Operational Review 2013

The Geological and geophysical studies are substantially complete; from a G&G standpoint we are "drill ready".

Summary


Both before and subsequent to renewal of  all of the Company exploration licences and entry into the second exploration period, Bahamas Petroleum Company has seen a continuation of much of the work commenced and noted in the 2012 Annual Report.  This work covered the following main themes:

Environmental: Programmes to discharge all obligations under the Licence and undertaken as precursors to drilling of commitment wells compliant with international standards and best practices in excess of the requirements of the current Regulations.

Seismic interpretation: following the accumulation of the huge seismic data base, processing and interpretation of the 3D seismic survey,  more  detailed and focused studies towards structural, stratigraphic and reservoir/seal modeling.

Prospect definition and risk reduction: utilising the seismic interpretation to refine prospect definition, identify primary locations for accessing stacked play types  and overall risk reduction have been undertaken given the requirement to identify and prioritise drilling targets and follow-on potential.

Well planning and preparation work studies: studies required to ensure safe and compliant carrying out of well obligations consistent with the Act, Regulations and Licence and consistent with international standards and best practices.

Licences: realising a renewal of all of the Company licences, as well as a realignment of the southern boundaries of the most southerly licences to align with the maritime boundary between The Bahamas and Cuba, thus ensuring title to the full extent of mapped structures.

Highlights 

  • The 3,074 km2 of 3D seismic data which provides high resolution picture of a portion of the Southern Licence area was utilised by consultants at the University of Texas Bureau of Economic Geology (BEG) Reservoir Characterisation and Research Lab (RCRL) to construct a detailed seismic facies analysis for the Southern Licence area. This work has been refined and continued during the period. In conjunction with this University of Texas study, iReservoir completed a detailed evaluation of the available log data (particularly from the Doubloon Saxon #1 well) and used these data to complete a seismic inversion which has been continually reviewed during the period and further integrated into prospect definition work and alternative well location studies. This work  is  also being revisited  to  more closely  define  sequence  stratigraphy in the proximity of defined prospects.
  • Bahamas Petroleum contracted with Applied Drilling Technology Inc. ('ADTI') to complete an initial well plan and Front End Engineering and Design (FEED) study for a 22,500 feet vertical well to test the southern end of the 'B' structure. This study is under constant reappraisal and reevaluation as the optimal location to locate the first well - both from a prospectivity and drilling hazards perspective.
  • As the world's international rig market has become constrained more rigs are coming on to the market capable of executing a well consistent with the prepared drill plans and discharge of the current licence obligations. This  has  significantly  impacted  the day rates rig companies seem prepared to accept. Bahamas Petroleum Company  keeps   updating its reports on the provision of and anticipated costs of available  rigs by continual investigation of the rig market.
  • Bahamas Petroleum Company continues to engage with selected major international oil companies and proactive independent oil companies for the purpose of seeking an internationally renowned partner and potential operator of the exploration well. These discussions are ongoing.
  • Discussions with potential partners has meant the need to create, maintain and extend a database on detailed play types within the licence boundaries, individual reservoirs and their production potential, specific individual prospects and the volumetrics associated with each individual play. This work bears the need for continual updating.
  • Industry interest in the area,  which saw three (3) wells drilled in northwestern Cuban waters during 2012, saw continued activity during the year with drilling, operated by the Russian company Zarubezhneft, ultimately suspended having only reached a depth of approximately 2,000 metres. This depth was well short of their target depth of a minimum of 6,000 metres and a long way short of any horizons considered by the Company as prospective in the southern licence area.

Subsurface


Bahamas Petroleum Company, since prior to licensing in 2007, has engaged in a dedicated effort to locate and secure all available geological, geochemical and geophysical data related to the hydrocarbon potential of The Bahamas. This dataset now comprises three essential parts (i) the physical core material (rock matter) and cuttings (rock particles), (ii) the accumulated electronic data (mainly comprising seismic surveys), and (iii) the paper data, comprising reports, analysis, maps, interpretations and conclusions. The physical core material (rock matter) and cuttings (rock particles) are appropriately stored in secure company premises.

