Curaçao can draw energy investor interest.

By now there seems to be available an ample body of public knowledge indicating that at least four of the attributes that are required for the accumulation of oil and/or gas may be present under the seafloor of the Curacao maritime area. The first of these elements is called “source rock”. Source rocks can only form where sediments have been deposited.

Exploration for oil and gas is confined to sedimentary basins. Sedimentary basins can be formed as follows. Erosion causes soil and rock particles to move into rivers and along these rivers into the ocean. These particles are then deposited upon the ocean floor, and, frequently, particles of plant and animal matter are deposited along with these particles of rock and soil. As a layer of these deposits builds up on the ocean floor, it is soon covered by additional layers of similar deposits. This is how sedimentation occurs in geologic time and how so-called “petroleum basins” can be formed. Curacao and Bonaire form part of such a petroleum basin.

Because the oil and/or gas in a source rock are usually widely disseminated throughout the rock, they are not considered an attractive target for exploration because a well drilled into such a rock will not encounter enough hydrocarbons to be commercial. The hydrocarbons from the source rock must be consolidated and localized in order for there to be a chance for the hydrocarbon accumulation to be commercial. Frequently, as additional layers of soil and rock are added, the increasing pressures result in the hydrocarbons being squeezed out of the source rock into adjoining rocks which contain more and bigger pore spaces between the bits of soil and rock. The hydrocarbon fluids accumulate in this porous rock and such a rock is called “reservoir rock”. This type of rock is essential for the accumulation of hydrocarbons. Unless the rock contains adequate pore space and those spaces are connected, the hydrocarbon fluids cannot accumulate in sufficient quantities to become a commercial accumulation.

The presence of good source rock and good reservoir rock are not sufficient by themselves to provide a hydrocarbon accumulation. The hydrocarbons must be accumulated in a localized area and be of large enough size in order for the accumulation to have a chance to be commercial. Since the hydrocarbons are produced from a well that can drain only a limited area, there must be a large amount of hydrocarbons in a local area for the accumulation to be commercial. This requires the presence of a “trap”. There are many types of traps, but essentially, all traps are formed because oil and gas are lighter than water. If all three liquids are present in a rock, the gas will tend to float on the oil, and the oil will tend to float on the water.

The simplest type of trap is called an “anticline”. Essentially, this is a hill located beneath the earth’s surface. As the fluids move into this buried hill or anticline, the oil and gas which are riding on top of the water in the reservoir will accumulate at the top of the anticline since they are lighter than water, and they will become trapped there as the water continues to move beneath them. This then gives a good localized area of hydrocarbon accumulation that may become commercial under certain conditions. These conditions will be explained below.

Anticlines and other types of potential traps can be located by utilizing seismic surveys. In maritime areas these surveys are obtained by a ship towing an array of sensors capable of recording very small shock waves. Small explosions are initiated by an array of explosive devices also towed by the ship. The small explosions send shock waves downward into the water and into the sediments below the seafloor. Changes in the type of sediments can cause a portion of the downward trending shock waves to be reflected back to the sensors. The time from the instant the explosion occurred to the time the reflected shock wave arrived at the sensors is measured. Methods are then utilized to determine the velocity of the shock wave during this time period, and the depth to the change in the sediments that caused the shock wave to be reflected to the sensor can be measured. The time for the shock wave to come from the top of a buried hill or anticline will be less than the time from the sides and bottom of the hill, so a map of these reflected times will show how the depth of the reflector is changing over an area. Although no wells have been drilled in the Curacao maritime area, more than 4,000 km of seismic profiles have been recorded in this area through the years.

However, an anticline is only part of the trap. The anticline only becomes an actual trap if the reservoir rock within the anticline is covered by a nonporous, impermeable “seal”. Without such a seal, the oil and gas would simply continue to move through porous rocks into the area of lesser pressure. Since the top of the anticline would be the area of lesser pressure, the hydrocarbons could just continue to move upward until they encountered a nonporous rock that would halt their movement upward. Then they would continue to move in an “updip” direction until they reach another trap of some sort or until they reach the ocean surface. In the event they reach the ocean surface, they are called oil or gas seeps. Many of these seeps are known throughout the world. But such type seeps have not been documented in this particular area.

The next question is whether an accumulation of hydrocarbons in the Curacao maritime area may be a commercial accumulation. Important factors in determining eventual commerciality are: (i) the size of the accumulation (as was already remarked above); (ii) the cost to drill and produce the accumulation; (iii) the price received for the oil and/or gas produced.

The size of the hydrocarbon accumulation is determined by the area covered by the accumulation and the thickness of the accumulation. The results from seismic surveys show that the area covered by the accumulations may be quite large, so this may be of considerable interest. The thickness of the accumulation is controlled to a large extent by the height of the anticline containing the accumulation. In this way geoscientists can make an estimate of what is called the “structural closure” of a trap.

The cost to drill and produce these accumulations will be very large. One of the factors that have a great impact on the cost to drill a well is the depth of water. The average depth of water in the Curacao maritime area is about 1300 meters. This was a major prohibitive factor to exploration in the past, because the maximum water depth for commercial production was about 500 meters.

Major advances have been made in drilling and producing in deeper waters. Consequently, water depths of 1300 meters are no longer a deterrent to further exploration. Although it is technically possible to drill and produce wells in such water depths, the cost to do so is very substantial. Such very large investment expenditures will obviously limit the number of companies that will be interested in exploring in such an area.

A further element in the determination of whether or not a field once discovered will be commercial is the price received for the oil or gas produced. During recent years, this price has shown considerable variation. The current price of oil is about $90 per barrel depending upon the grade of the oil and its location. Because of the variations, most companies tend to be very conservative when trying to project future production rates and future prices when evaluating a prospect prior to drilling.

The amount of overhead, taxes, etc. is to a large extent dependent upon the type of exploration agreement entered into between the company exploring for oil and gas and the host country where the prospects are located. The location of the country in question also has a bearing on the costs. The closer the country is to a market, the smaller the transportation costs will be to get the oil or gas to market.

An additional important point to keep in mind is the fact that a very large number of countries are interested in having the petroleum potential of their country evaluated and
developed, because the development of these resources can provide a very large source of revenue to the country. Quite naturally, those countries with established production have the best chance of promoting further exploration and development because all four of the critical attributes required for the accumulation of hydrocarbons are already known to be present. This means that those countries without established production must offer what appears to the companies to be a bigger share of the profits from future production in order to entice them to explore in an area where discoveries have not as yet been made.

As a result, there is a considerable amount of competition between host governments on the fiscal terms offered to energy investors. These investors are prone to seek out only that class of frontier risk ventures where early, low cost technical work might provide an option to dramatically improve their probability of success. This process is called “derisking” a prospect.

Exploration to date has been accomplished at little expense to the government. The efforts are continuing and may bear fruit in the future, as petroleum exploration is a step-by-step process which depends on a convergence of favorable economic and political circumstances locally and in the world.

If future exploration in the Curacao area is successful, it is expected that some company will almost certainly be interested in also testing the structures in the adjacent Bonaire maritime area.

C. Gomes Casseres