Sunny side up – oil exploration in the Bahamas

Materials World magazine
1 Apr 2009

Michael Forrest talks to Dr Paul Crevello, Chief Operating Officer of Falkland
Islands-registered oil and gas company BPC Ltd, about the firm’s exploration
of the Bahamas.

The quest for oil to drive our economies has taken geologists to some hostile environments, from the cold rough seas of northern Britain to the frozen wastes of the North Slope, Alaska. But some of the geology that hosts oil deposits is in sunnier locations, and this has led AIM-listed BPC Ltd, registered in the Falkland Islands, to explore the Bahamas.

The Bahamas are located on a continental block that some 250 million years ago formed part of the super continent that encircled the globe around equatorial latitudes. This continent, known as Pangea (ancient Greek for ‘entire earth’), began to break up about 167Ma with the initiation of sea floor spreading in the north Atlantic to the southeast and the proto-Caribbean to the southwest.

The block under the Bahamas and the southern half of Florida in the USA (known as the Florida-Bahamas block) migrated to the southwest towards its present position by lateral movements on the faults that bound the block. Limited sea floor spreading between the Yucatan peninsula, the Florida-Bahamas block and the Gulf of Mexico allowed the accumulation of thick carbonate and anhydrite rocks over a wide area.

By early Cretaceous times (about 135Ma), a great carbonate bank dominated the area and was rimmed by near continuous reefs that led to interpretation of the area as a single carbonate megabank. More recent seismic research has identified deep water troughs that dissected the bank and were connected to open ocean. This sequence was locally abruptly terminated by a mid-Cretaceous sea level flood which forced coral reefs to migrate landward, with the rising sea level leading to an overall shrinkage of the great carbonate bank. The reefs stabilised with a slowing sea level rise. Regional platforms that were re-established in the late Cretaceous still thrive.

The Florida-Bahamas platforms were deformed along its southern boundary when the Caribbean plate collided with the Florida-Bahamas block. Folded and faulted terraine and stacked thrust sheets formed along the collision zone, creating the islands extending from Cuba to the east along the Lesser Antilles. BPC’s acreage lies in the folded outboard portion of the collision zone, where the mainly carbonate sequence is up to 5.5km thick.

Oil outlook

In terms of oil generation, the low thermal gradient and thickness of post mid-Cretaceous are unlikely source rocks. Earlier Jurassic and Lower Cretaceous lithologies are more promising, with three potential sources – syncronous rift silicate clastic sediments, post rifting lagoonal and shallow carbonates, and deeper water hypersaline carbonates.

Examples of these sources are the syn-rift San Cayetano clastic sequence found in boreholes and an outcrop in northwest Cuba. Total organic carbon ranges from 0.7%-1.5% with an original content estimated at three per cent and a hydrogen index over 600. The Sunniland Trend in south-central Florida has a 12% total organic content in argillaceous carbonate sediments and a hydrogen index from 400 to over 800. In both cases, the total thickness and gross volumes are not known, precluding the estimation of a total oil generating capacity.

This data indicate the potential for new discoveries in the region. This drew the attention of Alan Burns, founder of BPC Ltd, and Chief Operating Officer Dr Paul Crevello.
The area surrounding the Bahamian Islands has been explored for oil since 1945. However, only limited and sporadic drilling and seismic work has been undertaken, with no drilling completed in the past 20 years. In the 1950s, oil majors Gulf, Standard Oil, BP, Superior Oil and Shell held licences and carried out seismic work, with the first deep well, Great Isaac-1, drilled in 1971. Changes in petroleum legislation in 1982 triggered a new wave of seismic acquisition. Tenneco drilled the Doubloon Saxon-1 well in the southwest of the Bahamas, close to Cuba, in 1986.

