Sherritt to renew exploration, eyes gas sales in northern Cuba

Sherritt International Corp., Toronto, plans to resume exploratory drilling in northern Cuba in the third quarter and is considering an increase in its $90 million capital spending plan in light of the current oil price.

Capital spending was $46.2 million in the first half of 2004, and first half gross working interest oil production in Cuba fell 13% to 37,444 b/d (19,811 b/d net). The production dip was due to natural declines in Canasi and Puerto Escondido fields and delays in drilling several development wells in the last half of 2003.

Exploratory drilling will start with the Santa Cruz prospect on Block 7. Sherritt said it has work commitments for several exploration wells on blocks 7, 9, and 10 in the next 12 months.

With three rigs running, the company will refocus development drilling on the Seboruco area, where recent drilling has resulted in higher than anticipated initial production rates (see map, OGJ, Oct. 9, 2000, p. 38).

It will undertake a 50% capacity expansion of the Yumuri oil treatment facility in late 2004 to process production expected from new wells at Seboruco and Yumuri. Construction was completed in the 2004 second quarter on a pipeline to ship gas from the Canasi facility to the Cuban gathering system at Puerto Escondido.

"This pipeline project reaffirms the corporation's commitment to assist the Cuban government in developing the infrastructure necessary to utilize the large volumes of gas produced at Canasi in an efficient and environmentally responsible manner," Sherritt said.