Guatemala outlines geology on offered tracts

Guatemala has begun releasing details on four Peten basin tracts offered this spring in an oil and gas bidding round.

Guatemala's Ministry of Energy & Mines through the General Directorate of Hydrocarbons is offering acreage in the North Peten and South Peten subbasins (see map, OGJ, Mar. 18, p. 82). Officials are to award tracts through seismic option contracts (SOCs), production sharing contracts (PSCs), or exploitation contracts.

Companies seeking tracts in Guatemala's spring tender are required to submit bids during the last 5 working days of May. Guatemala's Ministry of Energy & Mines then has 60 days to evaluate offers and choose the winning bidders.

Regional setting

Ninety-five of the 100 or so wells drilled in Guatemala since 1958 are in the Peten basin. Although the region has been the site of most of Guatemala's exploration activity, it remains largely untested.

The Peten basin is divided into northern and southern subbasins by the La Libertad arch, which lies on an east-west axis across Central Guate- mala. Officials believe the geology of the tendered areas has been influenced by the arch.

Isopach maps, geological sections, well data, and other information indicate the depths of prospective formations in the Peten basin increase toward the west.

Several tectonic episodes have affected the South Peten basin, resulting in moderate to strong extensional and compressional deformation.

The Cretaceous Coban formation, of great importance in Guatemala's petroleum geology, is subdivided from top to base by the members A, B, C, and D.

Most fields producing in Guatemala, including Rubelsanto, Tierra Blanca, Chinaja, and Yalpemech, are in the South Peten basin. Coban C carbonates are the producing horizons in all the southern fields. Although fields are small, remaining potential lies in a variety of play types.

The Coban B member has proven to be petroliferous in the northern part of Peten basin, with discoveries reported at Xan and Chocop. Seven North Peten wells are producing 12,000 b/d of oil from the Xan horizon, in a sabhka depositional environment where carbonate reservoir rocks are enhanced by fracturing.

Area A-1-96

Area A-1-96 is the northernmost tract offered in the tender. It covers about 424,954 acres in central El Peten department, south of the Peten Itza Lake, and includes Blocks L-5-96, K-6-96, L-6-96, and M-6-96.

The northern boundary of A-1-96 is 5 km from Santa Elena City.

Guatemala is offering an SOC on Area A-1-96 because of a lack of seismic information in the contract area. About 40 line km of 2D data is available on the tract.

A contractor must agree to conduct at least a 200 km 2D seismic program on the tract and drill a well at least 2,500 m deep.

Area A-1-96 is within Guatemala's flexure zone, defined by two linear elements on east-west strike interpreted as left lateral slip faults in a 1983 report by Texaco Exploration Guatemala Inc.

No discoveries have been reported in A-1-96. However, three nearby wells have reported hydrocarbon shows.

A unit of Royal Dutch/Shell in 1959 encountered brown oil traces in Paleozoic sediments at 3,009-86 ft with the Laguna Blanca well, drilled to 3,971 ft. The well also produced about 330 Mcfd of hydrogen sulfide at 3,136-3,222 ft.

In 1959-60, Guatemalan Atlantic Richfield Corp. reported salt water with oil traces at 5,017-32 ft in the 1A San Francisco 1A well. Drilled to 6,397 ft, the well also had oil, gas, and H2S shows at undisclosed depths.

Esso Standard's Peten Itza well in 1962 also encountered oil shows in deeper intervals above 9,014 ft.

Area A-2-96

Area A-2-96 covers about 70,000 acres in southwestern El Peten department on the border with Mexico.

Because it is surrounded by Tierra Blanca, Chinaja, Caribe, Rubelsanto, Tortugas, and Atzam fields, some among the oldest producing areas in the country, Guatemala is seeking both an SOC and PSC for Area A-2-96.

The A-2-96 SOC model requires a contractor to conduct a 100 sq km 3D seismic survey within 2 years and notify the energy and mines ministry 2 months prior to the end of the term whether he wants to retain the acreage. If so, the company will have to drill a well of at least 4,500 m in the third year.

The PSC model sought for A-2-96 requires the contractor to carry out a geological study of the area and drill two wells of at least 4,500 m within 3 years.

Upper Cretaceous carbonates, lower and upper Tertiary clastics, and Quaternary alluvium outcrop in the structurally complex area.

