Tweet
Drilling for Jamaican oil begins later this yearChinese drilling company seeks licence by Al EdwardsFriday, July 27, 2007 The exploration for oil and gas in Jamaica takes on added significance as oil prices hit a high of US$77 per barrel yesterday.Last year, the minister of finance and Planning, Dr Omar Davies, said that the oil bill rose from US$943 million in 2005 to US$1.33 billion in 2006. Some estimate that Jamaica's oil bill could possibly reach the US$2-billion mark for this year.In 2005, a bidding round in Houston saw only three companies interested in 10 of the 23 blocks on offer. None of the majors expressed an interest, perhaps because previous exploration efforts in Jamaica have failed. The last exploration effort in Jamaica took place between 1955 and 1983 with the drilling of nine wells onshore and two offshore wells at the Pedro Banks. No commercial hydrocarbons were found, though there were many oil and gas shows. According to the Petroleum Corporation of Jamaica (PCJ), it spent US$18 million in oil exploration activities, including the drilling of three wells from 1981 to 1982.The minister of industry, technology energy and Commerce, Philip Paulwell has said that the time is right to revisit Jamaica's hydrocarbon potential."We are now using a huge percentage of our foreign exchange earnings to buy oil and this is a very serious problem. We need to use as much domestic energy sources as we can and ultimately, if we can find a domestic source of oil or gas - both of which will continue to be primary fuels of our time - it would mean big savings for Jamaica," said Dr Raymond Wright,senior consultant and former boss of the Petroleum Corporation of Jamaica (PCJ).The Australian exploration company, Finder Exploration, was granted a licence to conduct exploration activities on four blocks offshore southern Jamaica. The first phase of exploration activity entailed the acquisition of seismic geophysical data, which has been collected on behalf of Fugro, one of the world's largest seismic contractors.Speaking with Caribbean Business Report from the Ministry of Industry, Technology, Energy and Commerce's Kingston headquarters, Paulwell said: "Finder's exploration efforts have now put them in a position where they are now looking to start drilling because based on the seismic work they have done, they are predicting billions of barrels of oil. We will now see drilling begin some time later this year and a Chinese company is now seeking to get a drilling licence."Paulwell added that this shows that the prospectivity is quite good and that there is international interest in Jamaica' hydrocarbons. The structures are indicating that there is more gas than oil and that they can accommodate huge volumes.Exploration activities in Jamaica are conducted under a Production Sharing Agreement whereby the licensee pays a 12 1/2 per cent royalty to the government, either in cash or kind. And splits the oil and gas produced with the Petroleum Corporation of Jamaica (PCJ) (sharing scale ranging from 30 to 60 per cent in favour of the PCJ). The split would be based on the volume of oil and gas produced as well as the depth of water in which production takes place.However, Dr Raymond Wright remains cautious about the prospects of striking "black gold" and is of the view that Jamaica will not produce big oil fields given its geological position. However, he believes that Jamaica may hit on commercially viable deposits."On average, given the prospectivity of Jamaica, that's what's to be expected. We will never find the oil finds that they have, say in Venezuela or Trinidad because of our geological location. Those countries are situated at the mouth of a major delta, the Orinoco, a prime place to find oil, which is usually found in the detritus that is brought down over geological time by rivers and emptied into large deltas," explained Dr Wright.Crude oil surged to US$77 a barrel yesterdayCrude oil surged more than a dollar to US$77 a barrel yesterday, its highest level in almost a year on increasing demand from refiners in the United States, putting in context Jamaica's need to discover commercial volumes of oil and gas.Yesterday's price rally lifted US crude above London Brent for the first time since February. Analysts pointed to US data released on Wednesday that showed crude stocks fell for a third consecutive week.There are worries that crude prices have risen too high lately. A fair price for crude oil is between US$60 and US$65 a barrel, Hansan Qabazard, head of research for the Organisation of Petroleum Exporting Countries (OPEC), told Dow Jones Newswires on Monday - leading some to conclude the cartel may be open to reversing its long-held position that oil supplies are adequate. Reports Sunday had quoted OPEC President Mohammed al-Hamli as saying the group is concerned about the impact of higher oil prices.Jamaican business leaders have often complained that energy costs in Jamaica are prohibitive and are a major impediment to a thriving business community. But the fact remains that Jamaica is at the mercy of the international markets and oil imports are a major drag on the country's foreign currency reserves."I think we will either determine successfully or unsuccessfully whether oil or gas exists in Jamaica in commercial quantities. That is the mission," concluded Dr Wright.Talk Back No comments have been posted Post your comments Related Articles No related articles were found The Simpsons Movie - only bigger, not really betterBack To School Countdown... ImmunisationAre you sitting on your money? Should the UHWI be exempt from the government's abolition of registration fees? Yes No Undecided View Results Back to TopNews | Sports | Editorial | Columns | Lifestyle | Western News | All Woman | 2004 Olympics | TeenAge | Education | Food | Business | HealthCopyright© 2000-2001 Jamaica Observer. All Rights Reserved. Terms under which this service is provided to you.
