GUYANA OIL: ExxonMobil’s US$9 billion Payara project approved for 2024 startup

Minister of Natural Resources, Vickram Bharrat yesterday approved ExxonMobil’s third field development in the Stabroek Block, the Payara project. The oil major said, after making its final investment decision (FID) yesterday, that the Prosperity Floating Production, Storage and Offloading (FPSO) vessel will start production in 2024 at up to 220,000 barrels of oil per day.

From left: Anand Gohil, CNOOC Petroleum Guyana Limited; Alistair Routledge, President of ExxonMobil Guyana; Minister of Natural Resources, Vickram Bharrat and Timothy Christian, Director, Vice President of Hess Guyana Exploration.

PREPARATIONS BEGUN

The hull for the vessel is with Dutch firm, SBM Offshore in Singapore awaiting the installation of its topside modules. ExxonMobil said that 10 drill centers are planned along with up to 41 wells, including 20 production and 21 injection wells.

Notably, the company stated in a release yesterday that the Payara development will cost US$9B to produce 600 million oil-equivalent barrels. This is US$3B higher than its US$6B estimate for the Liza Phase Two project, which will be producing at a similar peak rate from a reserve with a similar volume estimate. Liza Phase Two is projected to start producing in 2022. The Liza Unity FPSO is currently under construction in Singapore as well.

Guyana’s review of Payara spanned two administrations. The former David Granger administration had contracted the UK firm, Bayphase, to review it despite ExxonMobil forming part of Bayphase’s clientele. The environmental issues, among others, which arose during this review, were not raised by Bayphase.

fter all, the firm is not expected to give reports which do not flatter its clients. The former Government had expected the review to be completed early this year, but the contentious 2020 General and Regional Elections took centre stage and prolonged government’s approval of the project.

When the Irfaan Ali administration took over in August, it asked Canada to assist it with the review. That consultation resulted in former Alberta Premier, Alison Redford, being accepted to lead the review of BayPhase’s work. She worked with a team of technical experts, funded by Canada. Despite questions about Redford’s capability to review field development plans (FDP), as well as ethical concerns fuelled by her political history, the administration allowed her to complete the review.

Experts, including Petroleum Consultant, Dr. Jan Mangal, and International Lawyer, Melinda Janki, had spoken against approving Payara so rapidly. They had said that Guyana should take all the time it needs to review Payara, with Dr. Mangal explaining that proper reviews require large teams of technical experts and may take many months, even years.

Following the review, the Ministry of Natural Resources laid out new stipulations for the handling of environmental issues plaguing Exxon’s operations, namely natural gas flaring and discharge of produced water. The government stated that it is committed to managing and harvesting Guyana’s resources in keeping with internationally recognised acceptable environmental standards and transparency.

FLARING
Government said it has strictly prohibited routine flaring without approval from the Environmental Protection Agency (EPA), and explicitly stated that any flaring to maintain oil production is not allowed. ExxonMobil’s local subsidiary, Esso Exploration and Production Guyana Limited (EEPGL) will be expected to compensate the government for the cost of wasted gas during flaring and will be subject to fines under the EPA which are related to emissions from flaring. It is also expected to establish a framework for a carbon price in line with international standards.

Kaieteur News had learnt that ExxonMobil intended to preserve loopholes in its future projects which it exploits in the Liza Phase One permit to flare natural gas. The Payara production license has put a 60-day cap on startup flaring, and includes emergencies, maintenance and restart as “special circumstances”. ExxonMobil will also be expected to report all instances of gas flaring within 24 hours, whether allowed or not, and explain why such flaring has occurred.

ExxonMobil has been flaring gas for over nine months at its Liza Phase One operations, with no word on when it will stop the pollution altogether. There has been public outcry about the issue, given that it has made Guyana one of the highest flaring countries in the world per capita. Government’s statement made no reference to flaring at Liza Phase One.

