Released January 26, 2022 | SUGAR LAND
en
Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Apparently enticed by currently high commodity prices, Hess Corporation (NYSE:HES) (New York, New York) said Tuesday it is planning an increase in capital spending, though much of the focus is on developments offshore Guyana.
Hess announced plans for capital spending of about $2.6 billion for 2022, with about 80% of that going toward developments offshore Guyana and in the U.S. Bakken Shale. That represents a 37% increase from its spending last year.
"The majority of our 2022 budget is allocated to Guyana, which is positioned to be one of the highest-margin, lowest-carbon intensity oil developments in the world, and to the Bakken, our largest operated asset where we have a robust inventory of high-return future drilling locations," said Chief Executive Officer John Hess.
The investment decision is a standout in a climate where major oil companies are focusing less on new fossil-fuel developments, and more on low-carbon initiatives that align with the energy transition movement.
Hess said it believes it can generate a significant amount of free cash flow from its Bakken project. Guyana, meanwhile, is emerging as a major oil producer. In terms of costs, the company said it has a break-even price at Guyana's Stabroek Block of between $25 and $35 per barrel Brent.
The Bakken Shale historically has posted a break-even price at about $50 per barrel. Brent on Tuesday was trading near $86 per barrel, a multi-year high.
Norwegian energy consultancy Rystad Energy (Oslo, Norway) said the global inventory of fields with proven oil with a break-even price of $60 per barrel would be enough to meet demand growth for most of the decade.
Economists at the Organization of the Petroleum Exporting Countries (OPEC) said in their monthly market report for December that Guyana was one of the few oil-producing countries expected to show supply gains in 2022.
Industrial Info is tracking 28 oil and gas projects offshore Guyana, worth $3.58 billion. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Production Project Database can click here for a list of detailed project reports.
Oil was discovered off Guyana's coast only in 2015, and the country is quickly capitalizing on its newfound resource wealth at a time when developed economies are moving away from fossil fuels. That was a focal point at last year's COP26 climate summit in Glasgow, Scotland, where developing nations trying to tap newfound oil wealth were left wondering if they're too late.
Undeterred by the push for a low-carbon future, Guyana's government earlier in January passed legislation to update the regulatory framework for upstream activity. The measure included mandates for the use of local contractors. Another round of offshore leases this year, meanwhile, could see the country's oil reserves improve and boost its potential for revenue.
More recently, the governments of Brazil, Guyana and Suriname agreed to work together to build up the energy infrastructure in the eastern part of South America.
Earlier this month, Hess said it ran through hydrocarbon-bearing sandstone while drilling in the Fangtooth-1 and Lau Lau-1 wells in the Stabroek Block off Guyana. The two new discoveries add more to the estimated 10 billion barrels of oil equivalent reserves already proven.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
Hess announced plans for capital spending of about $2.6 billion for 2022, with about 80% of that going toward developments offshore Guyana and in the U.S. Bakken Shale. That represents a 37% increase from its spending last year.
"The majority of our 2022 budget is allocated to Guyana, which is positioned to be one of the highest-margin, lowest-carbon intensity oil developments in the world, and to the Bakken, our largest operated asset where we have a robust inventory of high-return future drilling locations," said Chief Executive Officer John Hess.
The investment decision is a standout in a climate where major oil companies are focusing less on new fossil-fuel developments, and more on low-carbon initiatives that align with the energy transition movement.
Hess said it believes it can generate a significant amount of free cash flow from its Bakken project. Guyana, meanwhile, is emerging as a major oil producer. In terms of costs, the company said it has a break-even price at Guyana's Stabroek Block of between $25 and $35 per barrel Brent.
The Bakken Shale historically has posted a break-even price at about $50 per barrel. Brent on Tuesday was trading near $86 per barrel, a multi-year high.
Norwegian energy consultancy Rystad Energy (Oslo, Norway) said the global inventory of fields with proven oil with a break-even price of $60 per barrel would be enough to meet demand growth for most of the decade.
Economists at the Organization of the Petroleum Exporting Countries (OPEC) said in their monthly market report for December that Guyana was one of the few oil-producing countries expected to show supply gains in 2022.
Industrial Info is tracking 28 oil and gas projects offshore Guyana, worth $3.58 billion. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Production Project Database can click here for a list of detailed project reports.
Oil was discovered off Guyana's coast only in 2015, and the country is quickly capitalizing on its newfound resource wealth at a time when developed economies are moving away from fossil fuels. That was a focal point at last year's COP26 climate summit in Glasgow, Scotland, where developing nations trying to tap newfound oil wealth were left wondering if they're too late.
Undeterred by the push for a low-carbon future, Guyana's government earlier in January passed legislation to update the regulatory framework for upstream activity. The measure included mandates for the use of local contractors. Another round of offshore leases this year, meanwhile, could see the country's oil reserves improve and boost its potential for revenue.
More recently, the governments of Brazil, Guyana and Suriname agreed to work together to build up the energy infrastructure in the eastern part of South America.
Earlier this month, Hess said it ran through hydrocarbon-bearing sandstone while drilling in the Fangtooth-1 and Lau Lau-1 wells in the Stabroek Block off Guyana. The two new discoveries add more to the estimated 10 billion barrels of oil equivalent reserves already proven.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
