Oil and optimism flowing freely at Spanish Lookout

While the company’s owners gathered in Belmopan to make their contribution to the nation’s medical facilities, the wells, pumps, bowsers, and employees of Belize Natural Energy Limited continued in their efforts to radically improve the nation’s economic health. This afternoon I took a brief tour of the Spanish Lookout oil field and discovered that in addition to petroleum, a sense of optimism has been discovered in more than commercial quantities.

(Clanging noise)

Janelle Chanona, Reporting
For oil exploration experts, that sound is music to the ears.

Robert Craig, Drill Manager
?At the moment we have a couple of tanks that we?any fluids, gas, or anything that we produce from the well are coming into those tanks. The pump is just to clear those tanks, so usually it is a good sound because it means that something returned from the well. Quite often it?s water, but in most of the cases here, we?ve been lucky that there?s been some oil come through.?

After direct hits at Mike Usher 1, 2, and 3 Belize Natural Energy officials hope well number four will also strike gold.

Since the company officially announced ?commercial quantities? of oil in Spanish Lookout, the pace of activity has quickened. A 3D seismic test is now in the pipelines to determine the boundary of oil field and other potential pools in the B.N.E. license block. That area of approximately four hundred thirty-eight thousand acres of land, spans parts of Benque, Yalbac, Spanish Lookout, Belmopan, and even Burrell Boom.

Sheila McCaffery, Director, Belize Natural Energy
?It?s making history here in Belize; it?s making history all over the world, because this is the first time this country has had a commercial discovery. And to move from an exploration programme into an commercial discovery is of course a huge step forward in terms of it has huge implications, not only for social and economic, but also from a business perspective and it?s huge potential for everybody. It is vindication of what we?ve felt, I suppose, from the very day that we all set foot in Belize to start this project over four years ago, and of course particularly since we started drilling in June 2005.?

Janelle Chanona
?According to B.N.E., this is the only thing that will remain here at Mike Usher number 1 once the tank farm is established. And if you listen carefully, you can actually hear the oil coming out of the ground. This is all done naturally just because of the pressure that?s coming up with the gas. And if you touch this pipe, you can actually feel the temperature of the oil that?s being transferred to the holding tanks.?

Sheila McCaffery
?We are all about reducing the impact of what?s on the surface. And as you can see, it?s a very, very different site today than the Mike Usher one site than when it was when you were here in June/July of last year when there was lots and lots of machinery here. The impact of the oil industry ultimately will be that small black Christmas tree?as it is called?at the top of the well and that is what allows oil to be produced currently. And if at some stage in the future we have to have mechanical intervention that can pump or whatever, it will be it will no greater than the size of the fencing outside the pipe. So in the longer term, all of this will be restored back to agricultural land.?

Presently, fifteen tanker trucks transport more than two thousand barrels of Belizean crude from all three wells every day to a waiting barge in Big Creek. B.N.E. plans to construct two tank farms, one in the Spanish Lookout area and another near the port. Those facilities will include three tanks, each capable of holding ten thousand barrels of oil. The size of the tanks is roughly the same as the Esso storage at Port Loyola.

But the B.N.E. oil discovery in Spanish Lookout has also opened a can of criticisms regarding ownership of the natural resource and exploration opportunities.

Sheila McCaffery
?There are other license blocks available, I do not see a rush of Belizeans or anybody else necessarily coming forward to grab those blocks and invest millions and millions of dollars to be able to do that. I hear lots of talk about it, I haven?t actually physically seen anything on the ground just happening yet. And I know myself just how difficult it is for an oil company to come down here and mobilise equipment to get in here when the oil market is all over the world is buoyant and every piece of equipment is being used and is at a total premium.?

?Various statements are made that there is oil in the north, there?s oil in the south, is there? I don?t know that there is. I certainly don?t know if that is, but I certainly think fifty companies failed spectacularly to find it. The only thing that is real is that there is definitely oil in Spanish Lookout and we are producing it. And the oil industry is Belize Natural Energy in Belize at the moment. Of course like every other company, we would love to see other companies in here because it would bring the whole industry into a much more rounded perspective and we then could see sharing of cost and the overall cost of wells and stuff like that go down. So therefore the cost of exploration and the extension of the industry to drive the country would improve, so it?s in our interest to have other people here as well.?

But following last week?s historic announcement, it appears B.N.E. has begun to buck heads with government negotiators regarding benefits to Belmopan.

Sheila McCaffery
?Subject to a joint operating agreement, which we will agree over the next ninety to one hundred and twenty days, the government will sign up and become an active partner and gain the industry knowledge, which it requires to run an oil company and to run an oil field. And that will require investment by the government as well, because let?s be under no illusion, the cost of developing this oil field in Spanish Lookout will far exceed the sales of oil for the foreseeable future and there will continue to be a heavy investment for the next twelve to eighteen months. So as long as people understand that, yes, there is oil sales being produced, but the infrastructure requirements and the cost of developing an industry in the country here is actually far greater than what the sales of oil is likely to be in the foreseeable future, certainly for the next twelve months.?

?It?s kind of interesting that the Petroleum Advisory Board is advising about the oil industry and we?re not a partner, given that we are the industry in Belize at the moment. But, I have no?I don?t know what really the government were really referring to. What I do know as being factually true is that Belize Natural Energy under current its production sharing arrangement, currently contribute thirty-eight percent of that they sell to the government and it happens in the following way: seven and a half percent royalty is on the gross amount of money that comes in, that?s the money before all of the operating and exploration costs are apportioned. So therefore, if you are comparing a royalty payment versus a net profit that would be taxable, there is a rule of thumb which would be a factor of three, so you have seven and a half multiplied by three is equal to twenty-two and a half tax, plus your ten percent that the government owns that they are currently under the joint operating agreement, plus the fact that we are giving that interest free to them, plus the fact there?s a production share. So that?s how you arrive at thirty-eight percent.?

According to B.N.E. director Shiela McCafferey, there are currently six teams working simultaneously to ensure efficient flow of oil from well to barge. Claudio Tzul is one of the one hundred Belizeans employed by B.N.E.

Claudio Tzul, Pumper, Belize Natural Energy
?We work hard out yah and I think pan the ending of the day, I feel very proud of it because then we achieve a lot, we learn a lot. From the time I start to work here, I learn a lot of different thing.?

?It?s a proud time to be working with B.N.E. because it?s the first time that something like this happen naturally in Belize and I think, I hope it lasts us forever for a long time so my kids get for see it, their kids get for see it; it will benefit the whole Belizean population after all.?

Planning for wells five and six are currently underway.