in his reaction, said, “Results from the SPS-2 drilling and flow tests are consistent with our pre-drill expectations, confirm our geologic, geophysical, and reservoir models, and, importantly, add substantial resources towards a potential development”

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