Looking ahead

• Date: 01 December 2019
• DOI: http://doi.org/10.1111/oet.12749
• Published date: 01 December 2019

LOOKING AHEAD

Looking ahead

1|GUYANA PREPARES FOR

FIRST OIL

While frontier offshore oil and gas exploration and devel-

opment has been paired back in many regions around

the world, Guyana has bucked the trend and is all set for

first oil in December, followed by a rapid growth in

output—which is likely to transform its tiny economy.

The South American country has attracted interest from

several majors and upstream independents, not least

ExxonMobil, which has Guyana front-and-center of its

international expansion plans.

In December ExxonMobil plans to start production

from its Liza discovery

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via the Liza Destiny, the comp-

any's first (of many) floating production storage and

offloading (FPSO) vessels in the area. ExxonMobil fore-

casts the FPSO will produce about 120 000 bpd. This will

be followed by Liza Phase 2, which is slated to begin pro-

ducing in 2020 and projected to average about

220 000 bpd; and Payara, a potential 220 000 bpd discov-

ery, slated for start-up in 2023. The company forecasts it

will average 750 000 bpd of production offshore Guyana

by 2025—representing one of the most significant

increases in production for any non-OPEC country over

the period.

Expansion is expected to continue beyond that, with a

pipeline of recent discoveries lining up for development.

These include the Haimara-1 well discovery in January

2019, the Yellowtail-1 well discovery in April 2019, and

the Tripletail-1 well discovery that was announced in

September 2019 (see Figure 1). All these wells found

extensive hydrocarbon (mostly oil) resources in high

quality sandstone reservoirs.

Exxon acts as operator of the blocks involved, with a

45% working interest. Its two partners are Hess, which

has a 30% working interest and CNOOC Nexen, with the

remaining 25%. Altogether the gross recoverable resource

in the main Stabroek Block is now estimated to be more

than 6 bn boe, including Liza and other successful explo-

ration wells—which represents a world class resource.

Equally important is the relative political stability of

the country, and a positive attitude to oil company

interest—reflected in competitive fiscal and other

licensing terms. Nevertheless, there is some political risk,

and a change of government could see the terms tough-

ened up (there have been questions raised about produc-

tion verification, among other things, by some local

commentators

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). However, the scale of investment and

small size of the economy means Guyana should see sig-

nificant benefits quickly arriving from the fresh flows of

public money linked to the oil developments, along with

increased private investment.

2|LESS CLEAR-CUT FOR

TULLOW AND PARTNERS

ExxonMobil is not the only international operator active

in Guyana. Upstream independent and frontier specialist,

Tullow Oil, has also been drilling and has found substan-

tial resources. However, high sulfur levels may jack-up

costs and erode margins on the finds, casting doubt over

commercial development, according to latest reports.

FIGURE 1 ExxonMobil-operated blocks in Guyana. Source:

ExxonMobil

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