LONDON–U.K.-listed oil explorer Tullow Oil PLC (TLW.LN) said Monday it has decided to abandon a high-pressure oil well it was drilling off the coast of Guyana due to fears it could become unsafe.
The company said in a statement it had preemptively ended operations at the Jaguar-1 well, “after reaching a point in the well where the pressure design limits for safe operations prevented further drilling to the main objective.”
Tullow’s caution, coming just weeks after the French government briefly suspended drilling offshore nearby French Guiana due to environmental concerns, underlines the intense scrutiny on the safety of offshore drilling since the disastrous Deepwater Horizon blowout and oil spill in the U.S. in 2010.
Despite not reaching its target depth, Tullow said early drilling had yielded some signs of light oil.
Tullow has spear headed exploration off the largely-ignored northeast coast of the South American continent. It made the first major discovery offshore French Guiana in September 2011, along with partners Royal Dutch Shell PLC (RDSB.LN) and Total SA (TOT). It has licensed large areas for exploration offshore neighboring Suriname and Guyana.
The Jaguar-1 well is one of 35 prospects that Tullow is appraising worldwide. The firm has carved out a reputation for exploration success, making more notable oil discoveries than many of its larger, better-known peers in recent year. However, Tullow earlier this month highlighted the cost of drilling unsuccessful wells, announcing it would write down some $440 million of oil and gas discoveries that had proved to be less lucrative than initially hoped.
Analysts at Bernstein Research played down the significance of the well abandonment. “Jaguar was one of the largest prospects in Tullow’s pipeline this year…All that has changed is the likely timing of the well, and we now know that the basin is oil generating,” it said.
At 1321 GMT, Tullow shares were down 2.2%, or 31 pence, at 1402 pence a share, in a flat market.
– Alexis Flynn, Dow Jones Newswires