Deciphering data

Despite the lack of continuous exploration there has been significant archiving of seismic and rock data. ‘This is one of the main attractions for BPC,’ says Crevello. ‘We have selected our licence areas using the 16,000km of seismic line data. Over 7,000km of this was obtained from scanned 2D data archived at various universities scattered across the USA. This gave data for a 10x10km grid over the deep water areas of Old Bahama Channel, Santaren Channel and Florida Straits. We have also a quantity of well data that, despite its age, is sufficient to analyse the petroleum systems in the Bahamas’. All of this has been digitised and loaded on the company’s workstations.

‘The logs from the wells include core descriptions, cuttings and thin sections for petrographic analysis and basin modelling,’ Crevello adds.

‘Additionally, core data recovered from a hurricane-ravaged warehouse in New Orleans, USA, has been significant in providing original rock calibration of well log analyses (petrophysics), seismic attributes and providing fundamental data on rock types, reservoir pore systems and depositional environments.’

The primary targets are in the Upper Jurassic and Lower Cretaceous carbonate sequences, particularly below the anhydite seal rocks in the region. Secondary targets include syntectonic rifts that have not, as yet, been drilled. Log analyses of drill holes in the Bahamas indicate a range of relationships between reservoir rocks and seal caps. For example, the geology of the Doubloon Saxon-1 drill hole is represented by fine-grained sucrosic (sugary) dolomite formed in what is interpreted as a shallow offshore hypersaline basin to shoreline. By contrast, the Great Isaac-1 borehole is dominated by a high-energy grainstone deposited as a beach on a subtle bathymetric high on the Bahama platform. Crevello says, ‘There is sufficient data to support a number of conclusions. Organic-rich sediments have been identified across the licence areas that correlate with onshore oil-producing provinces in Cuba and Florida. Basin modelling of these source rocks suggests that oil-producing maturity was reached during the Tertiary to present times, and that these source rocks could be found at depths of 3,600-7,000m.

‘Furthermore, oil shows were frequently encountered in cuttings and in bleedings from tight fractures. Hydrocarbon shows were noted in the lower zones of most wells drilled in the Bahamas.’

Finance facts

The licencing framework in the Bahamas requires annual rents to be paid for the initial three years, with an extension providing all conditions are met, including a minimum annual expenditure. If not met, 50% of the shortfall must be paid to the Government. In the event of a discovery the licensee is entitled to a lease.

There are no corporate income taxes in the Bahamas. Rentals are charged for the lease area but they are deductable from production royalty payments. These are 12.5% of well-headed production of up to 75,000 barrels per day (bpd) and 25% for production in excess of 350,000bpd. BPC has four licence areas to the south of the Bahamas, some 60km from Cuba, while its Miami, USA, licence is immediately south of Grand Bahama.

Miami hosts the 1971-drilled Great Issac well that extended below the mid-Cretaceous unconformity. Although seismically prospective, core results were disappointing despite hitting a permeable oolitic host rock. However, at 5,352m, the drill penetrated a bed with high pressure salt water, which, upon analysis, revealed dissolved gas.

BPC Ltd has four other targets including broad stratigraphic arches, stratigraphic traps and down dip structures that require further seismic investigation. The southern licences, acquired in 2007, are Bain, Cooper, Donaldson and Eneas, which lie on the edge of the Bahamas Bank, and the old Bahamas Channel over water depths of five to 535m.

Within the Donaldson licence is the Doubloon Saxon-1 borehole drilled to a depth of 6,626m targetted on porous limestones and dolomites. Although oil shows were encountered, the drilling was hampered by extensive zones of lost circulation and as much as 1.4m barrels of drilling fluid were lost to the formations. Within the four licences, Crevello and his team have identified 22 leads, some of which are very large structures but poorly detailed by the old seismic data. These are a matter of priority for the company.

Crevello is positive that BPC efforts will be rewarded. ‘The Bahamas area is sparsely explored with only five wells drilled in an area of 800,000km2, the latest in 1986. While it is premature to model specific targets, it is likely that floating production storage and offloading facilities will be used for deep water wells.’