The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas Petroleum Company (BPC) is still pegging the investment required for its first exploratory well at between $100-$120 million, while holding to its position that its activities can “transform” Bahamian living standards and the Government’s finances.

Simon Potter, the oil explorer’s chief executive, in his half-yearly message to the company’s shareholders, said BPC was still in negotiations with several potential joint venture partners for that first well, having received several offers since opening its data room in May 2012.

No offers had been accepted yet, but Mr Potter said the oil exploration outfit had “made considerable progress in further de-risking prospects within its southern licence fields.

However, Adrian Collins, BPC’s non-executive chairman, disclosed that the company had “highlighted our frustration at the lack of clarity coming from the new administration in the Bahamas” to shareholders at its annual general meeting (AGM).

The letter issued on September 7, 2012, by Kenred Dorsett, minister of the environment, confirming that BPC had paid all due licence fees and was in-compliance with Bahamian law and regulations in its activities “to date”, cleared up some of the issues.

Mr Potter added that the letter’s recommendations on well planning and design, which were outstanding, related to future activities - namely the exploratory well.

The main stumbling block now, for BPC, is the Government’s planned referendum on oil drilling, and the precise wording of the questions to be put before the Bahamian people. A ‘no’ vote will create a major headache.

Again touting the potential benefits to the Bahamian people, economy and government if commercial quantities of recoverable oil were discovered in this nation’s waters, Mr Collins noted the “significant challenges” the Government faced from both a social and economic perspective.

“Success in our exploration activities could mean a transformation of the Bahamian economy and provide the necessary financial support for any, and many, social programmes,” Mr Collins said.

“The company believes that our success could transform the nation’s finances, and therefore the quality of life for most Bahamians, within the space of a few years. Indeed, our economic modelling of the prospects suggests that royalty payments to the Bahamian Government within the first year or two of production alone could present the Bahamas with financial options never previously enjoyed. A sustained income stream thereafter from agreed royalties would allow the Government to implement long term social programs consistent with policy from which Bahamians could benefit for many years to come.”

Mr Collins added that BPC intended to match the ‘best practices’ model employed by Norway, the US and UK, and “be regulated by the highest standard or health, safety and environmental regulation”.

Referring to the absence of any detail and wording on the referendum, the BPC non-executive chairman added: “When the Bahamian people make their decision on this matter known, they will do so in the knowledge that Bahamas Petroleum Company will fully adhere to these commitments, and will strive to fulfil its role in the transformation of the economy in the most environmentally safe way possible, intent on preserving the current environment for future generations.”

Mr Potter, meanwhile, said BPC had gained “sufficient confidence” from its ‘fast track’ 3D seismic testing results to begin initial engineering designs and plans for a 22,500 feet deep exploratory well.

He added that Statoil, the Norwegian owner of Grand Bahama’s South Riding Point terminal, had submitted and received comments on its environmental feasibility study relating to the exploration licences it had applied to the Government for.

“The company is already engaged in a vigorous and proactive campaign to present the benefits a successful exploration program could bring to the nation and, in particular, the people of the Bahamas,” Mr Potter added.