Tullow Oil Hits Heavy Crude off Guyana
Ireland-based energy company Tullow Oil announced Wednesday that two discoveries off the coast of Guyana - an important frontier area for offshore exploration - contain lower-value, sulfurous heavy crude. The company's shares plunged by 27 percent following the announcement. By closing, shares in its partner company, Eco Atlantic, had plummeted by almost twice that amount.
Tullow announced oil discoveries in Guyana at the Jethro well in August and the Joe well in September. At Jethro, the company discovered 55 meters of net pay in a high-quality sandstone reservoir. Joe encountered 16 meters of net pay in deposits from the Upper Tertiary (Neogene) period, a new play type for the region.
“Recent analysis has shown that at these locations we have encountered heavy oil. We remain confident in the broader light oil potential of the Orinduik and Kanuku blocks located in this prolific oil basin," said CEO Paul McDade in a statement.
Eco Atlantic described the grades as "mobile heavy crudes, not dissimilar to the commercial heavy crudes in the North Sea, Gulf of Mexico, the Campos Basin in Brazil, Venezuela and Angola." While sour heavy grades are less attractive, the Jethro discovery has several factors in its favor: 2,600 PSI overpressure, a porous formation and a high reservoir temperature of 200 degrees F, which increases oil mobility and provides an advantage at a floating production facility.
"The fact that the oil is already hot in the reservoir, and mobile, and has high quality porous sand to travel through, helps to eliminate a great part of the conventional heavy oil challenge," said Colin Kinley, cofounder and CEO of Eco Atlantic.
Tullow holds a 60 percent operating interest in the Orinduik Block, with 25 percent held by Total and the balance by Eco Atlantic.
Oil major ExxonMobil has led the way in exploring offshore Guyana, drilling 16 wells in four years and discovering 14 reservoirs with commercial potential. Guyana is one of the company's most promising growth regions, with a combined six billion barrels of estimated recoverable resources found to date. Exxon's first project to come online in the area, the Liza field, will produce light, low sulfur crude.