ExxonMobil, Hess Announcements Add To Guyana’s Oil And Gas Bonanza

The offshore oil riches potential for the tiny South American nation of Guyana expanded again this week with a pair of announcements of new successes in the prolific Stabroek block under development by a consortium led by ExxonMobil
XOM
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On Wednesday, April 26, consortium partner Hess
HES
Corp. announced another successful discovery well would add to significant new production to the development’s inventory. “The Lancetfish-1 well encountered approximately 92 feet of oil bearing sandstone reservoir. The well was drilled in 5,843 feet of water by the Noble Don Taylor and is located approximately 4 miles southeast of the Fangtooth discovery”, Hess said in a release. The referenced Fangtooth SE-1 discovery was drilled in January.

Hess owns 30% of the consortium, while ExxonMobil, the operator, owns 45% and Chinese company CNOOC had a 25% stake. Hess noted its “net production net from the Liza Destiny and the Liza Unity FPSOs totaled 112,000 bopd in the first quarter of 2023 compared with 30,000 bopd in the prior-year quarter.” The 112,000 net production would equate to roughly 375,000 gross bopd production for the consortium as a whole during the period.

The following day, April 27, ExxonMobil announced it has made a final investment decision (FID) to proceed with the planned Uaru development after having secured needed government and regulatory approvals. Uaru will become the 5th development project at Stabroek, with an anticipated additional production capacity of 250,000 bopd once development commences in 2026.

“Our fifth, multi-billion-dollar investment in Guyana exemplifies ExxonMobil’s long-term commitment to the country’s sustained economic growth,” said Liam Mallon, president of the ExxonMobil Upstream Company. “Our Guyana investments and unrivalled development success continue to contribute to secure, reliable global energy supplies at this critical time.”

The additional development at Uaru and the new discoveries made this year will raise forecasts for already-prolific crude production for this country of roughly 750,000 citizens. In a study released in July, 2022, Rystad Energy estimated Guyana’s production could reach 1.7 million bopd by 2035 without factoring in subsequent new discoveries.

The same Rystad study also pointed out that “Guyana is the global leader in total offshore discoveries since 2015, with 11.2 billion barrels of oil equivalent, amounting to 18% of discovered resources and 32% of discovered oil. Of the total, a whopping 9.6 billion barrels are oil, far outpacing the US in second place with a comparatively small 2.8 billion barrels.”

“Guyana is just starting to extract and monetize its vast resource wealth, and the coming years will be a financial windfall for the Georgetown government. The country has played the long game after several decades of elusive exploration. The country’s offshore production is finally ready to take off,” said Schreiner Parker, Rystad Energy senior vice president and head of Latin America and the Caribbean.

Another key aspect of the Stabroek production profile is its low emissions profile compared to other international oil developments. Rystad’s study said it is among the top-performing quartile of global oil and gas producing assets, and ExxonMobil’s data indicates the Stabroek’s production volumes are generating 30% lower greenhouse gas intensity than the average in the company’s upstream portfolio.

Bottom Line

In a recent interview, former Science Advisor to the Caribbean Community Climate Change Centre Ulric Trotz discussed his views that the burgeoning oil and gas revenues accruing now to the governments in Guyana and neighboring Suriname can be used to help advance climate and food security in the CARICOM Caribbean Community. It’s a proposition he advances in a white paper titled “On the intersection of Energy Development and the Environment in Guyana.”

Trotz told me he has little use for arguments by activists to leave the oil and gas in the ground, proposing instead that responsible management of the assets by the operators and the revenue streams accruing to the governments involved can lead to a more sustainable future for the entire region. As things are shaping up, the Stabroek development could serve as a sustainability model for future oil and gas developments around the world.