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Oil Explorer 'expects' JV talks start this month

06 October 2011

Published On:Thursday, October 06, 2011

By NEIL HARTNELL

Tribune Business Editor

A Bahamas-based oil exploration company is expecting to this month start receiving bids from oil majors over a potential exploratory drilling joint venture in this nation's waters, having collected "several trillion bits of data" in its 3D seismic survey of its licence fields.

Responding to Tribune Business's e-mailed questions, Dr Paul Gucwa, the Bahamas Petroleum Company's (BPC) chief operating officer, said the company had now closed its data room to interested parties, and was awaiting bids from major international petroleum players.

Confirming that Bahamas Petroleum's 3D seismic testing was complete, Dr Gucwa said the company would receive 'fast track' findings from it in December, with full results emerging in the 2012 second quarter.

And, with Bahamas Petroleum due to deliver its Environmental Impact Assessment (EIA) to the Bahamas Environment, Science and Technology Commission (BEST) this month, Dr Gucwa said he was also set to give presentations as to why a 'Macondo'-type spill, which resulted from the destruction of British Petroleum's (BP) Deepwater Horizon rig in the Gulf of Mexico, could not happen in Bahamian waters.

Asked by Tribune Business about the status of Bahamas Petroleum's negotiations on a joint venture tie-up with an oil major to begin exploratory drilling in this nation, Dr Gucwa responded: "We have closed our data room, and now are waiting to see which companies will submit bids and enter into negotiations. We expect to start receiving bids in October.

"The 3D seismic acquisition is completed, and we are now in the process of processing the several trillion bits of data collected. We will get our 'fast track' processing in December, and the final processing late in the 2012 second quarter.

"I will be reviewing the processing plans on Friday. These data will allow us to finalise a location, help us better understand the 'Jurassic' section below 20,000 feet, and will provide the best available data to plan a safe well."

Dr Gucwa last month told this newspaper that seven major international oil companies had either visited Bahamas Petroleum's data room or expressed an interest in doing so, though he declined to name them.

The company, which has its Bahamian offices in East Bay Street's Montague Sterling Centre, is hoping to conclude negotiations with a 'preferred' joint venture partner by the 2012 first quarter, giving the two parties one year to plan their first well in detail.

The joint venture involves drilling wells in the five areas for which the Bahamas Petroleum Company holds licences, and Dr Gucwa previously told this newspaper they wanted to begin drilling the inaugural well before year-end 2012.

Addressing the safety and environmental concerns raised by the explosion that destroyed BP's Gulf of Mexico rig, Dr Gucwa told Tribune Business: "Later this month I will begin making presentations that will outline how the Bahamas is geologically different from the US Gulf of Mexico, and why a 'Macondo'-type spill could not happen here.

"The US Gulf of Mexico consists of rapidly deposited sandstones and shales. These sediments are deposited undercompacted, with a large amount of water in the pore space. As the sediments are buried, which happens quite rapidly geologically in these sediments, if the water cannot escape high pressures begin to develop.

"High or abnormal pressure is a common occurrence in the US Gulf of Mexico because of this. The sediments in the Bahamas are carbonates that precipitate from sea water very slowly, are not very compressible, and the development of high pressures due to rapid burial does not occur. That is not to say there are no drilling issues, and proper planning is essential. That is why we would like to get a partner by the first quarter next year, so we will have a year to carefully plan the well along with our emergency management plan."

While unable to speak for the Government, and its efforts to develop a regulatory and environmental safety framework for the industry, Dr Gucwa said: "I believe they are moving forward with their efforts to develop regulations.

"In the meantime, we are aware of the requirements of Norway, the UK and the US, and are striving to meet or exceed these regulations as we move forward with our well planning."

As for the agreement finally signed this week between the Bahamas and Cuba, which determined the maritime borders between the two nations, Dr Gucwa said: "Had the border not been agreed, there would be some question as to the extent of our licences and whether a portion was actually owned by Cuba. The agreed border is outside of our licenses and we are entirely within Bahamas waters."

Four of Bahamas Petroleum's five licence areas border the boundary with Cuba. One of the three licences it holds in a joint venture with the Norwegian company, Statoil, also borders Cuba.