ExxonMobil proceeds with Payara development offshore Guyana

Sept. 30, 2020

IRVING, Texas – ExxonMobil has made its final investment decision to proceed with the Payara field offshore development in Guyana after receiving government approvals. Payara is the third project in the Stabroek Block and is expected to produce up to 220,000 barrels of oil per day after startup in 2024, using the Prosperity floating production, storage and offloading (FPSO) vessel.

Third Guyana development receives final investment decision following government approval.  Production to begin in 2024; production capacity of 220,000 barrels per day ExxonMobil grows Guyanese workforce with project development and investment  The $9 billion development will target an estimated resource base of about 600 million oil-equivalent barrels. Ten drill centers are planned along with up to 41 wells, including 20 production and 21 injection wells.

“ExxonMobil is committed to building on the capabilities from our Liza Phase 1 and 2 offshore oil developments as we sanction the Payara field and responsibly develop Guyana’s natural resources,” said Liam Mallon, president of ExxonMobil Upstream Oil & Gas Company. “We continue to prioritize high-potential prospects in close proximity to discoveries and maximize value for our partners, which includes the people of Guyana.”

ExxonMobil’s first offshore Guyana project, Liza Phase 1, began producing in late 2019, well ahead of the industry average for development time. Liza Phase 2, remains on track to begin producing oil by early 2022. It will produce up to 220,000 barrels of oil per day at peak rates using the Liza Unity FPSO, which is under construction in Singapore.

ExxonMobil is evaluating additional development opportunities in the Stabroek Block, including Redtail, Yellowtail, Mako and Uaru resources, and plans to have five drillships operating offshore Guyana by the end of this year.

As new projects proceed, investment in the Guyana economy increases. More than 2,000 Guyanese are now supporting project activities on and offshore, a 50 percent increase since 2019. ExxonMobil and its prime contractors have spent over $300 million with more than 700 local companies since 2015. More than 2,500 Guyanese companies are registered with the Centre for Local Business Development, which was founded by ExxonMobil and its co-venturers in 2017 to build local business capacity to support global competitiveness.

The Stabroek Block is 6.6 million acres (26,800 square kilometers) with current discovered recoverable resources estimated at more than 8 billion oil-equivalent barrels. 18 discoveries on the block to date have established the potential for at least five FPSO vessels producing over 750,000 barrels of oil per day by 2026. 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, among the largest publicly traded international energy companies, uses technology and innovation to meet world energy needs, with an industry-leading inventory of resources. Among the largest refiners and marketers of petroleum products, its chemical company is one of the largest.

ExxonMobil sanctions Payara project

ExxonMobil and its partners agreed to develop the deepwater Payara oil field offshore Guyana.

Oct 1st, 2020

IRVING, Texas – ExxonMobil and its partners have agreed to develop the deepwater Payara oil field offshore Guyana, the third project in the Stabroek block, with a projected cost of $9 billion, targeting around 600 MMboe of resources. Production should begin in 2024 through the 220,000-b/d capacity FPSO Prosperity. ExxonMobil also plans 10 subsea drill centers and up to 41 wells (20 producers and 21 injectors).

SBM Offshore will construct, install, lease, and operate the Prosperity for a period of up to two years, after which ownership and operation will transfer to ExxonMobil’s subsidiary in Guyana.

Prosperity, which will largely follow the design of the block’s second FPSO, Liza Unity, will be based on SBM Offshore’s Fast4Ward approach of a newbuild, multi-purpose hull combined with standardized topsides modules. Prosperity will be spread moored in a water depth of around 1,900 m (6,233 ft), with storage for 2 MMbbl of crude oil, associated gas treatment capacity of 400 MMcf/d and water injection capacity of 250,000 b/d. SBM Offshore is considering fabricating and coating of part of the light structural steel for the vessel in Guyana and plans to employ local engineers as part of the Payara project team.

TechnipFMC will manufacture and supply the subsea production system, including 41 enhanced vertical deepwater trees and associated tooling, six flexible risers, 10 manifolds, and associated controls and tie-in equipment.