The major asset of the Company and that which comprises the majority of the $46.4 million capitalised exploration spend to date is the acquisition and processing of 3,074 km2 of 3D seismic data in the Southern Licence area. These data were collected by CGGVeritas using their 'BroadSeis' technology - the first time 3D seismic has been acquired and this technique was used in The Bahamas. Two data volumes were delivered, 'Fast Track' and the final Pre-Stack Depth Migration (PSDM). Sample spacing on
the PSDM volume is 12.5 meters in the x, y direction and 4 meters vertically. The data are of high quality and being used to advance understanding of the hydrocarbon systems.

The 3D (Figure 1) confirms and better defines the prospective structures (Folds B and C) previously mapped on the 2D and evaluated in the Competent Person's Report (CPR), whilst removing structures mapped on the 2D underneath Trend A, which were confirmed as velocity artefacts. Significantly, the new data provides insight into the residual risks
with encouragement regarding source potential and fetch area, indicating the basement to be deeper than previously mapped implying a thicker, deeper Upper Jurassic (source rock) interval. Furthermore, the interpretation shows a uniform south west dip under the Cretaceous platform (Trend A) indicating access to a larger than previously mapped fetch area toward the Cuban mainland under the North Cuban basin. Faulting continues to display a distinct overthrust character potentially turning horizontal in the interpreted organic-rich facies of the late Jurassic, though there is also clear evidence of reverse faulting penetrating deep into the Jurassic section. The seismic displays good correlation across faults giving high confidence in the fault picks.

The folding shows distinct rollover above the fault plane creating significant attic volumes above any migration entry or exit point to the structure.

Discussion of Potential Reservoirs, Prospectivity and Analogues

As in any frontier exploration province where there is inadequate well control, geological and reservoir properties that lead to prospect definition must be estimated or inferred using detailed models and regional data, as much local data as possible and analogues. The Company has integrated the seismic facies interpretation undertaken by the University of Texas, Bureau of Economic Geology reservoir Characterisation Research Lab (RCRL), the petrophysical data from the Doubloon Saxon (DS) well, various internal reports on the cuttings and core descriptions, the tie of the DS to the 3D seismic volume completed by iReservoir, the reservoir summary in the CPR, and the C & C Reservoirs Digital Analogue Knowledge System (DAKS) of world wide oil fields.

This synthesis allows the Company to report on its understanding of five (5) gross prospective intervals from deepest (oldest) to shallowest (youngest):

1.    Lower Cretaceous anhydrite-dolomite interval, Main play target.
2.    Lower Albian and Aptian Megabank, Main play target.
3.    Albian reef and platform, Main play target.
4.    Mid-Cenomanian reef and platform, Analogue play target.
5.    'Pre-MCU' Albian and Cenomanian basinal and forereef, Analogue play target.

Intervals 1 and 2 can be directly tied to the Doubloon Saxon well and the reservoir data is based on the petrophysical interpretation from that well. Intervals 3, 4 and 5 are not directly tied to the Doubloon Saxon well as much of this drill section is either missing or subject to significant drilling problems - due to collapse.

Figure 2 summarises the regionally significant stratigraphic events. As the continental margin subsided following the breakup of the continents in the Jurassic the initial sediments were deposited in a restricted marine environment (gray and purple). It is in the first layer (gray) and possibly below that the company believes source rocks were potentially deposited. The purple layer records a regionally extensive evaporite basin where anhydrite (seal) and dolomite (reservoir) were deposited sequentially. As the water  depth deepened an extensive carbonate platform, or 'megabank', was created (green through light blue - Aptian through lower Albian). As the water depth continued to deepen the megabank divided into distinct reef and platform areas separated by deeper water channels. This lasted until mid- Cenomanian (top of the light orange) when the water depth became too deep for the reef and platform facies and the shallow water carbonates were buried by a pelagic drape. During the overall trend of deepening water depth there were times when sea level dropped and the reef and platform areas were exposed and caves and caverns (karst) developed (dark orange). This seismic facies framework is used to help better interpret rock types from the seismic and apply the appropriate geologic models for estimating reservoir properties.

 

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Figure 1
Figure 1

3D structure maps displayed at different stratigraphic horizons and related directly to the 3D section.  The considerable dimensions of these structures both shallow and deep in the section are denoted recognising their aggregate global scale.

Figure 2
Figure 2 (1)

Stratigraphic events of regional significance and approximate ages.