Australia's Melbana has reached an accord with Cuba to enhance production in the Santa Cruz offshore field. The is located within 30 miles from Havana. Photo courtesy of alexrojas2990/Pixabay
Dec. 5 (UPI) -- Australia's Melbana oil exploration company, which has rights in a Cuban area known as block 9, will now also work to enhance production from the separate Santa Cruz offshore field, which has been producing oil for over a decade.
"Melbana has completed its initial assessment, yielding a number of promising opportunities to enhance production" from the Santa Cruz offshore field just off the islands northeastern coast, about 28 miles away from Havana, the company said on Wednesday.
The Santa Cruz field is an area that was estimated to have up to 100 million barrels of recoverable oil, with some production there over the last 12 years, the company said.
Field production in 2012 in Santa Cruz was about 1,600 barrels per day, Melbana said. The field was declared commercial in 2006 and in the first seven years it produced a total of 7.4 million barrels from 18 wells, with grades ranging from 10 to 22 API, or heavy crudes.
Melbana has now finalized a contract with state oil company CubaPetroleo for a long-term "right to share in any enhanced production from the Santa Cruz field," the company said.
The company will carry out an initial study period of eight months, which includes "two side-track wells from existing well bores to new geological targets," and then decide whether to continue.
Melbana's CEO Robert Zammit said that he was pleased to have obtained "CubaPetroleo's support to complete our commercial negotiations promptly and lock in the opportunity."
"Our ability to identify the enhanced oil opportunities in Santa Cruz was greatly accelerated given our learnings from Block 9. During our marketing activities for Block 9 we noted strong investor and industry interest for Santa Cruz, given its size and existing production," he added.
"In due course, Melbana will likely seek to fund the field work required to increase oil production from Santa Cruz at the asset level, " Zammit said.
As for Block 9, it is also located in the northeast of the island. The company said in June that the rig it chose for drilling there would be available sometime in the first quarter of 2019. Block 9 is near Santa Cruz, it added.
Melbana said it is encouraged by Cuban reports that in an offshore area named Bacuranao, the Cuban national oil company made a finding in October that revealed the potential for 22 API grade, the highest quality discovered in the area. Bacuranao, Santa Cruz and Block 9 are part of the same "belt trend," Melbana said.
The API rates the quality of oil and the higher the number, the better chances for the oil to yield more expensive oil products like naphtha, or gasoline. The API rates light oil at 41 degrees while West Texas Intermediate, at just under 40, is a medium to light crude oil.
Heavy crude grades normally yield mostly lower cost products known in the industry as "bottom of the barrel" like fuel oil, which is used as fuel for ships, or asphalt. Countries that produce heavier crudes normally import lighter crudes to blend them before refining.
According to preliminary information from the United States' Energy Information Administration, Cuban production of crude oil in 2017 was about 50,000 barrels per day. Its consumption was about 172,000 barrels per day in 2015, which means it is dependent mostly on imports with Venezuela playing a key role.
Unlike most of Latin America, Cuba offers potential as the area, because of the 60-year-long embargo imposed by the United States against the island, has been lightly explored, Melbana said.
The Cuban crude oil production, according to EIA, is higher than other countries that have for a long time granted exploration licenses.
For example, Peru, where oil operations started ahead of most Latin American countries early in the last century -- and which has carried out several bidding rounds for exploration areas just in the last decade -- produces less crude oil than Cuba at just 44,000 barrels per day.
Because of the embargo, U.S. companies cannot own oil assets in Cuba. They can, however, participate in drilling with special licenses, the EIA said.
Cuban reserves were estimated in 2016 at 124 million barrels, it said.