Liza Phase 2, the block’s second project, is on track to produce first oil by early 2022 through the 220,000-b/d capacity Liza Unity, currently under construction in Singapore.

ExxonMobil was evaluating additional development opportunities such as Redtail, Yellowtail, Mako and Uaru resources, and plans to have five drillships operating offshore Guyana by the end of this year.

Over 2,000 Guyanese nationals support project activities on and offshore, 50% more than in 2019.

To date there have been 18 discoveries across the block, with estimated combined resources of more than 8 Bboe, sufficient for at least five FPSOs producing more than 750,000 b/d by 2026.

Partners in the Stabroek block are Hess Guyana Exploration and CNOOC Petroleum Guyana.

SBM Offshore confirms Prosperity FPSO award

OCTOBER 1, 2020. NERMINA KULOVIC

Dutch FPSO provider SBM Offshore confirmed the award of contracts for the next phase of the ExxonMobil-operated Payara development project in the Stabroek block, located circa 200 kilometres offshore Guyana. The award to SBM Offshore follows ExxonMobil’s final investment decision for the $9 billion Payara project, its third development in the Stabroek block. It also follows the completion of front-end engineering and design studies, completion of the multi-purpose hull and receipt of requisite government approvals.

The Payara project will target an estimated resource base of about 600 million oil-equivalent barrels. It is expected to produce up to 220,000 barrels of oil per day after startup in 2024, from the Prosperity floating production, storage and offloading (FPSO) vessel.

SBM Offshore to build Prosperity FPSO

Under the ESSO contracts, SBM Offshore will construct, install and then lease and operate the Prosperity FPSO for a period of up to two years. After this, the FPSO ownership and operation will transfer to Esso Exploration and Production Guyana Limited (EEPGL), an affiliate of Exxon Mobil Corporation. EEPGL is the operator and holds a 45 per cent interest in the Stabroek block, Hess Guyana Exploration Ltd. holds a 30 per cent interest and CNOOC Petroleum Guyana Limited holds a 25 per cent interest.

A Fast4Ward design of the Prosperity FPSO largely replicates the design of the Liza Unity FPSO based on the SBM Offshore Fast4Ward program that incorporates the company’s new build, multi-purpose hull combined with several standardized topsides modules.

The FPSO will be designed to produce 220,000 barrels of oil per day, will have associated gas treatment capacity of 400 million cubic feet per day and water injection capacity of 250,000 barrels per day. The FPSO will be able to store around 2 million barrels of crude oil.

As a result of the award from EEPGL, SBM Offshore also anticipates the award of contracts to local companies for work performed in Guyana. The company is examining executing scope for fabrication and coating of a portion of the light structural steel for the FPSO in Guyana, which would be a first for SBM Offshore in the country.

TechnipFMC wins large subsea contract for Payara

01 Oct 2020

Following the FID for the Payara project, ExxonMobil awarded a contract to TechnipFMC to manufacture and deliver the subsea production system for the Payara development. The deal includes 41 enhanced vertical deep water trees and associated tooling, six flexible risers and ten manifolds with associated controls and tie-in equipment

TechnipFMC was awarded a large contract by Exxon Mobil Corp subsidiary Esso Exploration and Production Guyana Limited for the subsea system for the proposed Payara project offshore.

For TechnipFMC, a ‘large’ contract ranges between $500 million and $1 billion. Arnaud Pieton, President Subsea stated:

‘We are delighted to take the next step in the partnership established with ExxonMobil and the country of Guyana for their subsea developments. As a continuation from Liza phase 1 and 2, this award is a tribute to the value created through this partnership and will also lead to growing further TechnipFMC’s local presence in Guyana. We continue to develop and deliver the most advanced proven subsea technologies enabling these developments with the schedule certainty required for the Payara Project first oil.’

In support of this project, TechnipFMC will continue hiring and training Guyanese engineers.

Payara is the second oil discovery in the Stabroek Block located approx. 193 km (120 miles) offshore Guyana with water depths of 1,500 m (4,900 ft) to 1,900 m (6,200 ft). ExxonMobil affiliate, Esso Exploration and Production Guyana Limited (EEPGL), is the operator.

