ExxonMobil to Proceed with Liza Phase 2 Development

 

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

• Phase 1 on schedule for first oil by first quarter of 2020
• Guyanese direct and indirect workforce more than doubled in 2018 to more than 1,000
• ExxonMobil has funded the Liza Phase 2 development offshore Guyana after it received government and regulatory approvals.
• 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.
• A total of six drill centers 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.

“With the government of Guyana and our partners, ExxonMobil is bringing industry-leading upstream capabilities to build upon Phase 1 and further develop the shared value of Guyana’s resources,” said Liam Mallon, president of ExxonMobil Upstream Oil & Gas Company. “We 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. Following well completion activities at the recently announced Yellowtail discovery, the Noble Tom Madden 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.

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 over 1,000. ExxonMobil and its co-venturers spent nearly $60 million with over 500 Guyanese vendors in 2018. Over 1,500 Guyanese companies are registered with the Centre for Local Business Development, 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 kilometers. 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. 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, the largest publicly traded international oil and gas company, uses technology and innovation to help meet the world’s growing energy needs. ExxonMobil holds an industry-leading inventory of resources, is the largest refiner and marketer of petroleum products, and its chemical company is one of the largest in the world. Follow ExxonMobil on Twitter at www.twitter.com/exxonmobil.

ExxonMobil, through its affiliate Esso Exploration and Production Guyana (EEPGL), is the operator of the Stabroek Block with 45% stake. Hess, through its subsidiary Hess Guyana Exploration, holds 30% stake while the remaining 25% stake is held by Chinese firm CNOOC’s subsidiary CNOOC Petroleum Guyana.Last October, EEPGL awarded TechnipFMC a contract for the engineering of the subsea system of the Liza Phase 2 development. Under the contract, TechnipFMC will provide 30 enhanced vertical deep water trees and associated tooling, and also eight manifolds and associated controls and tie-in equipment for the offshore oil project.

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America focused on business climate change

As oil supermajor ExxonMobil drills offshore, their diplomats are empowering American companies to develop industries in Guyana , where an anticipated oil boom is expected to generate unprecedented profits.

In its 2018 Investment Climate Statement, the State Department reported Guyana is becoming an attractive location for international investors. Future drilling by ExxonMobil “would generate billions in revenue for the country and could potentially transform the social, political, and economic landscape.”
Given the anticipated oil boom, many investors hope to ride a wave of oil and oil-related wealth to newfound riches. “Foreign investment is likely to greatly increase in the coming years,” U.S. Ambassador to Guyana Sarah-Ann Lynch recently commented. “Guyana has vast untapped resources, so the potential is enormous.”
Efforts to attract investors to Guyana are part of the administration’s broader goal of opening international markets to U.S. businesses. Although President Trump identifies as “Tariff Man,” who creates barriers to trade in the U.S. market, he wants to reduce barriers to trade in other countries.

“I’m opening up markets like nobody has ever opened markets before,” the President boasted last year.

The State Department has a team of about 1,500 officers working at U.S. embassies with the “primary goal” of opening markets. Secretary of State Mike Pompeo told oil executives and energy investors U.S. diplomats are “working to ensure that markets are open for American businesses all around the world.”
If “you want to attack markets all around the world,” Pompeo said in a separate interview, the “State Department’s here to help you.”

Since the discovery of oil off the coast of Guyana, U.S. diplomats have been attacking markets in Guyana. to create a better “business climate.” The last U.S. Ambassador to Guyana Perry Holloway arrived in 2015 with a mandate from Washington to “improve the country’s overall business climate.” One priority was to establish an American Chamber of Commerce. Last year, its opening may have “set the record for the fastest launch of an official AmCham affiliate. “Of course, I am not sure whether anyone could make remarks here without mentioning oil.”

For U.S. officials, oil has been the main focus of efforts in Guyana. ExxonMobil located over five billion barrels of oil-equivalent in the Stabroek Block, an area about 100 miles off the coast .

Over several years, U.S. diplomats have been quelling controversies, including concerns about an oil spill, a controversial oil contract between ExxonMobil and the Guyana and a border dispute between the Guyana and Venezuela over the oil basin.

ExxonMobil has a powerful friend in President Trump. Since entering office, he has been unleashing the power of U.S. oil companies. He gave the oil industry one if its biggest gifts by withdrawing from the Paris Climate Agreement, questioning the science on climate change, repealing regulations that reduce carbon emissions, opening new parts of the country for drilling, and defending the use of fossil fuels.

Vice President Mike Pence promised the Oil and Gas Association the oil and gas industry has no greater friend than President Trump.  His actions are contributing to a redistribution of power in the global oil market. The United States emerged as the largest oil producer . “We’re getting close to where we’ll have true American energy dominance,” Secretary of State Pompeo marveled at an energy forum.

