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Guyana's President Irfaan Ali announced that the first phase of the Liza offshore crude project had achieved its intended full-production capacity of around 130,000 B/D. Ali told virtual attendees at the Guyana Basin Summit that he expected an additional 10 exploration and appraisal wells to be drilled off Guyana this year. He said the second phase of the Liza project, operated by ExxonMobil, would begin in 2022. The consortium led by Exxon, which includes partners Hess and CNOOC Ltd., has made 18 discoveries containing more than 8 billion bbl of recoverable oil and gas in Guyana's Stabroek block.
Geoscientist Kerry Moreland was ExxonMobil's exploration manager for the Guyana/Suriname Basin from 2014 to 2018, when the energy giant confirmed multiple discoveries, including the world-class Liza-1 find, where for decades drillers hit mostly dry holes. After a stint as West Africa exploration manager and Africa geoscience manager for development and production, Moreland was promoted to her current position: vice president, Sub-Sahara Africa and Asia Pacific, exploration and new ventures, ExxonMobil Upstream Business Development Co. Today, Moreland manages ExxonMobil's oil and gas exploration acreage and evaluates new opportunities across the industry's two most important frontier energy landscapes--Asia Pacific and Africa, which are destined to see the highest growth in energy demand by 2050 as well as present the greatest challenges for managing energy supply in a dual energy environment. This week, Moreland discussed her company's current successes and future vision in one of a series of IPTC Insights interviews conducted by a moderator with thought leaders at the International Petroleum Technology Conference (IPTC) in Kuala Lumpur. Here, JPT reports the highlights of Moreland's interview. IPTC: In January 2020, ExxonMobil increased its estimated recoverable resource base in Guyana to more than 8 billion oil equivalent barrels and announced its 18th discovery in September 2020 at the Redtail-1 well on the Stabroek Block.
ExxonMobil made its ninth discovery offshore Guyana, possibly creating the greatest value of any offshore basin in the Americas. This is the company's fifth discovery on the Stabroek Block in the past year and proves a new play concept for potential development. The Hammerhead-1 discovery encountered approximately 197 ft (60m) of high-quality, oil-bearing sandstone reservoir. The well was safely drilled to 13,862 ft (4,225m) depth in 3,373 ft (1150m) of water. "The Hammerhead-1 discovery reinforces the potential of the Guyana basin, where ExxonMobil is already maximizing value for all stakeholders through rapid phased developments and accelerated exploration plans," said Steve Greenlee, president of ExxonMobil Exploration Company.
Could 2019 be a bumper year for offshore energy development? In just the first few weeks of this year, four discoveries in the UK North Sea and offshore Guyana and South Africa found 1.3 billion BOE—25% of the approximately 5.3 billion BOE high-impact volume discovered globally in the whole of 2018—according to Westwood Global Energy Group. Westwood has identified another 78 high-impact exploration wells either currently being drilled or planned for the remainder of 2019. The expected gross unrisked volume of oil and gas from the 78 wells is 23 billion BOE. More than half the wells are in deep water (Fig. 1).
The consensus among major energy consultancies is that offshore development in almost all areas of the world is making a comeback after the most recent industry downturn. Rystad Energy forecasts spending on offshore projects to outgrow that of onshore shale activities this year. Lifting the equivalent of 120,000 B/D of oil from the Permian Basin would require an investment of $12.8 billion, compared with $3.7 billion for the first phase of the Liza section of the Guyana project, according to Hess Corp. Chief Executive Officer John Hess in a recent Bloomberg article. Hess, which has assets both in shale and offshore, is a partner with ExxonMobil in Guyana.
Wood Mackenzie says that operationally and financially, “all lights are green” for oil and gas companies’ upstream development plans, including offshore development. And, although the International Energy Agency (IEA) reports that only the best projects are going ahead, the definition of “best” has been expanded by the fact that capital investment in some areas (i.e., the US Gulf of Mexico and Norwegian shelf) that once required a breakeven oil price of $60–80/bbl are now claimed to be robust at $25–40/bbl.
Lower costs and faster project delivery are transforming offshore project economics to the point where majors are now generating more free cash flow at $60/bbl than they were 5 years ago at $100/bbl, according to Wood Mackenzie. Applying lessons learned from the downturn, operators have reset portfolios by shedding higher-cost assets and investing instead in higher-return, lower-cost projects. The projects remain lean and phased, with the focus on keeping costs relatively low and cycle time relatively short for continued market sustainability. Executive pay for many operators is now linked more closely to returns than growth. The reset seems to be paying off with improved profitability and cash flow.
Wood Mackenzie points to three themes that have emerged as restricted budgets have driven a more focused approach to prospect selection.
New plays in new basins. With little to no infrastructure and little service sector, frontier prospects need to be big enough to realize economies of scale and need to be brought on stream quickly. In addition to geology, fiscal terms and domestic political support also are important. Wood Mackenzie points to Guyana, Egypt, and Cyprus as deepwater plays with very high-quality reservoirs that have proved both productive and profitable at lower prices for ExxonMobil, Eni, and Eni and Total, respectively.