Source: TechnipFMC

FIELD DEVELOPMENT

Another Guyana project sanctioned:

• ExxonMobil sanctions $9 billion Payara oilfield scheme
• Third development on the prolific Stabroek Block will commence production in 2024

US$ 9 billion Payara Project, single largest investment in Guyana

1 October 2020
By Josh Lewis in Perth

• US supermajor ExxonMobil has taken a final investment decision on its Payara development, on the Stabroek Block and .confirmed it was moving ahead .
• US$ 9 billion Payara Project, is the single largest investment in Guyana

The US$9 billion Payara development, the largest single investment in the history of Guyana, will target an estimated resource base of about 600 million oil-equivalent barrels.
The project in the Stabroek Block is expected to produce up to 220,000 barrels of oil per day after start-up in 2024, using the Prosperity Floating Production, Storage And Offloading (FPSO) vessel. Guyana is currently producing around 100,000 barrels of oil per day, but within the next few years, production will surpass one million bopd.  The Government and ExxonMobil signed the licence to give the green light for the Payara project, after a taxing assessment.  Payara is the third Field Development Plan (FDP) from Exxon to gain approval. The first FDP approved was for Liza Phase One, while Liza Phase Two is expected to start up in 2022.

Payara approval was a result of “several reviews and consultations by local and international experts.”

Government decided to scrutinise work by the Department of Energy and Bayphase Oil and Gas Consultants on Payara , to protect the interest of all, in keeping with international transparency and accountability standards.

A Canada-funded team of technical experts assessed the Payara FDP to ensure compliance with all relevant regulations and confirm all were enforceable. “This included environmental standards and reservoir management to safeguard the interests of the people of Guyana and that their resources are developed in a sustainable and responsible manner to the benefit of the country”.

The Government remained committed to managing and harvesting oil and gas resources sustainably in keeping with internationally-recognised acceptable environmental standards and transparency.

Miguel Moyano, Executive Secretary of Arpel, a regional oil and gas association, predicted that Guyana will become a petroleum powerhouse in the Region with oil production expected to tip one million barrels of oil per day in the coming years,
“Guyana together with [Argentine unconventional formation] Vaca Muerta, I think, are the game-changers of our region,” Moyano, a petroleum expert, told a BNamericas webinar.

According to Arpel, emergence of Guyana as an oil-producing nation is interesting and exciting, as since the first major oil discoveries here, oil companies around the world have been paying keen attention to how the country develops its oil resources.  US oil titan Exxon estimated that there were eight billion barrels of recoverable reserves in the Stabroek Block.

From Liza Phase One, Guyana has already banked over US$160 million in bonus, cargo lift and royalty payments. Oil revenues will fund development of modern infrastructure and improve social services.

Guyana approves US$9 billion Payara FDP for 2024 startup

Oct 01, 2020

Minister of Natural Resources, Vickram Bharrat yesterday approved the Payara project, ExxonMobil’s third field development in the Stabroek Block. After making its final investment decision (FID) yesterday, the oil major said 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.

The FPSO hull is with Dutch firm, SBM Offshore in Singapore awaiting installation of its topside modules. 10 drill centers are planned along with up to 41 wells, including 20 production and 21 injection wells.
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 last regime contracted UK firm, Bayphase, to review the plan of client ExxonMobil. Environmental issues, among others, which arose during review, were not raised by Bayphase. The deposed government expected the review to be completed early this year but contentious fraudulent 2020 elections prolonged government approval.  When the new administration entered in August, it asked Canada to assist assessment of the review. Former Alberta Premier, Alison Redford, led the team of technical experts, funded by Canada, assessing the BayPhase review of the field development plan (FDP).

Following assessment, the Ministry of Natural Resources laid out stipulations for environmental aspects of Exxon’s operations. 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 prohibited routine flaring without approval from the Environmental Protection Agency (EPA) and any flaring to maintain oil production is not allowed. ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL) will compensate the government for the cost of wasted gas during flaring and will be subject to fines under the EPA related to emissions from flaring. It is also expected to establish a framework for a carbon price in line with international standards.

