Guyana: Oil Production: Exxon’s Liza Phase 2 to cost US$6B

Texas-headquartered ExxonMobil on May 02, 2019 said that it is steaming ahead with its Guyana operations, pumping US$6B into the second phase of the

File photo: In November 17, 2017, SBM Offshore started the conversion of the Bahamas-flagged Tina, a crude carrier, into the Liza Destiny FPSO.

Liza development. The decision followed recent Government and regulatory approvals of the second phase development.

Guyana is expected its first commercial oil early next year with the floating platform, Liza Destiny, to be here in the third quarter of this year.

“Liza Phase 2 will produce up to 220,000 barrels of oil per day and further capitalize on the significant development potential of the Stabroek Block, where ExxonMobil estimates producing more than 750,000 barrels of oil per day by 2025,” ExxonMobil disclosed yesterday in a statement.   

The oil giant, which announced a major oil find early 2015, shortly after the Coalition Government took office, said Liza Phase 2 received government and regulatory approvals, and remains on track for mid-2022, producing up to 220,000 barrels of oil per day.

Meanwhile, Phase 1 is on schedule for first oil by the first quarter of 2020.
The number of Guyanese, direct and indirect workforce, more than doubled in 2018 to more than 1,000 persons, it was disclosed.

With regards to Phase 2, a total of six drill centres are planned as well as approximately 30 wells, including 15 production, nine water injection and six gas injection wells.

“Phase 2 startup is expected in mid-2022 and will develop approximately 600 million barrels of oil. Liza Phase 2 is expected to cost $6 billion, including a lease capitalization cost of approximately $1.6 billion, for the Liza Unity floating production, storage and offloading (FPSO) vessel.”

According to ExxonMobil, which is developing the Stabroek Block concessions with two partners, it is bringing industry-leading upstream capabilities to build upon Phase 1 and further develop the shared value of Guyana’s resources.

Liam Mallon, president of ExxonMobil Upstream Oil & Gas Company also disclosed that they are actively pursuing significant development potential from numerous discoveries in the Stabroek Block.

“Liza Phase 1 remains on track to achieve first oil by the first quarter of 2020. It will produce up to 120,000 barrels of oil per day at peak rates utilizing the Liza Destiny FPSO, which is expected to arrive offshore Guyana in the third quarter of 2019.”

Pending government and regulatory approvals, a final investment decision is expected later this year for a third phase of development, Payara, which is expected to produce between 180,000 and 220,000 barrels per day with startup as early as 2023.

“ExxonMobil is evaluating additional development potential in other areas of the Stabroek Block, including at the Turbot area and Hammerhead. By the end of 2019, ExxonMobil will have four drillships operating offshore Guyana,” according to the statement.

The oil company has been banking heavily on Guyana to improve its fortunes.

The find, about 100 miles offshore Guyana, is said to be one of the biggest in years, and has the potential to change the country as an economic player in the region.

Guyana until now has been largely dependent on agriculture and its natural resources.

Following well completion activities at the recently announced Yellowtail discovery, the Noble Tom Madden drillship will move to the Hammerhead-2 well.

“The Stena Carron is completing a well test at the Longtail-1 discovery, and will then move to the Hammerhead-3 well. Later in 2019, the Stena Carron will drill a second well at the Ranger discovery. The Noble Bob Douglas drillship is completing development drilling operations for Liza Phase 1. ExxonMobil will add another exploration drillship, the Noble Don Taylor, in the fourth quarter of 2019.”

ExxonMobil also noted that as the projects proceed, the partners’ investment in the Guyanese economy continues to increase.

“The number of Guyanese nationals supporting project activities more than doubled in 2018 to more than 1,000. ExxonMobil and its co-venturers spent nearly $60 million with more than 500 Guyanese vendors in 2018. More than 1,500 Guyanese companies are registered with the Centre for Local Business Development, which was founded by ExxonMobil and its co-venturers in 2017 with the mission of supporting local businesses to become globally competitive.”

The Stabroek Block is 6.6 million acres, or 26,800 square kilometres.

Current discovered recoverable resources are estimated at more than 5.5 billion barrels of oil equivalent.
The 13 discoveries on the block, to date, have established the potential for at least five FPSO vessels producing more than 750,000 barrels of oil per day by 2025, the oil company said. ExxonMobil affiliate Esso Exploration and Production Guyana Limited is operator and holds 45 percent interest in the Stabroek Block. Hess Guyana Exploration Ltd. holds 30 percent interest and CNOOC Petroleum Guyana Limited, a wholly-owned subsidiary of CNOOC Limited, holds 25 percent interest.

ExxonMobil says it is the largest publicly traded international oil and gas company which uses technology and innovation to help meet the world’s growing energy needs.

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