Offshore potential and the importance of natural gas

Suriname’s National Oil Company (NOC), Staatsolie, recently outlined that it started 2021 with 89.6 million barrels of proven reserves, of which 6 were produced. Some 5.5 million barrels were added from Staatsolie’s development area, which led to the total proven reserves of 89.1 million barrels, at year-end. As stated by Staatsolie’s Upstream Director, Rekha Bissumbhar, “for upstream, success going forward will be maintaining our 6 million barrel annual production level for years to come through both effective enhanced oil recovery [EOR] methods, and the discovery of new reserves”.

Moreover, Staatsolie recently mentioned that seismic data point to an estimated 30 billion barrels of oil equivalent offshore. Currently, just 40% of Suriname’s offshore oil blocks have been licensed, some 32 million acres, leaving over 60% untouched and ripe with potential. As highlighted by Staatsolie’s CEO, Annand Jagesar, “there is an ongoing exploration program underway in the offshore area at the moment. This year alone, there are 5 high-impact exploration wells being drilled by International Oil Companies (IOCs) in the deepwater area targeting very large prospects”. Jagesar also mentioned that one of these, Krabdagu in Block 58, has already been very successful, encountering over USD $90 million of net pay.

Complementing the aforementioned, in August 2022, Westwood Global Energy declared that high impact exploration is showing signs of recovery, naming Suriname as one of the countries where ‘key wells to watch’ are located. According to Westwood’s Senior Analyst for Global Exploration and Appraisal, Jamie Collard, “South America is expected to continue to be an exploration hotspot with more wells planned for the Guyana-Suriname basin and offshore Brazil”; Guyana now holds the 17th largest oil reserves in the world as a result of a string of unprecedented discoveries made by ExxonMobil since 2015.

Furthermore, during the International Solar Alliance’s Fourth Regional Committee Meeting for Latin America and the Caribbean, Guyana President Irfaan Ali recently stated that “natural gas has the potential to reduce the Caribbean region’s electricity generation costs by 40%”, even sharing specifics on the massive gas reserves in Suriname, which account for 28 trillion cubic feet. By introducing natural gas into the energy play, the Caribbean stands a chance to rake back over USD $9 billion in annual fuel import bills. Suriname is one of the countries that stands to be the energy fulcrum of the Caribbean, which the region can depend on for energy security.

Staatsolie to invest USD 1.5 billion through 2027

According to Staatsolie, from 2022 through 2027, the company plans to spend an estimated USD $1.5 billion as part of its Investment Program, the bulk of which will be for participation in offshore development. In its updated Strategic Roadmap, Staatsolie also noted that these funds will also be used to develop sustainable energy projects, as the world looks to move away from fossil fuels in the future.

Staatsolie’s strategic goals include (i) developing offshore capacity to act as an effective partner and eventually becoming an operator; (ii) de-risking and promotion of all open offshore acreage; (iii) the monetisation of natural gas; and (iv) boosting hydropower capacity, and developing renewable energy opportunities.

In regards to 2022, Staatsolie’s focus includes working toward a development decision for Block 58 and participating in shallow water Blocks 5 and 8. But it is very likely that a final investment decision will come by 2023. It also includes engaging upstream, midstream, and downstream gas operators to further study gas development and offtake scenarios, and helping the government identify large gas offtakes, such as in the bauxite and petrochemical sectors.

Staatsolie and shallow water operatorship

Staatsolie also has its eyes set on becoming an operator in its shallow water blocks, according to its strategic goals 2022 through 2026. In its updated 2021 year-end report, Staatsolie’s Vice President – Offshore, Glenn Corrie, stated that “the company has been taking crucial steps towards its aspiration of achieving operator status”. According to Corrie, “Staatsolie’s main strategy in proving its value to IOCs is to become masters of their oil basin”, and noted that “Staatsolie in 2021, re-organised its offshore directorate by integrating geoscientists and petroleum engineers into a single pool to gather, analyze and interpret high-quality offshore data, subsurface resources and all necessary information to assess exploration and appraisal opportunities and maximize knowledge of the Suriname-Guyana Basin”.

Corie also added that “we are also deepening the geotechnical, software and other skills and talents of our people with methods including on-the-job training, hands-on sessions with specialists, training courses and secondments and participation in special projects at IOCs. Our intensive competency and capability development program is designed to identify and address any competency gaps”; Staatsolie is attributing the success of its shallow water bid round last year to this deepening of expertise.