The anticipated Guyana oil boom will add to efforts to achieve American energy dominance. Although located off the coast , oil production and distribution remain under the control of ExxonMobil. Oil produced by ExxonMobil will be sold into the marketplace by ExxonMobil.

Guyana, promised great riches, may never see the oil. When the government entered the Paris Climate Agreement, it acknowledged it will eliminate dependence on fossil fuels over the next several years.

“Given our solar, wind and hydropower potential and relatively small national demand, we believe that with adequate and timely financial support, Guyana can develop a 100 percent renewable power supply by 2025,” the government reported in its Intended Nationally Determined Contribution.

U.S. officials focus on achieving business climate change in Guyana and the . embassy is working to leverage the anticipated oil boom into an extravaganza of wealth and profits.

Kuwait cancels almost US$51 million of Guyana’s debt

A bilateral debt settlement agreement signed on March 18, 2019 through the Kuwait Investment Authority, agreed to cancel US$50,739,255.67 of Guyana’s debt to Kuwait,

This debt cancellation will reduce Guyana’s external debt and allow the country to expand its development agenda, as funds saved under this agreement would be allocated to social projects within the context of the national budget. ‘The agreement, which came after an ardent negotiation process, paves the way for greater cooperation and the strengthening of cordial ties between the two countries.’

Guyana officials travelled to Kuwait in September 2018 for negotiations . Ambassador Ally and his spouse, Dr Maryann Ally garnered support utilising their strong relationship with the people and government of Kuwait to make the debt write off a priority.

It is the result of renewed efforts to engage Guyana’s non-Paris club bilateral creditors in negotiating debt relief that is acceptable and sustainable.

The remaining amount of US$26,853,585.23 will be settled through a combination of cash payments, over nine years, and a debt swap arrangement.

Guyana’s debt to Kuwait originated from a loan deposit, contracted in 1975, from the Central Bank of Kuwait for Kuwaiti Dinars 3 million (US$10.3 million at that time), for the balance of payments to the Bank of Guyana. The debt accumulated massive arrears over the past four decades, at high market interest rates. As of December 31, 2017, the debt to Kuwait had grown to US$77,592,840.90, comprising principal arrears of US$9,940,500 and interest arrears of US$67,652,340.90.

Guyana is pursuing debt relief from other bilateral non-Paris club creditors like Libya.

Islamic bank funding for training for oil sector

Guyana asked the Islamic Development Bank (IsDB) to finance the training of local staff for the emerging oil and gas sector, even as foreigners would have to be employed if there are insufficient Guyanese to fill vacancies.

“A reverse linkage programme in technical and vocational training with emphasis on addressing the critical needs of our emerging oil and gas sector,” is one of several priority areas the Finance Minister told the 44th annual meeting of the Islamic Bank Group in Morocco.

The announcement that Guyana wants to tap into IsDB funding coincided with disclosure by the Department of Energy in Georgetown that oil companies were being asked to give priority to employing Guyanese. If the skills , are unavailable the companies have to turn their attention to the overseas labour market.

“Part of the Department’s responsibility is to ensure Guyanese get … first consideration. But you won’t get first consideration just for the sake of first consideration. You have to have equal skills and equal competencies so if there are two jobs and the Guyanese can do it, we ask the companies that Guyanese must be employed first but if the Guyanese doesn’t have the skill then we have to build that skill going forward but in the interim we may be forced to employ someone else.”

Last year, 1,071 Guyanese, up from 458, were hired directly by the oil and gas sector. Government asked ExxonMobil to report every quarter on its contribution. Job opportunities were available for electrical engineers, mechanical engineers and welders, among other trade skills.

The Energy Department said the time has come for Guyanese to think positively and grasp and create job opportunities while ensuring the right attitude in areas such as customer service. “You cannot be crying that other people are getting the jobs and we are not putting ourselves in position.”

The Department of the Public Service was working with the Department of Energy to offer targeted scholarships for the hydrocarbon sector. Oil reserves were provided by God and steps would be taken to ensure they trickle down to ordinary people. There were opportunities to invest in quality hotels.

The Council for Technical and Vocational Education and Training (CTVET) said Guyana lacks sufficient trainers in the areas of technical and vocational education and so the country must ensure that foreigners transfer their knowledge to Guyanese for the formulation of local standards. “We have to take advantage of those persons with the requisite competencies and when they come to Guyana, we address those areas that directly relate to the Guyanese context and the Guyanese condition. The country was suffering from a shortage of welders for the energy sector. We are recognising right now that we do not have the requisite skills to even deal with the welding opportunities that are presenting themselves.”

