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Released May 18, 2022 | SUGAR LAND
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Written by Pietro D. Pitts for Industrial Info Resources (Sugar Land, Texas)--U.S. oil producers Exxon Mobil Incorporated (NYSE:XOM) (Irving, Texas) and Hess Corporation (NYSE:HES) (New York, New York), who are partnered in the Stabroek Block offshore Guyana with CNOOC Limited (Beijing, China), have boosted estimates of recoverable resources in the prolific area to approximately 11 billion equivalent oil barrels, from more than 10 billion amid continued exploration success, which includes impressive finds at three new wells.
The latest finds push recoverable resources offshore Guyana closer to those of its southern neighbor Brazil, which had 11.9 billion barrels of reserves at year-end 2020. That's the second-largest in the Latin America and Caribbean region, according to BP plc's (NYSE:BP) (London, England) Statistical Review of World Energy, only behind Venezuela with its 303.8 billion barrels.
Industrial Info is tracking 26 projects, worth US$5.23 billion, that are tied to the Stabroek Block. Subscribers to Industrial Info Oil & Gas Production Project Database can click here for a list of detailed reports.
The discoveries and higher resource estimates will "help to inform [ExxonMobil's] future development plans for the southeast part of the block," said Liam Mallon, the president of ExxonMobil Upstream Company, in an April 26 company statement.
"These new discoveries further demonstrate the extraordinary resource density of the Stabroek Block and will underpin our queue of future development opportunities," added Hess Chief Executive Officer John Hess in a separate statement.
The three offshore discoveries--Barreleye-1, Lukanani-1 and Patwa-1--all found hydrocarbon-bearing sandstone reservoirs and are located southeast of the Liza and Payara developments. Taking into consideration these new finds, and the Fangtooth and Lau Lau finds revealed earlier this year, the ExxonMobil-led consortium already has achieved five discoveries to date offshore Guyana.
The Barreleye-1 well--located 20 miles (32 kilometers) southeast of the Liza Field--found 230 feet (70 meters) of pay, of which 52 feet (16 meters) is high-quality oil bearing. The Lukanani-1 well in the southeastern part of the block, which is two miles (three kilometers) west of the Pluma discovery, found 115 feet (35 meters) of pay, of which 76 feet (23 meters) is high-quality oil-bearing.
Operations at both wells are ongoing. The final well, Patwa-1, is located three miles (five kilometers) northwest of the Cataback-1 discovery and found 108 feet (33 meters) of pay.
Guyana's Stabroek Block covers 6.6 million acres (26,800 square kilometers). Partners in the block include ExxonMobil's local affiliate, Esso Exploration and Production Guyana Limited (operator, 45% interest), Hess Guyana Exploration Limited (30% interest) and CNOOC Petroleum Guyana Limited (25% interest).
Stairstep Production Growth
Exxon has sanctioned four oil projects in the Stabroek Block but is now only producing from two floating production storage and offloading (FPSO) units. Production in the block could climb to 360,000 barrels per day (BBL/d) by year-end 2022, once both units reach full capacity.
Liza Phase 1 initiated production operations in December 2019 from the Liza Destiny FPSO, which had an original capacity to process 120,000 BBL/d. Recently completed production optimization work has boosted capacity to 140,000 BBL/d, although production is currently at 130,000 BBL/d. The unit is expected to reach its new capacity in the second quarter of 2022.
Liza Phase 2 started production in February 2022 from the Liza Unity FPSO and is slowly ramping up to its capacity of 220,000 BBL/d. The unit is expected to reach this capacity by the third quarter of 2022.
Guyana received its first entitlement lift of Unit Gold crude from Liza Unity between April 23 and April 24. The usual lifting entitlement was for 1 million barrels loaded onto the MV DIMITRIOS by the terminal operator, Guyana's Department of Public Information reported.
The Payara development, the third project offshore, is expected to produce 220,000 BBL/d from the Prosperity FPSO by year-end 2023. The start date is now five months ahead of schedule and in line with plans sought by the Guyanese government to accelerate production. The fourth project, Yellowtail, is expected to produce 250,000 BBL/d from the ONE GUYANA FPSO in 2025.
