CGX's Kawa-1 Well in Guyana Encounters Oil, but Drilling Costs Rise

Maersk Discoverer - Credit: Maersk Drilling
Maersk Discoverer - Credit: Maersk Drilling

Canadian-based firm Frontera Energy, the majority owner of CGX Energy and its partner in the Corentyne Block offshore Guyana, has informed that the Kawa-1 exploration well, spudded in the block in August, has encountered hydrocarbon presence. 

Also, the drilling at Kawa-1, being carried out by Maersk Discoverer semi-submersible drilling rig - is taking longer than initially expected with costs projected to rise, and CGX might need to see additional financing to keep drilling, Frontera said.

The Kawa-1 well, named after the iconic mountain overlooking the village of Paramakatoi in the Pakaraima Mountains of Guyana,  is located in the northeast quadrant of the Corentyne block, approximately 200 kilometers offshore from Georgetown. The water depth is approximately 355 meters (1174 ft) and the expected total depth of the Kawa-1 well is 6,685 meters (21,932 ft).

The companies have previously said that the stacked targets in Kawa-1 are considered analogous to the discoveries immediately adjacent to the Corentyne Block, in Block 58 in Suriname.

Hydrocarbon presence

According to Frontera's statement on Thursday, to date, approximately 90% of the planned footage has been drilled and the initial results suggest an active hydrocarbon system is present at the Kawa-1 location. 

Horizon 19, the first of three geological zones targeted by the Joint Venture, has been penetrated. Logging-While-Drilling and cuttings indicate the presence of hydrocarbons in several Campanian and upper Santonian formations. The Joint Venture will run the planned 9 5/8" liner at current depth, then drill ahead to the main Santonian target zone (Horizon 23) and the deeper secondary Santonian target zone (Horizon 25). The initial geological results will be further evaluated by wireline logging at the end of the well as part of the logging program for the deeper zones, Frontera said.

"The Joint Venture is pleased to report that drilling operations have recorded only a single lost-time injury since August and Covid-19 protocols have resulted in no disruptions to operations and no positive cases detected after arrival on the drilling unit," Frontera said, without going into details on the injury.

Costs rise

Frontera said that drilling has taken longer than originally forecast, with costs are projected to increase. The current cost estimate of the Kawa-1 well is now forecast to be approximately $115-$125 million.

"The Joint Venture will provide an update on costs and will issue full exploration results of the Kawa-1 well once total depth has been reached and results have been analyzed," the company added.

Frontera said that CGX might be required to seek additional financing in keeping with the ongoing drilling program and is currently assessing several strategic opportunities.

To remind, the planned drilling program does not only cover Kawa-1, but one more exploration well offshore Guyana, as CGX late in August exercised the option to use Maersk Drilling's Maersk Discoverer drilling rig for another well in the first half of 2022.

The drilling will take place in direct continuation of the semi-submersible rig Maersk Discoverer’s contract with Shell Trinidad. 


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