ExxonMobil, Hess See Plenty of Promise in Offshore Projects in Guyana, Gulf of Mexico

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Researched by Industrial Info Resources (Sugar Land, Texas)--Exxon Mobil Corporation (NYSE:XOM) (Irving, Texas) and Hess Corporation (NYSE:HES) (Houston, Texas) continue to see promise in their exploration wells in the Stabroek block offshore Guyana, where the companies estimate the block's Liza field holds 1.4 billion barrels of oil equivalent. A discovery announced earlier this week could further strengthen their case for a proposed floating, production, storage and offloading (FPSO) facility. Industrial Info is tracking more than $28 billion in global offshore projects involving ExxonMobil and/or Hess.

ExxonMobil subsidiary Esso Exploration and Production Guyana Limited holds a 45% interest in the Stabroek block and serves as operator, while Hess subsidiary Hess Guyana Exploration Limited holds a 30% interest and CNOOC Nexen Petroleum Guyana Limited holds 25%, according to Hess. ExxonMobil plans to formally approve investing in the Liza discovery by the end of this year.

ExxonMobil and Hess announced in separate press releases that they had discovered more than 95 feet of high-quality, oil-bearing sandstone reservoirs at the Payara-1 well offshore Guyana. The Payara field discovery is about 10 miles northwest of Exxon Mobil's 2015 Liza discovery, where the company said it recently identified another high-quality reservoir that is estimated to contain between 100 million and 150 million oil-equivalent barrels.

Industrial Info is tracking ExxonMobil and Hess' proposed, $600 million offshore FPSO facility in Guyana's Liza field. The FPSO, which would draw crude oil and natural gas from three Liza wells, currently is expected to have a processing capacity of 100,000 barrels per day (BBL/d) and a storage capacity of 1.6 million barrels. For more information, including components and specifications, see Industrial Info's project report.

Earlier this week, energy research firm Wood Mackenzie Limited (Edinburgh, Scotland) reported that major oil companies are likely to double their number of final investment decisions this year when compared with 2016, as they are becoming increasingly confident that that years-long recession in oil prices is coming to an end. Since early December, benchmark crude oil prices have risen more than 20% as top producing countries, particularly those in the Middle East, have agreed to curtail output.

Wood Mackenzie estimates that the global Oil & Gas Industry's exploration and production spending will hit about $450 billion in 2017, which is still 40% below 2014 levels, according to Reuters. Still, it represents the first annual increase (about 3%) in three years, and much of it is attributed to expected activity in the prosperous U.S. shale plays.

Lower costs for production also play a role. Offshore drilling, normally one of the more expensive areas for exploration and production, is becoming more profitable as contractor and rig rates have fallen. The Guyana project from Hess and ExxonMobil is among the earliest beneficiaries.

Further north in the Gulf of Mexico, both companies are at work on other offshore projects. Hess' largest active project, the $4 billion Stampede Oil Production Platform and a related $2 billion subsea installation, is under construction, with first oil on schedule for 2018. Hess, which will operate the platform and has a 25% working interest, expects the project to become a major cash generator by 2018. For more information, see Industrial Info's project reports on the production platform and the subsea installation.

ExxonMobil, meanwhile, is constructing a $4 billion subsea production system in the Julia Field. The company will drill four wells and install a subsea tie-back system to the semi-submersible Jack/St. Malo platform to produce 34,000 BBL/d, which will be transported via a pair of 10-inch production flowlines. For more information, including detail on major components and contractor contact information, see Industrial Info's project report.

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