Anticlines with multiple faults and domes generally associated with saline tectonics occur in A-2-96 and surrounding areas. Nearby reservoirs occur in traps of this kind.

However, 1 Las Mercedes and 1 and 1A La Felicidad, drilled in the area by Elf Aquitaine Guatemala in the early 1980s to 5,530 ft and 13,798 ft, respectively, were abandoned after finding small oil and gas shows.

A-3-96 and A-4-96

Areas A-3-96 and A-4-96 are adjacent tracts covering about 224,700 and 190,900 acres, respectively, in East Central Guatemala.

Getty Oil in the early 1980s drilled 1 Tzuncal to 8,090 ft and 1-X Cancuen to 9,989 ft in the northwest part of A-3-96. Both holes found small volumes of oil and gas and were abandoned.

Geophysical data also are available on the tract from a 150 line km 2D seismic survey conducted by Getty.

Guatemala is seeking an exploitation contract on A-3-96 requiring a contractor to evaluate the Tzuncal and Cancuen structures by reconditioning 1 Tzuncal and 1-X Cancuen.

Information on A-3-96 shows eight structures divided into three groups:

Asymmetric anticlines associated with intense thrusting and split faults in the southern part of the area.
More symmetric, aligned anticlines in the middle of the tract, broken frequently by split, normal, and perpendicular faults.
Symmetric anticlines associated to normal faults in the north.

Structural deformation increases in the southern part of A-3-96. Northern structures likely present less fracturing in the cap rock and greater reservoir continuity, possibly increasing chances of finding commercial hydrocarbons.

No wells have been drilled in Area A-4-96, and seismic data are scant. As a result, Guatemalan officials are seeking an SOC on the area with a minimum requirement of 150 line km of seismic surveys in the first 2 years.

In the optional SOC phase, Guatemala will require a contractor to drill a well of at least 2,500 m.

Contract requirements

Guatemala's hydrocarbon law sets the type of bid and items required for each area tendered.

Companies are required to bid separately for each area. Each bid is to include a presentation fee of $ 25,000 (U.S.), plus a $100,000 guarantee as a bond or letter of credit. The guarantee is refundable upon awards of acreage.

Tracts available through SOCs may be no larger than 741,300 acres and comprised of no more than six blocks of 123,550 acres each.

An SOC allows a contractor to evaluate an area and consider the possibility of entering an optional drilling phase, while protecting his rights to the acreage. The contracting company must agree to carry out biddable seismic surveys during the first 2 years of the contract. In the third year, if seismic results warrant, the contractor may convert the SOC to a PSC.

PSC tracts may be no larger than 1.186 million acres and include no more than six blocks, each no larger than 197,680 acres. Guatemala uses this type of contract in areas in which some information has been accumulated about geological structures.

PSC contractors have the option of reinterpreting available data or conducting further geological and geophysical work. In either case, the contractor must agree to drill at least one wildcat in the first 3 years of a PSC.

Exploitation and fees

An exploitation contract is available in any area of one or more exploitation blocks with a combined surface area of no more than 370,650 acres where previous activity has found hydrocarbons.

The contract includes an evaluation phase of 1 year with a possible 1 year extension, during which commerciality of the field or fields within the tract's boundaries must be determined.

At the end of the evaluation phase, the contractor has the option of releasing one or more exploitation blocks or the entire contract area with no further obligations. If warranted, the evaluation phase may be followed by a development and production phase of no more than 24 years.

Contractors working under any of the hydrocarbon contracts are required to pay annual rental fees amounting to about 10/acre during the exploration phase, about 20/acre during evaluation, or about $2/acre during the production period.

Guatemala sets oil royalty payments based on the gravity of production. After payment of royalties, operators may recover all investments directly related with contract activities.

After paying royalties and recovering investments, operators must share production with the government on a sliding scale based on production volumes. For production of 20,000 b/d of oil or less, the state receives 30% and the operator 70%. The state may receive as much as 70% if production is 90,000 b/d or more.

In the case of gas production, the operator receives 70% and the state 30% of net flow.

Oil and gas activity has begun to revive in Guatemala since the country's new hydrocarbon law became effective in September 1992.

Oil production amounts to about 14,700 b/d, 80% of which is exported. Production by yearend 1996 could reach 20,000 b/d. Guatemala aims to boost production to 45,000 b/d as soon as possible.