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Nov 30, 2007

Oil insiders host media tour on industry developments

Story PictureFor months now, oil has been a hot topic around local discussion tables. How much is really down there? How much revenue will the industry pay out to Government? And more importantly, how will the ordinary Belizean benefit from the discovery? In an attempt to answer those burning questions and put a couple conspiracy theories to rest, on Thursday members of the local press corps were invited on a tour of the only producing oil field for an up close perspective of petroleum production. News Five’s Marion Ali reports.

Marion Ali, Reporting
Thursday’s media tour of the Iguana Creek Central Gathering Facility and the Big Creek Port is just one in a series of familiarisation tours jointly organised by the Ministry of Natural Resources and Belize Natural Energy Ltd. to give journalists a first-hand experience of oil production in Belize.

The five wells at Spanish Lookout produce a combined amount of little over three thousand barrels of crude per day. Because the wells are located within a farming and residential community, B.N.E.’s Communications Manager Daniel Gutierrez says safety is a priority.

Daniel Gutierrez
“I’m not going to tell you that there can never be a spill, so technically it’s always possible. However, the systems in place, the pipeline being in place, the rating of the pipeline and everything that we have in place make a spill highly unlikely. But I can never tell you it’s impossible, I can’t do that. There’s a rupture pin valve on the well that would kill the well if there’s a problem. There’s satellite monitoring of the well. There’s real time camera-monitoring of the well. There’s an electronic Samuel Manager System whereby the engineers in real time are seeing how the well is performing and if there’s problem they’ll know right away. So there are all these layers of protection.”

In the event of spills, B.N.E. stocks up on these spill mats at pumping, production and transferral sites. For larger spills, it has two vacuum trucks designed specifically for the job.

In compensation for the change in scenery in Spanish Lookout, Director of Geology and Petroleum Andre Cho, says the community receives a portion of the government revenues collected from oil sales.

Andre Cho, Director of the Geology and Petroleum Department
“A lot of people use that terminology, but it’s not royalty, it’s just five percent of the royalty that the government receives. And if there’s more than one land owner all the landowners have to share that five percent. So in the case of Spanish Lookout oil filed, there are two land owners, the Spanish Lookout community which has about ninety percent of the field on their property and the remaining ten percent is under the Duck Run Village community.”

According to Cho, the government has paid the Spanish Lookout residents four hundred and thirty three thousand Belize dollars for operations conducted between January first, 2006, and the end of the second quarter, 2007. The Duck Run community should collect around forty thousand Belize dollars.

From the wells, the crude is pumped through five miles of pipe to the Central Gathering Facility in Iguana Creek where the oil, water, and gas are separated.
In response to concerns about how much oil is being extracted Cho offered this explanation.

Andre Cho
“In the international industry, the primary means of measuring oil is using what they call tank gauging, where they use a piece of equipment which is our measuring tape. Where before you produce into a tank you measure the height of the oil in the tank and then you convert height into barrels using a calibrated chart, these tanks come calibrated and I’ll explain that some more later. You produce into it then you measure the height of the oil again and you find the difference and you know that’s the height of oil that was produced into it. You convert that using the calibrated charts into volume and those go on our production records. The secondary means of measuring is using meters. Why it’s secondary is because meters can malfunction and result in problems.”

Once filled, the tanks are sealed and repeatedly checked for signs of tampering. The Geology and Petroleum Department has also established a field office on site at Iguana Creek for better monitoring.

Andre Cho
“The technicians are based in the fields in Spanish Lookout daily. They monitor and supervise the operations out there and when there’s a shipment they also supervise and monitor the operations here and the production and all the oil that is sold is recorded on official government forms and is entered in our database.”

Marion Ali
“And who monitors your people to ensure that there is not collusion?”

Andre Cho
“Well nobody, it has to end somewhere. So far the government has not questioned that. I understand what you’re saying, but our people are professionals and they know their duties. If and whenever that happens we’ll have to deal with it at that time.”

The gas derived from the petroleum is still being flared, but B.N.E. has yet to put a different system in place.

Daniel Gutierrez
“We want to be able to produce power out of it. We have not been able to do that. I think perhaps it is important for people to understand that we’re dealing with mother nature and things that come from mother nature. You can’t go out and buy a unit to do this. You can’t go off the shelf, set it here and connect it then boom it works. The systems have to be engineered properly, so what we’re doing is we are engineering the system so that we could be able to use the gas so that we can be able to use the gas to produce power. And hopefully, some of you may have heard Dr. Canton last night, the idea is to be able to process the gas a little more so that perhaps in the future we can get some other products such as butane and propane.”

Marion Ali
“From the Central Gathering Facility at Iguana Creek, the oil is transported via tankers, twenty-four of them each workday, to the Big Creek Port here where it is stored in these huge storage tanks behind me before it is shipped abroad.”

Currently Belize’s oil sells for around ninety seven U.S. dollars per barrel. Since the start of business in January, 2006, BNE have signed purchasing contracts with Panama, Costa Rica, and the United States. Marion Ali reporting for News Five.

Gross revenues from petroleum sales in 2006 were around eighty-four million Belize dollars, of which government has collected over twelve million dollars. The Income Tax Department received an additional twelve million.

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