A string of deep-water discoveries in the Caribbean has triggered a torrent of activity in the offshore supply industry, as one nation after another invites the exploration industry to drill for hydrocarbons in the hope of making another bountiful find.
Following ExxonMobil’s discovery in 2015 of massive oil reservoirs off Guyana in the Liza field – a find that put the Caribbean back on the exploration map – other strikes have followed in quick succession. ExxonMobil has hit the jackpot no less than seven times, the latest coming in late February this year when it encountered another high-quality oil-bearing reservoir off Guyana. Experts now believe the waters off Guyana and Suriname, 365 km apart, could be the next big oil region.
Similarly, there are hopes that BP’s discoveries of gas in Trinidad and Tobago in August 2017 will elevate the country to the status of premier hydrocarbon-producing Caribbean nation. Not to be outdone, the Bahamas has invited international oil companies to explore for black gold in its own deep waters, while Jamaica has Tullow Oil searching its backyard.
The oil majors are deploying their heavy artillery in the Caribbean, as one discovery follows another. Operated by Aberdeen-based Stena Drilling, it was the Stena Carron vessel that did the heavy lifting in ExxonMobil’s latest find in the Pacora-1 well off Guyana. One of four ultra-high specification drill ships owned by the group, the Stena Carron uses a proprietary system known as 'managed pressure drilling' to open up parts of the world’s oceans previously deemed un-drillable. The Pacora-1 well, for example, was drilled to a depth of 5,597 m in water 2,067 m deep.
The Stena Carron will be kept occupied in the Caribbean for a long time yet. Following the completion of the Pacora-1 well, it was moved to another well in the Liza field for more exploration and appraisal drilling in the block.
Behemoths of the business
With each new discovery, the oil companies have to order up bigger floating production, storage and offloading vessels (FPSOs), the behemoths of the business. For the development of the first phase of the Liza field, ExxonMobil will hire a heavyweight FPSO from SBM Offshore, a vessel with a capacity of 120,000 barrels of oil equivalent per day (boepd); for the second phase of Liza, the oil major will need an FPSO with a production capacity of 220,000 boepd.
The first oil is due to be extracted in 2022 and both FPSOs are being built at the Keppel yard in Singapore. In the current trend, both vessels are conversions of very large crude carriers (VLCCs). The conversions will be top-to-bottom contracts for Keppel and mark the 25th big project commissioned by SBM Offshore.
Keppel managing director for conversions and repairs Mr. Chor How Ja, said at the time of the commission: “The shipyard’s work scope includes refurbishment and life extension works such as the upgrading of living quarters, fabrication and installation of spread-mooring systems, as well as the installation and integration of topside modules.”
Work has only just started, but the completed FPSO will boast a storage capacity of 1.6M barrels of crude oil, produce up to 120,000 barrels of oil a day, run a gas treatment capacity of about 170M standard cubic feet a day, and have a water injection capacity of about 200,000 barrels of water a day. This giant vessel will be anchored about 193 km off Guyana.
Hub and spoke
In a 2017 study titled The potential market for LNG in the Caribbean and Central America, the Oxford Institute of Energy Studies explained that smaller Caribbean countries are not suitable for big deliveries that are typical of the LNG industry, so a new system will be necessary. This may involve small-scale deliveries of liquefied natural gas (LNG) using tankers, floating storage units (FSUs), container ships, shuttle tankers and ship-to-ship transfer systems, depending on the requirements of the country.
According to the Institute, Jamaica could provide a model for future projects. With a population of nearly three million, the country is trying to diversify away from its dependence on imported petroleum. In 2016, the government contracted US group New Fortress Energy to deliver gas between Old Harbour on one side of the island and its Bogue power plant on the other, taking a direct route along the coast through the Caribbean Sea.
The sea-going logistics are innovative. As the institute notes: “The physical supply chain set up by New Fortress Energy is relatively unusual in the LNG industry. Initially, New Fortress Energy had considered supply by ISO (intermodal) containers by road and container ship from its existing facility in Florida. But the logistics and risks of this were ultimately considered unsuitable, so the current alternative scheme was adopted.”
This involves an FSU, the Golar Arctic, with a capacity of 138,000 m3 that is moored in a sheltered bay on the south side of Jamaica. A shuttle tanker, the Coral Anthelia with a capacity of 6,500 m3, lifts a cargo from the FSU approximately once a week and delivers it to an LNG receiving terminal at Montego Bay on the northwest coast of the island. The LNG is vapourised in Montego Bay and the gas is delivered by a two-kilometre pipeline to the Bogue power plant.
It is a simple and neat operation and, encouraged by its success, the Jamaican government and New Fortress Energy have proposed that the FSU could be turned into a hub for LNG supply to other islands in the region. This would clearly involve more vessels.
An even more adventurous idea involves a hub-and-spoke system, as proposed by the Dominican Republic and Panama, that would ship LNG all around the Caribbean and Central America, using a supply chain of small-scale LNG ships and floating storage and regasification units (FSRUs). The plan is for deliveries to be made out of Dominica to a number of small islands and, in the case of Panama, to Nicaragua and Honduras among other countries lying on the shores of the Caribbean Sea.
In the long run, the region’s LNG supply chain could be replicated in other parts of the world. As the Institute notes: “The development of LNG imports in the Caribbean is of interest to the wider LNG industry….which may serve as a model to be followed by other regions.”
One of the advantages of using FSRUs moored just offshore, rather than building onshore terminals, is that the vessel can be deployed elsewhere if market conditions change.
In the hunt for hydrocarbons, every possible technological tool has to be deployed. In early April, the seismic vessel Polarcus Adira was put to work off Jamaica by Tullow Oil and its partner United Oil & Gas in what is known as a seismic acquisition programme. Covering a vast area of 2,250 m2, the vessel, hired from Polarcus, the Dubai-based marine geophysical company, will be at work in the region until early June in an eight-week assignment.
Like the Stena Carron drill ship, this vessel is another example of the increasing technological sophistication of the offshore support fleet. The Adira will gather data in 3D through its PolarcusXArray methodology. The seismic cables, towed behind the vessel, can be up to 10 km in length and 1.6 km wide.
If there is indeed more oil down there in the Caribbean, it is this kind of technology that will find it.