PRODUCED WATER
Government said that it has now required EEPGL to include tie-in points and space for produced water injection equipment, in its base design, consistent with its commitment to advocate for discharge of produced water at internationally accepted standards.

Government will oversee a study to be conducted by Exxon by the first quarter of 2020 to examine the safe and efficient reinjection of the produced water, and determine the effects of the reinjection on the reservoir. The license states that the study will also seek to determine how the effects of dumping produced water in the ocean can be minimized. Government said that this is in keeping with its commitment to preserve marine life and water quality.

ExxonMobil has been dumping thousands of barrels of produced water into the ocean at its Liza Phase One operations. Its Guyana President, Alistair Routledge claimed that the pollution is not harmful, despite there being no study to back up his assertion. Government’s statement made no reference to the discharge of produced water at Liza Phase One.

750,000 BARRELS A DAY BY 2026
ExxonMobil has managed to secure approval from Guyana for three separate developments in a space of four years, with a combined peak production rate of 560,000 barrels per day. All three projects will run simultaneously by 2024. The company yesterday reminded that it intends to have five FPSO vessels producing in excess of 750,000 barrels per day by 2026.

It has already identified a likely prospect for its fourth development at the Yellowtail well, believed by Westwood Global Energy to hold more than 300 million oil-equivalent barrels. Chief Executive Officer (CEO) for Hess Corporation, John Hess, earlier this month related the consortium’s optimism that Yellowtail will support its fourth drillship and produce at a capacity of 220,000 barrels of oil per day, the same as Payara. That would take peak production to 780,000 barrels per day.

Exxon’s subsidiary, Esso, operates the Stabroek Block with 45 percent interest, while Hess and CNOOC hold 30 percent and 25 percent respectively.
Exxon said it is evaluating development opportunities not just at Yellowtail, but at Redtail, Mako and Uaru. It is forging ahead to develop the proven eight billion plus oil-equivalent barrels in record speed, while Guyana fares with no depletion policy and a contract that falls well below industry standards in more ways than one.

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Comments

  • guyaneseonline  On October 2, 2020 at 1:56 am

    The PPP/C’s Grand Payara Betrayal
    Oct 02, 2020 Front Page Comment, Kaieteur News

    Kaieteur News – Payara was a masquerade from the beginning. It was an elaborate dog and pony show.

    Now that the licence is approved, all the government’s yapping and howling can cease.
    The government has deceived the public by its submission to the will of ExxonMobil. What it promised the people, it did not deliver.

    The PPP/C started out on the wrong foot with Payara. It picked the wrong persons to review the contract. The review of the Payara Field Development Plan has not been made public, yet the government has been hasty in inking the deal. It did not see it fit to even consult with the Guyanese people.

    The PPP/C is already in overdrive trying to sell us false dreams about the trillions of dollars which we will earn as a result of this deal. They are, however, silent about the US$9B price tag which has to be paid by the people for this plan, and about their abysmal failure to negotiate any substantial improvement in benefits.
    Payara was a lost opportunity. The PPP/C squandered the chance of righting past wrongs and rebalancing the oil agreements in the country’s favour.

    Instead of the Treasury benefitting from a bonanza, all the people got were empty words.

    Payara is a bitter pill for Guyanese. Their hopes have once again been dashed at the hands of their political leaders. It is time for the Guyanese people to let their leaders know how they feel about this grand betrayal.

    • kamtanblog  On October 2, 2020 at 2:11 am

      Smells of rotting fish !
      Corruption ?

      Or just politricks !
      Guyanese residents
      You decide ?

      Kamtan uk-ex-EU

  • Dennis Albert  On October 2, 2020 at 12:20 pm

    If Guyana produces 780,000 barrels daily, OPEC has to cut 780,000 to offset the excess capacity. COVID has shocked demand for a decade, while Exxon is making hay while the sun shines. By the time oil reaches past $80 a barrel, Guyana will have none of the oil left.

    • kamtanblog  On October 2, 2020 at 12:58 pm

      Ugly head of the greedy capitalist corporations !

