Cuba's oil production rate is growing as Sherritt International Corp., Toronto, develops heavy oil fields along the island's northern coast.
Sherritt said its gross oil production in Cuba in the quarter ended June 30 averaged 31,818 b/d, compared with 18,801 b/d in the 1999 second quarter.
Sherritt holds an indirect interest in seven exploration/production-sharing contracts with the government. The 11 contracts cover a combined 3.55 million acres and encompass most of the island's existing oil fields, the company said.
"The enhanced production-sharing contracts require the corporation to provide services and technical assistance to rework and enhance the production of selected wells, or to drill new wells in existing oil fields," Sherritt said. In return, the company gets a percentage of the incremental oil production and accelerated recovery of its costs.
Sherritt said Cuba "appears to have a favorable geological setting for massive accumulations of oil and gas."
Sherritt in February 2000 produced its 25 millionth bbl of operated cumulative oil production since beginning operations there in 1992.
The company said it has "accumulated an extensive data base of historical geological, engineering, and production information from all of the wells in the north coast Cuban oil fields and has gained unparalleled experience in the characterization, technical understanding and management of Cuba's reservoirs."
Sherritt's main focus in 1999 was to commence production from new reserves.
It drilled three discovery wells and six development wells in northern Cuba in 1999.
These included three at Puerto Escondido, one at Yumuri, two in Varadero, and one in the Varadero West contract area. The company also participated in two wells on Block 7, Canasi-2 and Seboruco-1.
It drilled and completed Cuba's first multilateral horizontal well at Varadero.
A discovery well drilled in June 1999 at Yumuri oil field flowed at a rate of 4,400 bo/d. A seismic program was shot over Yumuri in August 1999, and two additional development wells were scheduled during 2000.
Sherritt acquired a 45% working interest in Block 7 last year and participated in the drilling of the Canasi and Seboruco discovery wells.
Sherritt said it added 8 million bbl of gross proved reserves in Cuba during 1999 at a finding and development cost of $5.03/bbl.
Realized oil prices for the Cuban production averaged $23.40/bbl in first half 2000 vs. $14.29/bbl in the first 6 months of 1999.
Second quarter 2000 average net oil production of 16,798 b/d was 43% higher than the same period of 1999 and set a quarterly production record.
Oil and gas operations generated about 60% of Sherritt's total revenues in first half 2000. Oil and gas capital spending was $19 million in the first half.
Sherritt said it ranks among the top seven oil and gas producers in Canada in terms of the production levels achieved for its non-Canadian operations.