Abstract In May 2015, ExxonMobil successfully brought in the Liza 1 wildcat well, 120 miles off the coast of the South American nation of Guyana in the Stabroek block, in the Guyana-Suriname basin. Prior to the Liza 1 success, there were 22 wells drilled by other companies, all of which proved to be non-commercial. ExxonMobil stated that recoverable reserves from the Liza field – Phase 1 development would be in the range of 0.8 – 1.4 billion barrels of oil equivalent. The Liza field is part of one of the most prospective basins in South America based on a US Geological survey report - the Guyana-Suriname basin. A representative model was created using Petrel, Wellplot Digitizer, PROSPER, CMG and Microsoft Excel and consists of eight (8) producers, three (3) gas injectors and six (6) water injectors as outlined in the ExxonMobil Phase 1 development plan. Simulation results indicate that over a twenty-five (25) year period approximately 456 MMSTB of oil and 3.5 TCF of gas, equivalent to 1.04 billion BOE will be recovered from the Liza Phase 1 development. Based on the Production Sharing Agreement between the Guyana government and ExxonMobil, an economic assessment was undertaken which quantifies the government share of revenues to be obtained from the Liza field – Phase 1 development. The variables in this economic evaluation included capital expenditure (CAPEX), oil and gas price, operational expenditure (OPEX), 2% royalty payment, cost recovery mechanism and 50% profit split to the Guyana government. Based on ExxonMobil estimated capital investment of $US 4.5 billion, an oil price of $US 50/bbl, gas price of $US 2.50/MMBTU and this project's projected operational expenses over the twenty five year period, total new revenue to Guyana over this period will amount to $US8.9 billion. It is also estimated that Guyana's share of the development cost will be paid back within six (6) years of commencement of production of the Liza field.
Razack, Javed (Ramps Logistics Ltd.) | Nazir-Khaleel, Imtiaz (Ramps Logistics Ltd.) | Rampersad, Shaun (Ramps Logistics Ltd.) | Zambrano, Alvaro (Ramps Logistics Ltd.) | Chandarjeet, Shivani (Ramps Logistics Ltd.) | Choon, Sachin (Ramps Logistics Ltd.)
Abstract Since 2015, over a dozen deepwater exploration and appraisal wells have been drilled across Trinidad, Guyana and Suriname. By 2020, these three countries are expected to see at least another twenty-five deepwater wells being drilled. These include 17 development wells for Guyana's massive Liza field. Seismic exploration is also being conducted over unexplored deepwater blocks in Guyana and Suriname, which could pave the way for even more wells during this period. A key element in the offshore drilling supply chain is the onshore supply base. This shorebase is the logistics hub for all drilling activity. Supply vessels commute between the rig and shorebase, where they are loaded with all drilling fluid, cement, drillpipe, logging tools, food supplies, and any other equipment needed by the rig. Fuel and potable water for the rig are also loaded at the shorebase. When the vessels return from the rig, they unload waste generated at the rig and demobilize tools, unused drillpipe and so on. The shorebase must have the following: covered warehousing, flattened and reinforced laydown yard, offices for support staff, and quayside access with a dock that is long enough and with deep enough draft to accommodate the supply vessels when fully laden with cargo. The shorebase must also have sufficient crews for loading and unloading of materials, as well as heavy equipment such as cranes and forklifts. Vessels must also be able to access electric power and load potable water, drill water and fuel. In Guyana and Suriname, natural deepwater ports do not exist due to sedimentation from several rivers like the Berbice, Essequibo, Demerara and Paramaribo. The severe draft restriction means that the large supply vessels required to take cargo to the rig cannot easily dock in Guyana or Suriname. Moreover, Trinidad has many major multinational service companies already set up, so the majority of equipment and materials needed for drilling must emanate from Trinidad. Further, since Trinidad has a mature oil and gas industry, there are several shorebases already set up to service drilling operations. As a consequence of these three main factors, the primary shorebase for all wells in Guyana and Suriname have been located in Trinidad. With the Liza field being developed, ports are being renovated in Guyana while more service companies are aiming to set up there. However, until a deepwater shorebase is built in either Guyana or Suriname, the primary supply base for these wells must come from Trinidad. Secondary supply bases have been located in Guyana or Suriname, to facilitate smaller supply vessels and emergency support.
Recent years have seen a burst of activity in the Guyana-Suriname Basin, as several major offshore discoveries have sparked industry interest in a nascent area that could have a significant amount of untapped reserves off the northern shores of South America. A panel discussion the 2018 Offshore Technology Conference (OTC) examined the state of business development in the area, and representatives from owner and operator companies discussed the prospects of commercial opportunities that the basin may contain. Bob Fryklund, chief upstream strategist at IHS Energy, said the Guyana and Surinam basin is a potentially booming area. The Stabroek block, located in the basin, has been a boon for operator ExxonMobil and co-owners Hess and CNOOC Nexen since 2015, with seven major discoveries (Liza, Liza Deep, Payara, Snoek, Turbot, Ranger, and Pacora) in the block uncovering almost 800 exploration wells and estimated recoverable oil reserves of around 3.2 billion bbl. Fryklund said these discoveries, together with ExxonMobil and Hess's continued drilling in Stabroek, indicate the possibility of a long-term successful run for companies that invest in the block.