By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
The Government could earn a collective $30 billion in royalty income during “the first 10 years of production” if projected quantities of oil are discovered in Bahamian waters, an oil explorer yesterday saying this would put the nation’s finances “into the black pretty quickly”.
Dr Paul Gucwa, the Bahamas Petroleum Company’s (BPC) chief operating officer, speaking after a weekend presentation given to the Trades Union Congress (TUC) on its activities, said he was “confident that everything was moving forward” on both the company’s and the Government’s side.
Suggesting that BPC’s licence renewals, outstanding since just prior to the May 2012 general election, would be dealt with “in due course”, Dr Gucwa said the Government was continuing to work on putting the correct regulatory and safety regime for its activities in place.
Confirming that BPC would seek an extension if the Government failed to have the regulatory regime in place in time for it to meet its commitment to ‘spud’ a first exploratory well by April 26, 2013, Dr Gucwa added that the company was also set to “crank up” its public relations efforts to ensure the Bahamian public had all the “facts” on its operations.
In his presentation to the TUC, Dr Gucwa said BPC’s activities over the next two years - if they were allowed to proceed and discovered the commercial quantities of oil forecast - “could help rebase the Bahamian economy”.
Noting that there was time to train Bahamians for the jobs that may be created, Dr Gucwa said that based on there being two billion barrels of oil in Bahamian waters, production would take place over three stages.
The first would involve drilling 15 wells, with production set to peak at more than 72 million barrels per year in the first year.
Explaining that this initial phase was designed to provide BPC with some income to offset development costs, Dr Gucwa said the second phase would involve a further 21 wells.
And production, according to his presentation, would peak at over 160 million barrels per year during the sixth-seventh years of drilling, encompassing a third development phase.
The TUC presentation showed that the Government would start earning royalty income, some 12.5 per cent of each barrel extracted, in the third-fourth year of BPC’s activities if exploration proved successful.
Collective royalty income, forecast as being between $3-$4 billion per year, was set to hit $30 billion over the 10-year period between the fourth and 14th year of BPC’s work, the company projected.
“It is exploratory, but if it did work out that oil was there, it could be very good for the Bahamian economy,” Dr Gucwa told Tribune Business yesterday. “It would put it [the Government’s finances] into the black pretty quickly.
“If we get the go ahead to go drill our well, and make a significant discovery, that will provide another source of revenue for the Bahamian economy. Presumably, it could be significant.”
BPC’s presentation to the TUC showed that the company still plans to launch its Bahamian Depository Receipt (BDR) share offering to Bahamian investors during the third quarter this year.
And, having spent $50 million to-date on seismic testing and searches in Bahamian waters, the presentation pegged the cost of exploratory drilling - the stage BPC has reached - at $60-$160 million.
If that goes well, a further one-three years of appraisal drilling in Bahamian waters will follow, typically requiring a $400-$600 million investment.
After that, three-six years of development and construction planning, and 220-40 years of possible production, were set to follow, costing anywhere from $30-$40 billion.
Disclosing that BPC was “starting to crank up our communications”, with more trade union and church group presentations set to follow, Dr Gucwa told Tribune Business: “Our desire is that everyone understands the facts behind what we’re doing, and makes a decision on the facts, some of the miscommunication that floated around during the election.”
Acknowledging that the new Government had much on its agenda when it took office, he added: “I’m confident that everything is moving forward.”
Asked about the status of BPC’s licences, Dr Gucwa added: “I’m expecting that in due course everything will be dealt with.
“It’s my understanding that they are working to put the regulations in place, and we’ve had several meeting now with several of the groups responsible should there be an accident when we’re drilling. We’re having more communication with the Government.”
Kenred Dorsette, minister of the environment, confirmed that work on devising an appropriate regulatory regime, together with health and safety and environmental rules, was ongoing.
He told Tribune Business: “Certainly, we do not have the regulations, or updated regulatory environment, that I think would be necessary for that industry.
“My Ministry is in the process of continuing to work to review the regulatory environment, and we intend to work with the Attorney General’s Office in that regard.”
Confirming that BPC was still working towards the first well target date of April 26, 2013, Dr Gucwa added: “Hopefully the Government will be there by then in terms of having the regulatory regime in place.