      For over decade have preached the gospel.!
      Leave oil where it is and negotiate with IMF/WB
      interest loans using oil as “collateral” to move
      GT city nearer CJA on higher ground.
      Google Brazillia !
      UK oil wealth was used to repay USA war debts
      …Reagan-Thatcher era. North Sea oil is but a
      trickle now.
      Corruption and gross incompetence will enslave
      /ensure Guyana remains a “failed state” regardless of it newly discovered oil wealth.

      Que sera sera
      QED

      Kamtan uk-ex-EU

      • Dennis Albert  On October 2, 2020 at 8:18 pm

        Exxon wants the oil cheap, while inflating costs. The risk of an oil spill will affect property prices across the coast, and possibly decimate the economy, increasing lawsuits from neighboring countries. The risk of an oil spill at this rapid pace is too high. By 2026, over a million barrels per day and 5 floating vessels drilling into over 100 wells.

      • kamtanblog  On October 2, 2020 at 9:17 pm

        Wow …scary !

        2010 BP oil spill in Gulf of Mexico was one
        if most recent and one of worse oil spills ever.
        BP had to pay $90B in compensation to those
        who suffered losses as a result of spill.
        Hey that a decade ago ! Is Guyana the next big
        one ? Have lessons been learnt ? Doubt it !
        Not holding my breadth !

  • Jo  On October 2, 2020 at 6:35 pm

    The unconscionable crooks couldn’t wait to sign the deal. Sorry for their followers who kept denigrating the previous administration that had consulted with other oil-producing regimes to get their advice. This group can’t wait, led by Jagdeo in the wings…to get their hands on the loot. Any talk of the Sovereign Wealth Fund or detailed plans for a national body to oversee the use of the monies for the improvement of the country? The oil revenue needs its own budget plans. And it needs international experts to assist in decision making..at the very least. Not surprised in the least…just sorry for those who trust them.

    • Dennis Albert  On October 2, 2020 at 8:14 pm

      Jagdeo and his crew aren’t going to be the boots on the grounds to invade Venezuela under the directive of the POTUS Trump.

    • Georgy Porgy  On October 2, 2020 at 9:40 pm

      Jo the PPP followers don’t care what Jagdeo and his crew do as long as they’re on top. They’re all cut from the same cloth….no morals, no scruples. All they think about is how much money they can accumulate at any cost.. Unfortunately, once again this government is looking to fleece the country and the Guyanese people and doing it right out the gate. Whatever crumbs Exxon throw Guyana’s way will end up in an offshore account in India or Russia. It’s a win/win for America and Jagdeo, not for America and Guyana

      • kamtanblog  On October 2, 2020 at 9:54 pm

        Here is a comparison

        Ali puppet Jagdeo pulling strings

        Potus puppet and Putin pulling string

        Entertainment for the masses who elect jackasses ….

        Hee haw !

      • Dennis Albert  On October 2, 2020 at 11:00 pm

        The PPP has to repay the favour given to them by the democracy bearers like Trump, Pompeo, Chaterjee and Justin Trudeau, by invading Venezuela and helping to overthrow Maduro at any cost, even if it means millions of refugees or deaths.
        The PPP supporters expect the GDF to fight the wars while they build Pradovilles and fifteen story hotels.

  • Winston  On October 3, 2020 at 10:17 am

    Who makes up the majority of the GDF and the Police Department? Afro Guyanese. Once again the PPP will send the black people out to do their dirty work like they did during their reign of terror using Phantom Squads. All the while they will sit in their comfy mansions counting their ill gotten gains. GDF should lay down arms and so should the police if asked to do anything that that flies in the face of democracy. It’s time that Guyanese take their country back from the clutches of devils.

    • Dennis Albert  On October 3, 2020 at 11:32 am

      The PPP supporters have dreams of emulating those barbaric people in the Middle East. They are already obese like Kuwaitis, but now they want to become the Saudis of the Latin America continent.

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