Shell to Suspend French Guiana Drilling, Partner Says

Royal Dutch Shell Plc (RDSA) will suspend exploration drilling off French Guiana until 2015 after three unsuccessful wells, according to a partner in the project.

A Shell-led venture is still drilling the GM-ES-5 well, due to be completed in November, Keith Bush, chief executive officer at partner Northern Petroleum Plc (NOP), said yesterday by phone. The partners may design a new drilling program in 2015, he said.

“Post this, there is going to be a lot of work done on the integration from the well data,” Bush said. “Whether this well is a discovery or not, we will need to look at where we want to be once the work program’s being conducted next year.”

Tullow Oil Plc (TLW) made the first oil find off the northeast of South America with its Zaedyus well in 2011. Shell’s partners, including Total SA (FP) and Wessex Exploration Plc (WSX), invested at least $800 million to drill four further wells, with the first three failing to find commercial resources, according to Bush.

Kirsten Smart, a spokeswoman in London at Shell, declined to comment. Tullow and Total spokesmen also wouldn’t comment.

Shell took over the Guyane Maritime operation in February 2012 from Tullow, a month after they announced “a frontier exploration partnership” in the Atlantic basin. Tullow plans to maintain its frontier exploration leadership after its experience in French Guiana this year, CEO Aidan Heavey told analysts on July 31.

“If we were still in French Guiana, operating there, I think we would drill different wells,” Heavey said in July. “We may not have any better results, but we will have a different approach.”

Exploration is risky and many wells may be needed to prove commercial reserves, Bush said. The company plans to maintain its minority stake in the project until the study is completed.

“There’s been a consensus in the joint venture in terms of the locations and things like that,” Bush said. “Until you drill, you don’t know what you’ve got.”

To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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