Once the four FPSOs are online by mid-decade, Guyana's production could reach 830,000 BBL/d, close to current production from OPEC heavy-weight Venezuela, which continues to struggle from the ongoing political stalemate and U.S. sanctions imposed in early 2019, which have hampered the functionality of its oil sector.
By 2027, ExxonMobil envisions at least six FPSOs in the Stabroek Block with a production capacity of more than 1 million BBL/d. There is potential for up to 10 FPSOs to develop gross discovered recoverable resources, according to ExxonMobil and Hess. Such a production scenario could see Guyana position itself as the third-largest producer in Latin America, only behind Brazil and Mexico, considering growth projections for both countries.
Demand for Guyanese Low-Carbon Barrels
Demand for Guyana's oil is projected to remain robust amid the attractiveness of the country's advantaged low-carbon barrels and the recent geopolitical events in Ukraine, which have boosted demand worldwide for more oil production amid U.S. sanctions on Russian oil and gas.
Even though Venezuela has the most potential to boost production, those increases will be stymied by U.S. sanctions and lack of investments. As a result, only two countries in Latin America are expected to significantly add production in coming years: Brazil and Guyana, and both from offshore.
Despite Guyana's production potential and export markets eager for additional barrels to fill voids left by Russia, Guyana's nascent oil sector will face headwinds related to a lack of infrastructure to support the sector, weak institutions that still lack seasoned oil and gas personnel, and the ever-lingering threat of the so-called resource curse due to the sudden and significant revenue surge.
The resource curse relates to the tendency of governments to put too much emphasis on a few reserves to the detriment of other economic sectors. A country with new-found oil, such as Guyana, could squander the opportunity if the emerging sector is mismanaged.
Elsewhere, Guyana's recently approved local content policy, which favors Guyanese companies across 40 sectors spanning metrology to dredging sectors, is also something that could impact foreign oil and gas producers as is the country's push to create its own national oil company in the second half of 2022.
Rising production and robust oil prices will aid Guyana's gross domestic product (GDP) growth. The country's GDP will be the highest in the Latin America and Caribbean region for the next two years, according to the World Bank's semiannual report for the region published in early April 2022. Guyana's growth is expected to reach 47.9% in 2022 and 34.3% in 2023 compared with 19.9% in 2021, far exceeding the low single-digit average growth rates for the region as forecast by the World Bank.
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
The latest finds push recoverable resources offshore Guyana closer to those of its southern neighbor Brazil, which had 11.9 billion barrels of reserves at year-end 2020. That's the second-largest in the Latin America and Caribbean region, according to BP plc's (NYSE:BP) (London, England) Statistical Review of World Energy, only behind Venezuela with its 303.8 billion barrels.
Industrial Info is tracking 26 projects, worth US$5.23 billion, that are tied to the Stabroek Block. Subscribers to Industrial Info Oil & Gas Production Project Database can click here for a list of detailed reports.
The discoveries and higher resource estimates will "help to inform [ExxonMobil's] future development plans for the southeast part of the block," said Liam Mallon, the president of ExxonMobil Upstream Company, in an April 26 company statement.
"These new discoveries further demonstrate the extraordinary resource density of the Stabroek Block and will underpin our queue of future development opportunities," added Hess Chief Executive Officer John Hess in a separate statement.
The three offshore discoveries--Barreleye-1, Lukanani-1 and Patwa-1--all found hydrocarbon-bearing sandstone reservoirs and are located southeast of the Liza and Payara developments. Taking into consideration these new finds, and the Fangtooth and Lau Lau finds revealed earlier this year, the ExxonMobil-led consortium already has achieved five discoveries to date offshore Guyana.
The Barreleye-1 well--located 20 miles (32 kilometers) southeast of the Liza Field--found 230 feet (70 meters) of pay, of which 52 feet (16 meters) is high-quality oil bearing. The Lukanani-1 well in the southeastern part of the block, which is two miles (three kilometers) west of the Pluma discovery, found 115 feet (35 meters) of pay, of which 76 feet (23 meters) is high-quality oil-bearing.
