By Simon Romero
Published: Tuesday, February 21, 2006
SPANISH LOOKOUT, Belize — Near this small Mennonite town carved out of the thick jungle, a farmer dug a shallow water well a few years ago and found a viscous black liquid seeping into the water.
Given Belize’s disappointing record of oil exploration, stretching back to its years under British rule, nearly everyone shrugged at the story except a stubborn Denver geologist.
Now Belize is the newest exporter of oil to the United States, a development that is starting to upend this small country of 280,000 people. A roughneck crew, backed by investors from Ireland and Colorado, struck oil in its first drilling attempt last year.
Their wells, dotting the dairy farms of German-speaking Mennonites who moved here a half-century ago from Canada and Mexico, are producing 2,000 barrels a day of oil similar in quality to the prized low-sulfur crude from the oil fields of West Texas.
Much of Belize is on tenterhooks regarding the oil and its ramifications. But the small companies behind the discovery, Belize Natural Energy andCHX Energy, which is based in Denver, are reveling in their good fortune.
Together with other independent companies that have recently struck oil and natural gas in locations once written off, including Paraguay, Syria and Uganda, these entrepreneurs are proving that wildcatting is alive and well.
As in Belize, the quantities of oil discovered in these places are relatively small. But with oil fetching more than $60 a barrel on world markets, smaller companies are willing to risk just about everything these days in hopes of finding even tiny oil fields.
“There were 50 dry wells drilled in Belize over 50 years until we came along,” said Susan Morrice, a geologist from Denver.
She is the wildcatter behind Belize Natural Energy, a venture she formed with the backing of her husband, Alex Cranberg, who is a Colorado oil executive, and more than 70 small investors from Ireland, her native country.
“We simply felt we could not fail in our search for oil in such a promising, if neglected, country.”
Morrice’s company has been remarkably swift in turning the discovery into cash. In January, Belize Natural Energy loaded 40,000 barrels onto a barge destined for a refinery in Houston, netting the company about $2 million.
With other wells planned in Spanish Lookout, it soon expects to be producing 5,000 barrels a day, and some geologists say Belize as a whole may one day produce 50,000 barrels a day. That level is tiny compared with Mexico, where daily output is 3.4 million barrels a day. But it is significant for a small country that has long scrounged for enough hard currency to import all its oil.
Belize imports about 5,000 barrels of oil a day. So the crude in Spanish Lookout has allowed this country to dream of energy independence.
Still, Belize, known as British Honduras until it was granted autonomy from Britain in 1981, faces some serious obstacles before it becomes anything resembling the Kuwait of Central America. It has no refineries or pipelines and, unlike many developing countries, it has no national oil company or oil ministry.
Andre Cho, a civil servant who is Belize’s inspector of petroleum, said the government had recently approved his request to hire more staff geologists, as well as a former United Nations consultant from India who specializes in organizing the petroleum industries of poor nations.
Despite such moves and the formation of a government petroleum advisory board in December, there is considerable skepticism throughout Belize that the country can develop its oil resources without the corruption and environmental damage that afflict other poor oil-producing countries.
Much of the tension around the oil discovery is focused on the 7.5 percent royalty that Belize Natural Energy is required to pay the government, which is much less than in other oil-producing countries. Royalties to Norway for exploration in the North Sea, for instance, are more than 70 percent.
Belize’s prime minister, Said Musa, has said the royalty was kept low to provide a strong incentive for companies to explore in a country where oil had never been found before.
Sheila McCaffrey, a director of Belize Natural Energy, said the government would end up collecting overall taxes of about 30 percent on the oil. That includes royalties and agreements that give the government a minority stake in the company, along with control of 10 percent of production from the oil wells.
The company is also trying to avoid ill will among Belizeans by channeling 1 percent of its revenue to a fund for protecting the country’s fragile environment, which is about 40 percent jungle.
The most acute political risk for Belize’s nascent oil industry may be a territorial dispute with Guatemala.
Representatives of the two countries agreed this month to begin negotiations to resolve territorial claims. But areas of Belize where oil exploration is taking place or planned remain squarely in land still claimed by Guatemala. Spanish Lookout is just a 20-minute drive from the Guatemalan border, where migrants seeking available land, many of them Maya Indians, have settled.
Special thanks to Gene Shinn & the Coral-list