“If for some reason they’re delayed we would want an extension, as we would not want to start a well in June at the start of hurricane season.”
In a brief interview with Tribune Business yesterday, Simon Potter, BPC’s chief executive, said the company was “working on business as usual” when it came to its licences.
Adding that BPC had met the renewal conditions “many times over, many fold”, he said: “We’re very clear on what our obligations are, and are looking forward to working with the Government to ensure we achieve them as best we can, both from an environmental and economic point of view.”
Comments
oracleoctavia 11 years, 8 months ago
Cost of ExxonMobile spill...August BP's Gulf of Mexico oil spill bill could hit $60bn, Moody's warns The final cost to BP from the Gulf of Mexico oil spill is likely to "remain uncertain for years to come" and could reach $60bn (£37bn), according to new analysis from Moody's, the rating agency...http://www.telegraph.co.uk/finance/ne...">http://www.telegraph.co.uk/finance/ne... The world’s largest oil company by market value, ExxonMobil Corporation (XOM - Analyst Report) has projected the expenditure to clean up a July 1 oil spill into the Yellowstone River in Montana at $42.6 million, as per a filing with the federal regulators.....http://www.zacks.com/stock/news/59797...">http://www.zacks.com/stock/news/59797........ Yellowstone River oil spill in Montana to cost Exxon $135 million Published: Friday, November 04, 2011, 4:30 PM ......http://www.nola.com/business/index.ss...">http://www.nola.com/business/index.ss...
So where is the environmental impact study, where is the legislation to protect the related industry....what is the potential adverse impact on FISHERIES & TOURISM...who is liable...where is the liability lines drawn if spill drift over to Florida or other islands...Jamaica, Puerto Rico etc....let's not be fooled with the Fool GOLD !!
TalRussell 11 years, 8 months ago
PM Christie you seem to think your mandate on Decision Day 2012 has somehow given you the green light to legalize the criminal activities of the numbers rackets and to place our entire tourism industry at drilling for oil risk?
by TalRussell
sherco 11 years, 8 months ago
Where are the Town Hall meetings as promised over this oil exploration in our pristine waters? The damage done to marine life (well documented in marine mammals) by the seismic testing alone is horrific. It deafens them and then they die and this is even BEFORE the hideous vista of 36 oil rigs could possibly become a reality on our horizons. Oh, the lure of "easy" money. Never seems to fail until it fails..bringing down our tourist and fishing industries. There are ALWAYS oil spills. Even at Clifton one can often see the sheen of spilled gasoline and diesel fuels and that is but nothing compared to what a spill and leakage of crude would look like. This is madness. Please Mr. Christie, don't be blinded by the prospects of billions flowing into this country; the costs of a disaster would soon outweigh them. Please look at clean and renewable energy technologies; wind mills would look a heck of a lot better in our waters and would create marine habitats at their bases and they don't spill anything; ocean currents generate energy...there ARE other alternatives to filthy oil. Think long and hard before jumping off this cliff.
Dynamohum 11 years, 8 months ago
The world will want and need all the energy it can get in the future, our neighbour Cuba is drilling for oil just across our maritime boundary , world class regulations and protocols are being negotiated , I believe the government will look after the environmental interests of our seas and islands whilst at the same time providing an opportunity for the enhancement of our social and economic well being. Should oil be found the benefit to the Bahamas would be profound, think of Norway, a pristine environment like ours, now because of the gas and oil in its waters one of the richest and prosperous country's in the world, a sovereign wealth fund for the benefit of current and future generations could be the legacy the discovery of hydrocarbons this administration bequeaths We should ensure tight regulations with accountability and grasp the nettle that the discovery of such resources will bring to the Bahamas, the reward for the current and future generation far outweighs the risk involved
positiveinput 11 years, 8 months ago
Seems like this 'deal' has already been cut. Notice the use of certain words and phrases - 'confident that everything is moving forward', 'in due course', 'working on putting the correct regulatory and safety regime for its activities in place'... This seems like another episode of its what the Bahamians want, but time tells another story like with the sale of BTC. With the oil venture, some good would come out of it, but sooner or later we all would find out oil and water really don't mix .
