While Guyana is at the heart of what is emerging as South America’s hottest offshore oil boom, things continue to heat up on the Suriname side of the oil basin. Apache and partner TotalEnergies are experiencing substantial success in offshore Suriname Block 58. Since January 2020 the partners, which each hold a 50% share in Block 58 where TotalEnergies is the operator, have made four significant oil discoveries in the block. Then in late July 2021, while conducting appraisal drilling in Block 58 near the Sapakara West discovery, TotalEnergies made another discovery with the Sapakara South-1 well.
That latest discovery brings the total number of discoveries in offshore Suriname Block 58 to five. Block 58 is adjacent to the prolific Stabroek block and is situated on the same crude oil fairway, meaning there will more than likely be further oil discoveries in the immediate future. When the Sapakara South -1 well is complete the Maersk Valiant drillship will move to drill the Bonboni prospect approximately 45 kilometers to the north.
The crude oil found is described as high quality with API gravities of 27 to 45 degrees. Those characteristics and the assay for Exxon’s Liza crude oil grade, which has an API gravity of 32 degrees and 0.58% sulfur content, indicate that the basin’s petroleum resources are light and relatively sweet. That is important to note because demand for sweet medium and light crude oil is expanding at a solid clip because of stricter fuel emission regulations and the push to decarbonize the global economy in a post-Paris climate accord world. Those events see big oil shying away from investing in carbon-intensive petroleum projects. It is those operations that involve the exploitation of sour heavy and extra-heavy crude oil grades that are carbon-intensive to extract and refine. For those reasons, in accordance with plans to focus on low carbon intensity projects, TotalEnergies chose to hand its 30.32% in Venezuela’s extra-heavy crude oil Petrocedeño operation to national oil company PDVSA at a $1.38 billion capital loss.
TotalEnergies, however, is committed to continuing its exploration and development drilling in Block 58 offshore Suriname, which some analysts believe could hold up to 6.5 billion barrels of oil. Aside from targeting the Bonboni prospect for drilling the energy supermajor and partner Apache plan to conduct flow testing of the Sapakara South-1 well before the end of 2021. Exxon with 50% partner Petronas, which is the operator, discovered hydrocarbons with the Sloanea-1 exploration well in offshore Suriname Block 52 during December 2020. That block is to the north of Block 58 and also believed to be on the same oil fairway which contains the discoveries made in the neighboring offshore Guyana Stabroek block.
Aside from the attractiveness of the crude oil grades found in Block 58, it is estimated that offshore Suriname will have an average breakeven price of $40 per barrel once the discoveries are developed and enter production. While that is higher than the $35 currently pegged for Liza Phase one in the Stabroek block in Offshore Guyana they are among some of the lowest in South America and should fall as additional infrastructure is established. Suriname’s national government in Paramaribo is determined to make the former Dutch colony into a major regional oil producer. As part of that strategy, national oil company and industry regulator Staatsolie launched the 2020/21 shallow-water offshore bid round in November last year. In late June 2021 Staatsolie awarded three shallow-water offshore blocks; Block 5 went to U.S. energy supermajor Chevron while Blocks 6 and 8 were awarded to a consortium composed of TotalEnergies (40%), Staatsolie (40%), and Qatar Petroleum (20%).
Suriname’s shallow-water blocks are to the south of Block 58 and contain similar geology to the deep-water blocks where discoveries have been made. This along with the blocks being underexplored and hydrocarbons being found during drilling in the 1980s points to their being the potential for crude oil discoveries.
Paramaribo is determined to become a major regional oil producer with it predicted that offshore Suriname holding at least 1.9 billion barrels of recoverable oil resources for the discoveries made to date. Blocks 58 and 52 are expected to commence production sometime this decade with industry consultancy Rystad Energy anticipating that Suriname will be pumping around 650,000 barrels of crude oil per day by 2030. Staatsolie has a 20% participation right under the production sharing agreements signed with Apache, TotalEnergies, Exxon, and Petronas. A favorable regulatory environment including low royalties, competitive breakeven prices, and increased political stability all make Suriname an attractive destination for foreign energy companies. Regardless of the threat of peak oil demand, Suriname is shaping up as the next big oil boom in Latin America.
By Matthew Smith for Oilprice.com
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