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CGX needs more information before declaring Kawa-1 a commercial discovery

A representative of Canada’s CGX Energy, the operator of the Corentyne block offshore Guyana, has indicated that the company is not ready to determine whether the hydrocarbon discovery at the Kawa-1 well is commercially viable.

Dr. Mark Zorback, CGX’s senior technical advisor, said during a virtual presentation last week that while results from the exploration well were very promising, the firm had not yet reached a formal conclusion. “It’s going to take not only the exploration wells but appraisal [and] complete mapping of the potential of this essential channel complex to really know where we are,” he was quoted as saying by “We’re very optimistic at this point.”

Responding to questions about the well’s commerciality, Zorback explained that CGX would need more information before making a declaration. He did not say how long it might take to obtain the necessary data.

The Canadian company and its partner (and majority shareholder) Frontera Energy first announced the discovery of hydrocarbons at Kawa-1 in January of this year. They then announced earlier this month that they had completed an integrated report confirming that light crude oil and gas condensate had been found in the well.

CGX and Frontera were asked during the virtual presentation why they had let so much time pass between its initial announcement of the find and publication of a statement on the integrated report. Regan Palsgrove, Frontera’s head of exploration, responded by saying that Kawa-1 had been such a long and deep well that the partners needed the extra time. She also pointed out that the companies had needed to work with third parties to integrate all of their data because they had not collected any modular formation dynamics (MDT) samples from the well.

“We had many pay zones, some of which weren’t targeted, and we needed the time to analyse all of that data,” Palsgrove commented. She described the extra time as well spent, saying that CGX and Frontera were now confident about the hydrocarbon potential of each pay zone within Kawa-1.

The two Canadian companies’ announcement on the discovery of oil reserves in the Kawa section of the Corentyne block earlier this year marked the first major crude find in Guyana’s offshore zone outside the Stabroek block assigned to ExxonMobil (US). Since then, the partners have said they intend to focus their exploration efforts on the northern end of Corentyne. Their next exploration drilling target is Wei-1, which is about 14 km north-west of Kawa-1.

Equity in the Corentyne block is split 66.67% to CGX and 33.33% to Frontera. The partners have also split equity in Demerara, another block in Guyana’s offshore zone, along the same lines.