sherco 11 years, 8 months ago
It seems Dynamonum may be a flag bearer for or will profit from BPC as he/she sees only the boon from "fabulous billions" with no thought put to the likely consequences of fossil fuel extraction here. Dynamonum mentions Norway as a country to emulate...Norway?? They still have a whaling industry for god's sake! Somehow, I don't think environmental issues are on their list of priorities. Oh sure one can talk about having tight regulations, rules and accountability...remember the Exxon Valdez spill? I realize that it was different than drilling but after 23 years the beaches still have thousands of gallons of oil on them and just below the surface. Even a pint of oil released onto the water can spread and cover one acre of water surface area and can seriously damage an aquatic habitat. How many animals died outright from the oil spill? Source: Exxon Valdez Oil Spill Trustee Council, Questions and Answers. “No one knows. The carcasses of more than 35,000 birds and 1,000 sea otters were found after the spill, but since most carcasses sink, this is considered to be a small fraction of the actual death toll. The best estimates are: 250,000 seabirds, 2,800 sea otters, 300 harbor seals, 250 bald eagles, up to 22 killer whales, and billions of salmon and herring eggs.”
That was Alaska...how about closer to home as in the Gulf oil spill two years ago; the greatest environmental disaster to ever effect the United States and to this day, still a mess on every front be it the conditions of the shore and estuary environments, the fisheries, the immediate and long term health issues that keep cropping up etc., etc., etc.. Just go online to read about all of the problems and future problems that are plaguing not only the people of the Gulf states but how BP is still having to shell out millions...it is an on-going disaster. What good did regulations and rules do in those two monumental disasters (the regulations were ignored and the rules "stretched). We well know how, "t'ings can go" with laws and rules in the Bahamas...a little blind eye turned here and there with something slipped under the table...! When a spill happens, it happens and nothing can ever "make it right" but the passing of centuries. No amount of money can ever really clean up such a catastrophe.
Do we really want to take that chance? Do we really want to go down that road? Clean, renewable energy for the Bahamas is the better answer...we just need to have the will to push it forward and forget about this "instant gratification." Bahamians, wake up and get involved before it is truly, too late.
Sam 11 years, 8 months ago
BPC conducted seismic tesing in what was called one of the most pristine areas of the Bahamas StrongWITHOUT an environmental impact assesment (EIA). Before the first drop of of is extracted seismic testing - or blasting sound at the sea bed (which has been likened to standing next to a 747 at take off) is conducted for MONTHS at a time This is done to map out the sea bed to help oil companies determine where the most likely sites are for oil drilling. Sesmic testing has been known to rip apart fish eggs, rip the lateral lines in fish, cause deafness in whales and dolphins causing them to strand, avoid their migratory and feeding paths. no EIA, no observers to count the dead nothing - the government was assured that there would be no problem - but how do we know?Where is th EIA for the oil drilling? Where are the regulations for this industry? Where is the transparency? Why should we trust BPC with oil drilling when they KNOW how dangerous seismic testing is and did NOTHING to mitigate it's effects? Drilling will bring its own noise to this senitive area, not to mention the inevitable spills that come with drilling and the bespoiling of the area. Then there are the pipes that would have to transfer the oil to ships and their spills, and have we forgotten that the Bahamas average land mass is merely 5ft on average above sea level? Have we buried our heads so far in the sand that we believe that some how God is going to save us from sea level rise? Is the BP Gulf spill such a distant memory that we would be willing to take that risk? In a country that receives on average 9 sun hours a day why are we not seriously investigating the sun, or wind and tidal energies. They are expensive? Why are we not inviting solar comapnies here to test the latest in solar technologies?How expensive is it going to be when we are flooded out of our homes? BP had access to the best and the bightest and for weeks oil spilled into the Gulf contaminating their fisheries, killing thousands of whales and dolphins, and seabirds. WE need to demand something better from our govrnment for our country and for generations to come...if you haven't already done so please sign the petion...if not you then who? http://www.thepetitionsite.com/1/NO-O...">http://www.thepetitionsite.com/1/NO-O...
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