According to the report, Staatsolie signed an offshore Production Sharing Contract (PSC) with Chevron for Block 5, located in shallow waters, then, in December 2021, a farm-out agreement brought in Shell as a partner. That agreement marks the first ever for Staatsolie where it participates as an offshore partner with a 40% stake. Staatsolie, through its subsidiary Paradise Oil Company, will be a non-operating partner.

New offshore licensing rounds

By Q4 2022, Suriname will put up d60% of the country’s offshore blocks for auction. As announced by Corrie, “the Guyana-Suriname basin is the hottest basin in the world, and our objective over the course of the next 12 months is to license the next round of all that acreage and put it into the hands of operators.” In 2023, another auction for shallow water blocks is planned. That bid round will see some eight million acres of shallow water blocks up for auction.

Recent discoveries and prospects

In August 2022, oil and gas company APA Corporation made an oil discovery at the Baja-1 well in Block 53 offshore Suriname, identifying USD $34 million of net oil pay in a single interval at the well, which was drilled using the Noble Gerry de Souza rig; the well was drilled to a depth of 5,290 metres in water depths of approximately 1,140 metres. APA Corporation operates Block 53 with a 45% stake. Other partners include Petronas, with a 30% stake, and CEPSA with a 25% stake.

Apa Corporation announced that the preliminary fluid and log analysis resulted in light oil with a gas-oil ratio (GOR) of 1,600 to 2,200 standard cubic feet per barrel, in a good quality reservoir.  The company also stated that “the discovery at Baja-1 is a down-dip lobe of the same depositional system as the Krabdagu discovery, 11.5 kilometres to the west in Block 58. Evaluation of open-hole well logs, cores, and reservoir fluids is ongoing”.

Following the completion of current operations at the Baja-1 discovery, the Noble Gerry de Souza drillship is planned to be mobilized to Block 58. At Block 58, the drill ship will be used to drill the Awari exploration prospect that is located approximately 27 kilometres north of the Maka Central discovery. As stated by APA Corporation’s CEO and President, John Christmann, “our success at Baja marks the 6th oil discovery we have participated in offshore Suriname, and the first on Block 53. This result confirms our geological model for the Campanian in the area and helps to de-risk other prospects in the southern portion of both Blocks 53 and 58”.

Block 58 is adjacent to Guyana’s Stabroek Block where over 30 discoveries have been made since May 2015. Two of those, Liza 1 and 2, are producing a total of approximately 360,000 barrels of oil per day. A third project at Payara is slated to start up in late 2023, and a fourth development at Yellowtail is targeting to start up in 2025.

TotalEnergies operates Block 58 with a 50% stake and APA Corporation holds the remaining 50% stake. Anticipating large scale oil and gas developments on Block 58, Staatstolie is waiting for a declaration of commerciality before an expected decision to exercise its right to take an equity stake of up to 20% in the project.

Along with TotalEnergies, Shell and Apache plan to drill another 5 high-impact exploration wells this year, targeting 2.5 million barrels oil equivalent.

Mining in Suriname

According to the International Trade Administration of the Department of Commerce of the United States, large U.S. and Canadian firms mine gold in Suriname. The Colorado-based U.S. multinational, Newmont, began operations in eastern Suriname (Merian Mine) in October 2016; Staatsolie has a 25% stake in this USD $1 billion joint venture. Newmont has estimated its mine life is 12-14 years.

Rosebel Gold Mines, a subsidiary of the Canadian company, IAMGOLD, started gold production in 2004, and in 2020, Rosebel Gold Mines produced 220,544 troy ounces of gold. In 2016, the company acquired additional property from the government of Suriname in the Saramacca area. Additionally, in 2017, IAMGOLD announced that the higher concentrations of gold reserves at Saramacca will extend the life of the mine until at least 2038.

Also, the state-owned mining company, Grassalco,  began recovering gold from reprocessed ore in 2014. The company also started exporting gravel to the Caribbean region.    Dubai-based Kaloti Precious Metals opened a gold refinery in Suriname in February 2014.  The refinery is part of a joint venture with the government of Suriname and local gold traders. 

Furthermore, Suriname acceded to the Minamata Convention in August 2018, and the National Institute for Environment and Development in Suriname (NIMOS) completed its Minamata Initial Assessment project (MIA) in 2019, however the government of Suriname has yet to act on the project’s findings or implement the Minamata Convention. According to Suriname’s Planning Office, small scale gold mining produced 14,800 kilograms of gold in 2020.

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