Bahamas Petroleum: Virus Mitigation Measures Lift Costs of Perseverance #1 Drilling

Bahamas Petroleum Company (BPC), an oil and gas firm which is gearing up to spud its first well offshore the Bahamas next month, has raised the cost estimates for the drilling operation, citing COVID-19 mitigation measures.

As previously reported, the company has hired Stena Drilling's Stena IceMAX drillship to drill the Perseverance #1 exploration well, in the far southern territorial waters of The Bahamas. 

In a  statement on Friday, BPC said that the sustained impact of Covid-19 means that BPC and Stena Drilling have decided to implement enhanced Covid-19 mitigation measures; including heightened isolation and testing measures for all crew and personnel, extended mandatory quarantine in secure hotel facilities, and private charter flights

"Enhanced Covid-19 mitigation measures and associated operational impacts means the cost estimate for Perseverance #1 is revised upward by approximately 15%, to between $24 million to $28 million (from $21 million to $25 million); contingency element expanded to $7 million (from $5 million)," BPC said.

Simon Potter, CEO of BPC, said "Given the ever-evolving and escalating Covid-19 situation around the world, the sobering reality is that preventing the Covid-19 virus spreading onto the Perseverance #1 drilling installation in the first place is dramatically more cost-effective than having to deal with it once it has arrived offshore. Hence the considerable efforts put in by BPC, Stena and participating contractors and service companies to develop even more stringent measures to detect and diminish the risk of infection, which are now being implemented, but which will come at a cost.

"Fortunately, given the flexible range of funding options the Company has developed over the course of the last two years, we have successfully agreed an increase to the size of our Conditional Convertible Note facility by £4.75 million to offset this increased cost. Moreover, we are pleased that the providers of this facility have demonstrated their commitment to the project by agreeing to provide a portion of this facility unconditionally once the well is spud, and the balance expected to be available as required. In aggregate, these arrangements provide enhanced financial capacity, notwithstanding a worsening Covid-19 environment.

"We are aiming to assess what hydrocarbon resource potential lies within the territorial waters of The Bahamas, for the mutual benefit of the nation and people of The Bahamas, the shareholders of BPC, and all other stakeholders. Safe, responsible, and uninterrupted operation is our key objective in the ever-changing global Covid-19 environment, and these additional costs and increased funding arrangements reflect a prudent approach to achieving this objective."

The well will be located in water approximately 520 meters deep and will be drilled to a target depth of 4,822 meters, but with the capability to be able to reach 5,600 meters, affording the ability to evaluate multiple reservoir horizons throughout the entire stratigraphic column below the Tertiary cover.  

The drilling is expected to take between 45 and 60 days. The well is targeting recoverable prospective resources of 0.7 billion barrels of oil, with an upside of 1.44 billion barrels.

The well has been designed specifically as an exploration well, with the sole objective of establishing the presence of hydrocarbons through a range of tests that will be conducted as the well is drilled.

"Perseverance #1 has not been designed to ever operate as a production well, such that at the conclusion of the drilling program the well will be permanently sealed and then abandoned.

According to AIS data on MarineTraffic, the Stena IceMAX drillship departed from Las Palmas on Tuesday on its way to the Bahamas. It is expected to reach Freeport on December 15.

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