Another shortage is for housekeepers for the tourism sector because Guyana does not have such qualified personnel. The fear is that others will come in and provide that service. Attendees must see themselves as having community links and facilitating training of persons to prepare them for “decent work”.

Guyana now has to “upgrade and re-skill” Guyanese to meet current demands with the highest quality and standard of certified persons who could work anywhere. Guyanese must change behaviour to take advantage of opportunities. “With what is happening .. there will be a requirement for .. a critical behavioural change in our country—our personal values, our moral values—and …. there will be those around who are doing the same business as you are doing, but what separates us will be the quality of service that we provide.”

Youths at the street corners who could deliver high-quality work would have to go to the CTVET office and undergo a variety of tests to prove their competency before they are awarded certificates.

Eco Atlantic raises cash for offshore drilling

Oil and gas company Eco Atlantic has raised cash through a share placement with the proceeds aimed at funding offshore wells.

Source Stena Drilling Ltd – www.stena-drilling.com

Eco said it has conditionally raised, in aggregate, $17 million before expenses through an oversubscribed placing and subscription of, in aggregate, 16,159,695 new common shares of no par value in the capital of the company at a price of 80 pence per common share.

Funds raised will be used to fund Eco’s share of up to four potential new exploration or development wells, in addition to the committed Jethro and Joe wells scheduled to drill in 2019, as well as for general corporate purposes.

Eco is a partner with a 15 percent share in the Tullow Oil-operated Orinduik block offshore Guyana. French oil firm Total is also a partner in the block.

The Orinduik Block partners in November 2018, approved the initial 2019 work plan and budget for the first Orinduik exploration well – the 250 million barrel Jethro-Lobe Tertiary prospect. This prospect, believed to be similar to the Exxon Hammerhead discovery in the adjacent Stabroek block, is scheduled to be drilled in June using the Stena Forth drillship.

The partners approved the drilling budget and the location of the second well – the Joe prospect. The plan is to start drilling the Joe well immediately after the completion of the Jethro drilling, in mid-July 2019.

Joe is a 150 mmboe (P50 – Best Estimate) Upper Tertiary target which has a 43.2% chance of success, as estimated in the recently published independent (NI51-101 Compliant) report produced by Gustavson Associates.

Gil Holzman, President and CEO of Eco, said: “We are delighted with the level of support from new and existing institutional shareholders for the Fundraising which was oversubscribed. We thank existing shareholders and welcome new shareholders to the Company. The level of demand is a reflection of the quality of Eco’s acreage and the potentially transformational drilling program ahead of us starting in 2 months. We are now very strongly funded for a potential development drilling scenario and additional exploration wells on the Orinduik block.”

The Orinduik Block has recently been given a boost to 3,981 mmboe Gross Prospective Resources (P50) from previously estimated 2,913 mmboe, following an independent competent person’s report by Gustavson Associates.

Operator Tullow described the upcoming wells as high-risk, high potential prospects. Apart from the Orinduik block wells, Tullow will be involved in another well in Guyana – the Carapa prospect will be tested on the Repsol-operated Kanuku license in the third quarter of 2019.

In 2018, Tullow increased its equity share in the Kanuku licence, offshore Guyana, from 30% to 37.5% through a farm-in deal with Repsol.

Offshore Energy Today Staff

Dubai-based shipping company to support oil sector

Gulf Agency Company Limited (GAC) has set up office, as GAC Logistics and Shipping (Guyana) Incorporated, “in response to demand for professional shipping and logistics support following the discovery of large reserves of oil and gas in its waters.”

The Dubai-based shipping, logistics and marine service company signaled its intention to be a key player in Guyana’s maritime and oil & gas sectors. This comes on the heels of its anticipation that Guyana will be at the top of the oil production per person league table by the mid-2020s.
To provide local expertise, GAC signed a Memorandum of Understanding to work cooperatively and finalise an agreement with Guyana National Shipping Corporation Ltd. (GNSC), a company with over 40 years of experience in the global and regional maritime industry, led by Managing Director Andrew Astwood. A launch ceremony for that partnership was held .

GAC will be led by Richard Mallen. a veteran in the business, with four decades of experience in shipping, logistics & supply chain sectors – seven of those years with GAC. He worked in a variety of project management, procurement, start-up and liner agency roles. Managing Director of GAC Trinidad & Tobago, Captain Gobind Kukreja, will oversee the Guyana operations, as both locations intend to work jointly.

Bob Bandos, GAC Group Vice President – Americas, says: “The start-up of GAC’s operations in Guyana is an important geographic step in expanding our regional footprint and the existing services offered in other GAC locations. Partnering with GNSC will benefit our local, regional and global clients in this new addition to GAC’s global reach.”