Melbana Energy's Cuban Triumph: An Exploration Success in the Caribbean

On May 16, 2024, at the PESA Technical Lunch in Brisbane, Duncan Lockhart, Exploration Manager at Melbana Energy, presented a comprehensive overview of the company's successful exploration activities in Cuba, highlighting the remarkable progress made in Block 9. This presentation underscored Melbana's commitment to leveraging its expertise in developing one of the most promising onshore oil fields in the Caribbean.

Strategic Location and Potential

Block 9 covers 2,344 km² in northern Cuba, strategically located on trend with the Varadero field, which boasts an impressive 11 billion barrels of oil originally in place (OOIP) and has produced 200 million barrels to date. The Block 9 production sharing contract (PSC) is valid until 2040, providing a long-term framework for exploration and development.

Drilling Success

Melbana has drilled four wells in Block 9: Alameda-1 and Zapato-1 in 2022, Amistad-1 (also known as Alameda-2) in 2023, and Alameda-3, which was spud on December 15, 2023. Alameda-1 was particularly significant, discovering three vertically stacked reservoir systems (Amistad, Alameda, and Marti), with the shallowest horizon revealing a 1,439-meter gross oil column. Based on the results of Amistad-1, McDaniel & Associates estimated a best-case Unit 1B contingent resource (2C) of 46 million barrels and an incremental best-case prospective resource (2U) of 90 million barrels in the up-dip western portion of the structure.

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Detailed Exploration Insights

Alameda-1 encountered oil in all three of its objectives. The well discovered significant hydrocarbon columns in the Amistad, Alameda, and Marti reservoirs. The Amistad-1 well further confirmed these findings, recovering oil from three separate reservoirs and flowing at over 1,900 barrels of oil per day (bopd) from Unit 1B. These results have defined an economic project within Unit 1B, with a Phase 1 development plan designed to include seven new Unit 1B wells and the acquisition of 3D seismic data.

Geoscience and Structural Analysis

Cuba's hydrocarbon system is underpinned by world-class source rocks along the north coast. The fine-grained carbonates, heavily fractured reservoirs, and thrust faulted structures create a complex but promising exploration landscape. Melbana's interpretation of the structural architecture in Block 9 has led to the identification of multiple deeper thrust sheet targets with better reservoir quality and lighter hydrocarbons.

Technological and Operational Achievements

Melbana has utilized advanced drilling techniques, including deviated and horizontal wells, to maximize reservoir intersection and productivity. The Amistad-1 well was directionally drilled to test oil-bearing Units 1, 2, and 3, resulting in commercial oil flows from Unit 1B at an average rate of 1,235 bopd. The oil from Unit 1B is lighter (19°API) and of higher quality than typical Cuban fields, providing a strong basis for initial cash flow and further development.

Timeline of Key Milestones

2015: Awarded Block 9 PSC.
2016: Opened Havana office and appointed experienced representatives.
2017: Geological data aggregation and prospective resource certification by McDaniels.
2020: Preparations for drilling, including permitting and civil works tenders.
2021-2023: Drilled three wells: Alameda-1, Zapato-1, and Amistad-1, confirming significant oil discoveries.

Future Development and Economic Impact

Melbana has outlined a Phase 1 development plan for Unit 1B, which includes drilling new wells and acquiring 3D seismic data to optimize subsequent field appraisal and development. The goal is to rapidly bring the Alameda field into production, with a target of producing 5,000 bopd from Block 9 by the end of 2024. The oil will be transported to the Matanzas supertanker port for export, with various export routes under investigation.

Regulatory and Market Support

The Cuban regulator has shown support for exporting the high-quality oil from Unit 1B. Additionally, a substantial resource of heavy oil (9°API) in Unit 1A, similar to typical Cuban crudes used for power generation, provides a secondary development opportunity. The confirmation of moveable heavy oil in Unit 3, with ongoing assessment, adds further potential to the project.

Ongoing Exploration and Appraisal

Melbana continues to drill and appraise deeper targets, with Alameda-3 currently testing the deep sheets. The planned acquisition of a 400 km² 3D survey and additional 2D seismic data will further de-risk contingent and prospective resources, setting the stage for sustained production and growth.

Melbana Energy's exploration success in Cuba's Block 9 is a testament to the company's strategic vision, technical expertise, and commitment to unlocking the region's hydrocarbon potential. With significant discoveries, a robust development plan, and supportive regulatory environment, Melbana is poised to transform its Cuban operations into a major onshore oil production hub. Investors and industry stakeholders will keenly watch as Melbana advances towards achieving its production targets and contributing to Cuba's energy landscape.

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