Lessons
from Ibis Deep
By Energy Correspondent
Trinidad Express
Port
Spain
Petroleumworldtt.com
10 15 06
It
is now common knowledge throughout the local industry
that the historic Ibis deep well is indeed history.
The well, although breaking many local drilling
records, will be remembered for quite sometime not
for its operational achievements but for its failure
to detect any semblance of hydrocarbon reservoirs
some four miles below the subsurface. And this in
spite of the upbeat and bullish confidence displayed
from a variety of upstream experts from reputed
companies and buoyed by years of in-depth planning
from international geoscientists and explorationists.
The
fact that this well was drilled by bpTT, who assumed
all risks and the entire drilling cost in an area
outside of its own licensed acreage, should indicate
the high confidence level displayed by the country's
leading gas producer regarding the probability of
the well's successful outcome.
Given
the pronounced three-dimensional structure evident
through a variety of seismic imaging, many technocrats
felt that this well was destined to be the turning
point in the fortunes of the country's oil and gas
industry. Ibis Deep was touted as the great hope
for opening up a wide vista of promising shallow-water
deep prospects. Even the politicians were convinced
of this, so much so that the Prime Minister and
Minister of Energy and Energy Industries felt it
necessary to touchdown on the Global Santa Fe's
Constellation One jack-up rig where history was
supposedly being made.
The
well was planned in an acreage belonging to the
South East Coast Consortium (SECC) block operated
by EOG Resources with state enterprises Petrotrin
and NGC sharing a combined 20 per cent working interest.
The intention was that bpTT would earn a share in
the acreage in the area of the well in return for
its option to bear the full cost of drilling.
Drilling
commenced in mid-April 2006 with the well designed
to reach a depth of 20,500 feet, the deepest in
the country's history, and to penetrate two prospective
hydrocarbon structures just above the final depth.
After
some four months of drilling activities, however,
and at a cost of about TT$500 million it was decided
to stop drilling at about 19,000 feet since the
expected hydrocarbon structure was not seen and
drilling deeper to the targeted 20,500 feet would
have been useless and operationally hazardous.
The
big unanswered question is why this well failed
given the years of planning and technical cooperation,
utilising the best and latest technology and the
supposedly finest international minds in exploration.
As the post mortem continues the simple consoling
fact is the acceptance that exploration is indeed
risky and, whatever the predictions may be, one
can never be certain what lies below until you drill
that hole. Drilling is indeed the great arbiter.
bpTT
will of course accept the results as part of the
risks of the upstream business but can take courage
from two key aspects. First, although it has incurred
an enormous expenditure, the entire sum would go
as a tax deduction (dry hole allowance) to significantly
reduce its petroleum taxes for the fiscal year.
Second,
many important learnings would have emerged both
from an operational standpoint regarding the drilling
of high-pressure/high-temperature wells as well
as a greater understanding of the geological environment
and structures that characterize the deeper horizons
of the Columbus basin. These lessons would undoubtedly
enhance the chances of success in future exploration
endeavours.
We
believe that the Ibis Deep failure would have finally
brought home a sense of reality to those who continue
to act as though the country's reserves are such
that a prolonged thrust of gas-based development
could be readily sustained under the precept that
demand would continue to drive supply.
A
number of projects planned for the new industrial
estates at the South West peninsula may never be
implemented if the tight gas-supply picture remains.
We have often wondered about the Government's logic
and seemingly strange policy of inviting foreign
gas-based investment on the premise of possible
or contingent resources rather than on the pillars
of existing proved reserves.
We
therefore hope that the lessons of Ibis Deep would
finally create a sense of pragmatism in the minds
of those who seem not to appreciate that the easy
oil and gas have already been found. We continue
to stress that unless meaningful reserves are persistently
added to the reserves pool through sustained and
successful exploratory efforts, it would be prudent
to step back a while rather than accelerate the
pace of gas based development before it screeches
to an abrupt halt.
Feedback:
energyczartt@yahoo.com
Trinidad
Express
Wednesday, October 11th 2006
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