The Peruvian oil and gas regulator PeruPetro has accepted a drilling plan and location for the Cuy offshore exploration well presented by Uruguayan Union Oil and Gas Group (UOGG) and UK’s Baron Oil.
Baron said on Monday that the drilling of the Cuy-Z34-13-1X well would be done in 5,764 feet (1,756 meters) of water to a total depth of 12,553 feet (3,826 meters).
The planned well is located in Block Z-34 offshore Peru in the Talara Basin. The block is a host to three prospects, Cuy, Cuy Sur, and Daphne, all located in the northern part of the block.
According to Baron’s estimates, the prospects hold a total of 885 million barrels of oil recoverable. In previous statements, the company said that the Cuy prospect was the most likely to be drilled first.
The Cuy prospect is located some 15 kilometers from an existing producing field in the shallow offshore/onshore Talara Basin, an area that has already produced 1.7 billion barrels of oil. Internal estimates made by the British oil firm state that the prospect holds 413 MMbbls recoverable of gross unrisked best estimate (P50) prospective resources.
The company added that UOGG, the company’s partner on the block, is looking to farm out the license to share the drilling costs which could lead to a substantial reduction in well costs with the fall in rig rates and service costs. Also, the license remains in suspension through the Force Majeure clause in the Production Sharing Contract (PSC).
Baron owns 20 percent interest in the Z-34 block PSC while the rest belongs to UOGG which is currently paying 100 percent of all the costs related to the block.
This arrangement between the partners will last through all remaining exploration phases of the PSC. The original transaction with UOGG was signed in April 2013 and approved in July 2016. Under the terms of the farm-in agreement, UOGG will pay Baron Oil’s subsidiary, Gold Oil Peru, $2 million when the deal is completed.
Malcolm Butler, Baron’s CEO, said: “Baron and UOGG have worked hard together over the past few months to produce not just the technical case for the optimum location to drill the Cuy Prospect but also a drilling, casing and mud programme that will cope with the unknown pressure environment of this untested basin and the problems created by the apparent presence of gas hydrates in the upper part of the geological section.
“Getting PeruPetro to accept this as a viable program is a significant step forward. However, the well cannot be drilled until UOGG has brought in a partner with the financial and technical strength to operate in this challenging environment, a suitable dynamically-positioned drillship has been located, and all necessary permits put in place.”
Offshore Energy Today Staff