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.
The group’s 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.
“We need some help from fuel prices in this country, but people aren’t too happy living near a smelly well,” said Jake Letkeman, the operator of the small Mennonite-controlled electricity plant here. “We’re waiting to see how this thing plays out.”
Much of Belize is on tenterhooks regarding the oil and its ramifications, but the small companies behind the discovery, Belize Natural Energy and CHX Energy of 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, which partly explains why the largest and richest oil companies shun such gambles for larger projects with more promising returns.
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 geologist Susan Morrice of Denver.
She is the wildcatter behind Belize Natural Energy, a venture she formed with the backing of her husband, Colorado oil executive Alex Cranberg, and more than 70 small investors from her native Ireland.
“We simply felt we could not fail in our search for oil in such a promising, if neglected, country,” she said.
Morrice’s company has been swift in turning the discovery into cash. In January, Belize Natural Energy loaded 40,000 barrels of oil onto a barge destined for a refinery in Houston, netting the company about $2 million.
The company soon expects to produce 5,000 barrels a day, and some geologists say Belize as a whole may one day produce 50,000 barrels a day.
That is a drop in the bucket compared with neighboring Mexico, where daily output is 3.4 million barrels. But it is significant for a small country that has long scrounged to import all its oil.
Belize imports about 5,000 barrels of oil a day, and gasoline costs nearly $5 a gallon. 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. About the same size as nearby El Salvador, it has only 4 percent of that country’s population. It also has no refineries or pipelines and no national oil company or oil ministry.
“We don’t want to repeat the mistakes of other oil countries, like Nigeria,” said Andre Cho, Belize’s inspector of petroleum.
He said the government had recently approved his request to hire more staff geologists, as well as a former U.N. consultant from India who specializes in organizing the petroleum industries of poor nations.
Despite such moves and the formation in December of a government petroleum advisory board, 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.
Belize Natural Energy plans to import a small plant to produce diesel fuel locally, which would alleviate the country’s need to import some of its refined fuel.
2,000
Barrels of crude oil produced daily in Belize, where oil is said to be of similar quality to that from West Texas
3.4 MILLION
Barrels of oil produced per day in neighboring Mexico; geologists say Belize could one day produce 50,000 barrels per day
$61.10
Tuesday’s closing price for a barrel of light, sweet crude for March delivery