Operations at both wells are ongoing. The final well, Patwa-1, is located three miles (five kilometers) northwest of the Cataback-1 discovery and found 108 feet (33 meters) of pay.
Guyana's Stabroek Block covers 6.6 million acres (26,800 square kilometers). Partners in the block include ExxonMobil's local affiliate, Esso Exploration and Production Guyana Limited (operator, 45% interest), Hess Guyana Exploration Limited (30% interest) and CNOOC Petroleum Guyana Limited (25% interest).
Stairstep Production Growth
Exxon has sanctioned four oil projects in the Stabroek Block but is now only producing from two floating production storage and offloading (FPSO) units. Production in the block could climb to 360,000 barrels per day (BBL/d) by year-end 2022, once both units reach full capacity.
Liza Phase 1 initiated production operations in December 2019 from the Liza Destiny FPSO, which had an original capacity to process 120,000 BBL/d. Recently completed production optimization work has boosted capacity to 140,000 BBL/d, although production is currently at 130,000 BBL/d. The unit is expected to reach its new capacity in the second quarter of 2022.
Liza Phase 2 started production in February 2022 from the Liza Unity FPSO and is slowly ramping up to its capacity of 220,000 BBL/d. The unit is expected to reach this capacity by the third quarter of 2022.
Guyana received its first entitlement lift of Unit Gold crude from Liza Unity between April 23 and April 24. The usual lifting entitlement was for 1 million barrels loaded onto the MV DIMITRIOS by the terminal operator, Guyana's Department of Public Information reported.
The Payara development, the third project offshore, is expected to produce 220,000 BBL/d from the Prosperity FPSO by year-end 2023. The start date is now five months ahead of schedule and in line with plans sought by the Guyanese government to accelerate production. The fourth project, Yellowtail, is expected to produce 250,000 BBL/d from the ONE GUYANA FPSO in 2025.
Once the four FPSOs are online by mid-decade, Guyana's production could reach 830,000 BBL/d, close to current production from OPEC heavy-weight Venezuela, which continues to struggle from the ongoing political stalemate and U.S. sanctions imposed in early 2019, which have hampered the functionality of its oil sector.
By 2027, ExxonMobil envisions at least six FPSOs in the Stabroek Block with a production capacity of more than 1 million BBL/d. There is potential for up to 10 FPSOs to develop gross discovered recoverable resources, according to ExxonMobil and Hess. Such a production scenario could see Guyana position itself as the third-largest producer in Latin America, only behind Brazil and Mexico, considering growth projections for both countries.
Demand for Guyanese Low-Carbon Barrels
Demand for Guyana's oil is projected to remain robust amid the attractiveness of the country's advantaged low-carbon barrels and the recent geopolitical events in Ukraine, which have boosted demand worldwide for more oil production amid U.S. sanctions on Russian oil and gas.
Even though Venezuela has the most potential to boost production, those increases will be stymied by U.S. sanctions and lack of investments. As a result, only two countries in Latin America are expected to significantly add production in coming years: Brazil and Guyana, and both from offshore.
Despite Guyana's production potential and export markets eager for additional barrels to fill voids left by Russia, Guyana's nascent oil sector will face headwinds related to a lack of infrastructure to support the sector, weak institutions that still lack seasoned oil and gas personnel, and the ever-lingering threat of the so-called resource curse due to the sudden and significant revenue surge.
The resource curse relates to the tendency of governments to put too much emphasis on a few reserves to the detriment of other economic sectors. A country with new-found oil, such as Guyana, could squander the opportunity if the emerging sector is mismanaged.
Elsewhere, Guyana's recently approved local content policy, which favors Guyanese companies across 40 sectors spanning metrology to dredging sectors, is also something that could impact foreign oil and gas producers as is the country's push to create its own national oil company in the second half of 2022.
Rising production and robust oil prices will aid Guyana's gross domestic product (GDP) growth. The country's GDP will be the highest in the Latin America and Caribbean region for the next two years, according to the World Bank's semiannual report for the region published in early April 2022. Guyana's growth is expected to reach 47.9% in 2022 and 34.3% in 2023 compared with 19.9% in 2021, far exceeding the low single-digit average growth rates for the region as forecast by the World Bank.
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
