Horseshoe well dry
CGX to go if no solution by July 15

Stabroek News
July 11, 2000

CGX Energy Inc is abandoning its Horseshoe #1 well after no oil was found and the company says its rig will leave by Saturday if a blazing row between Guyana and Suriname is not resolved to allow it back to its original drilling site.

The company has warned that if the rig leaves the basin it would be more than two years before another becomes available.

The CGX rig was evicted from its drilling location at the Eagle target within Guyana's maritime jurisdiction by two Surinamese gunboats on June 3. Paramaribo is claiming sovereignty over the area.

CGX reported in a release yesterday that the Horseshoe well had been drilled to a depth of 12,750 feet and that "preliminary sample and logging analysis suggest that the positive amplitude and AVO anomalies at the Horseshoe target were generated by thin carbonate beds in a dominantly sandstone and shale environment. The potential for targets of the Horseshoe type must be significantly downgraded."

However, according to Warren Workman, CGX's vice president for exploration, "the amplitude and AVO anomalies at Eagle and Wishbone are of a significantly better quality than Horseshoe." He added that the "Canje formation with its mixture of shales and carbonates is present in the Horseshoe #1 well but does not coincide with a significant shale in the overlying Lower New Amsterdam to provide a seal."

Following the eviction of the CGX rig from its drilling location at the Eagle target in Guyana's maritime jurisdiction, talks between the two countries at the ministerial level in Port-of-Spain on June 6, Georgetown on June 13 and 14, Paramaribo on June 17 and 18, and at the CARICOM summit last week in Canouan, St Vincent at the presidential level have so far failed to provide a resolution which would allow the CGX rig to return unhindered to its drilling location.

The talks at the presidential level are due to resume in Jamaica on July 13, in the presence of Jamaica's Prime Minister, P.J. Patterson.

The talks in Jamaica will deal with the immediate issues related to the return of the rig with the talks on the wider border issue being fast-tracked under the supervision of the CARICOM chairman, St Vincent's Prime Minister, Sir James Mitchell, and the CARICOM secretariat.

CARICOM leaders were anxious to have the rig remain in the basin and for the marine resources to be jointly exploited by the two countries. They expressed the view that if the key to the petroleum resources were to be unlocked it would dramatically transform the economies of Guyana and Suriname and of the region.

The release from the company said that if a decision was reached at the meeting to allow the rig to proceed to the Eagle/Wishbone target area, its "intention is to immediately drill a turbidite target."

In the release CGX expressed disappointment with the results but noted that the Horseshoe well was only drilled after the rig was evicted from its Eagle turbidite target.

CGX expended some US$8 million on drilling the 12,750 feet well which was completed ahead of schedule and included extra costs related to the initial set up at Eagle, subsequent standby charges estimated to have been in the region of US$80,000 a day and significant mobilisation and demobilisation charges. However, it noted that the hole at the Eagle target "will cost significantly less than the first hole already drilled."

The Horseshoe #1 site was over 80 kilometres from the nearest well and according to CGX there was little prior well control. But according to Workman, "by contrast the Abary well--about ten kilometres from the Eagle target--has several thousand feet of clay in the section overlying the Eagle and Wishbone targets and provides direct evidence for both bottom and top seals."

He said too that "a huge section of very clean sand was encountered in the Georgetown/New Amsterdam Formation in the Horseshoe #1, which will provide an excellent source for tertiary turbidite sands at Eagle and Wishbone."

The release noted that CGX's focus was the turbidite targets at Eagle and Wishbone and that these "have been the outstanding success stories of Atlantic exploration and production during the past 30 years and CGX remains committed to the Eagle and Wishbone targets."

It said too that CGX "continues to have a team in Guyana and will continue to work with both governments in search of a solution acceptable to all parties and which will allow the rig to immediately proceed to the turbidite targets. CGX views the turbidite targets to be of great importance and will vigorously protect its commercial rights." Drilling of the Horseshoe #1 well started around June 19 after the collapse of the third round of talks on the oil rig impasse.

The Office of the President yesterday declined to comment on the CGX announcement.

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