Despite more bullish oil prospects, Ja not celebrating yet
Jamaica’s potential oil reserves are now closer to tenfold the level of previous estimates, according to the latest detailed study, but the ministry in charge of energy argues that the findings are still preliminary and it’s therefore premature to compare the country with oil-producing nations like Trinidad & Tobago.
“Competent Person Reports in no way convey a guaranteed outcome,” the Ministry of Science, Energy & Technology, MSET, said in response to Financial Gleaner queries.
A Competent Persons Report, or CPR, is a technical assessment of prospective oil finds based on survey data. The most recent one on Jamaica, released in December, evaluated existing and new areas offshore the country.
The report put Jamaica’s potential oil reserves at 2.4 billion barrels of oil, or 10 times the levels held by Trinidad at 240 million, but less than a half of the 6.0 billion barrels of reserves estimated for Guyana. The Ministry of Energy cautioned comparisons with Caricom neighbours.
“Trinidad, on the other hand, is several tiers more advanced than Jamaica with proven, producible reserves. Jamaica’s hydrocarbon potential, by contrast, remains undiscovered and as such, comparing Jamaica, even casually, with Trinidad’s discovered and producing reserves is an exercise that would be fraught with mistakes,” it said.
If the resources detected are eventually denoted as proven oil reserves, then Jamaica would rank in the top 30 in world oil reserves beside the United Kingdom.
The company with the right to search for oil offshore Jamaica, United Oil and Gas Plc, selected world-renowned Gaffney, Cline & Associates Limited to undertake the assessment of United Oil’s prospective resource estimates for the Walton and Morant basins. Other CPRs were done by ERC Equipoise Limited in 2019, and an undetermined entity in 2017.
The next step requires United Oil and Gas to team up with a partner for capital-intensive heavy drilling. The company hopes to find a drilling partner by 2022, as required by its licence from the Jamaican government.
“The ministry has unfortunately not received any additional interest following the publication of the CPR report. However, we remain cautiously optimistic that once global conditions adjust post pandemic, that renewed interest in the opportunities offshore, and onshore, Jamaica will regain international focus,” said MSET.
The latest study upsized the reserves in the island by roughly tenfold compared to previous estimates.
“We are just as excited about seeing the multibillion-barrel potential of the licence as a whole,” said Jonathan Leather, chief operating officer of United Oil and Gas.
The reason for the rapid growth in reserves relates to the widened study which now includes 11 areas, as opposed to the testing of one area in the previous study, called the Colibri zone, which lies within the Walton basin, and was previously seen as its most promising zone for prospects.
The new study increased by 77 per cent the potential reserves in the Colibri zone from 229 million barrels to 406 million barrels. Additionally, the study now indicates that Colibri holds the second-largest reserves, with Thunderball in the Morant basin holding the largest reserves at 603 million barrels.
United Oil and Gas was granted a 100 per cent stake in the Walton-Morant licence in 2020 by the Jamaican Government. The licence covers 22,400 square kilometres, mostly offshore the island, and requires the company to drill or drop the licence by January 31, 2022.
The company said “11 wells have been drilled to date, with nine onshore and two offshore, and all, bar one, contained hydrocarbon shows”. The team will still focus its initial drills on the Colibri as the primary drill candidate zone.
“United has long held the view that the Walton-Morant Basin is a highly prospective and exciting basin, with billion-barrel potential. This is the second independent report on the licence and the first to explore prospects across the full basin,” Leather said in a statement to shareholders on the report issued in December. “The results are exceptionally positive and support our strong conviction that this is a transformational asset.”