The Payara production license placed a 60-day cap on startup flaring and includes emergencies, maintenance and restart as “special circumstances”. ExxonMobil will report all instances of gas flaring within 24 hours, whether allowed or not and explain why flaring occurred.

ExxonMobil will be required to have a metering system in place to record the volume of all toxins released from flaring. The permit notes that there should be detailed reports on the quantity of specific pollutants emitted from flaring including carbon dioxide, nitrogen oxides, carbon monoxide, methane and ethane, benzene, hydrogen sulphides , volatile organic compounds and sulphur oxides. ExxonMobil is expected to upkeep this recording system for six years and have the records available on the Payara FPSO)vessel for inspection for a period of two years.

PRODUCED WATER
Government 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 conducted by Exxon to examine the safe and efficient reinjection of produced water and determine the effects of the reinjection on the reservoir. The study will also seek to determine how the effects of dumping produced water in the ocean can be minimized. This is in keeping with its commitment to preserve marine life and water quality.
Esso Guyana President, Alistair Routledge claimed that the pollution is not harmful.

ExxonMobil will have to ensure proper compensation for damage or loss caused by any unmitigated oil spill from the Payara project which gets underway by 2024.

750,000 BARRELS A DAY BY 2026
ExxonMobil secured approval 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 intends to have five FPSO vessels producing in excess of 750,000 barrels per day by 2026.

It 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, 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 subsidiary, Esso, operates the Stabroek Block with 45 percent interest, while Hess and CNOOC hold 30 percent and 25 percent respectively.

Exxon 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 lacks a depletion policy. Payara approval pulls the plug on agitators, ending months of dispute and bringing relief to the industry.

Exxon proceeds with Payara development after approval

Sep. 30, 2020 6:54 PM ET|: Carl Surran, SA News Editor

Guyana will sign an agreement with Exxon Mobil (NYSE:XOM)that clears the way for the development of the 220K bbl/day Payara project on the 6.6M-acre deepwater Stabroek block.

Exxon is “eager to move forward” as Payara “remains a top priority in the company’s global growth plans.”

The $9B development will target an estimated resource base of ~600M boe.

Exxon operates the Stabroek block with a 45% stake, while Hess holds 30% and 25% belongs to PRC SOC CNOOC unit Nexen.

In a bullish analysis Quad 7 Capital endorsed Exxon, saying the company “has survived every major downturn in energy and emerged stronger each time.”

ExxonMobil taps Kotug for towage services offshore

October 14, 2020, Bojan Lepic

Dutch towage services provider Kotug has been awarded a long-term contract oil major ExxonMobil to provide offshore terminal towage support for operations in Guyana.

The contract, awarded by ExxonMobil subsidiary Esso Exploration and Production Guyana, marks Kotug’s first operation in the South American continent and upcoming oil-producing nation of Guyana.

To support the operations in Guyana, Kotug will employ its newly acquired vessel SD Power, a 130-tonne bollard pull, DP-2 azimuth anchor-handling tug. The vessel will provide support to the existing and upcoming floating production storage and offloading units (FPSO’s) at the Liza field by providing towage assistance to export tankers, infield support duties, and cargo duties.

Ard-Jan Kooren, CEO of Kotug, said: “Being part of the growing offshore oil and gas activities in the cooperative republic of Guyana and working together with one of the world’s largest oil majors ExxonMobil for us is an important milestone and in line with our long-term strategy to grow our business in the FPSO support business”.

ExxonMobil plans to have two FPSOs producing oil from the Liza field located in the Stabroek block some 200 kilometres offshore Guyana. The first, Liza Destiny, started production back in December 2019.

The other – Liza Unity – is under construction. ExxonMobil targets Liza Phase 2 start-up, which includes the Liza Unity FPSO, in early 2022. The hull of the FPSO was delivered from China to Keppel’s yard in Singapore in January 2020.

The FPSO is designed to produce 220,000 barrels of oil per day, to have associated gas treatment capacity of 400 million cubic feet per day and water injection capacity of 250,000 barrels per day. The FPSO will be spread moored in a water depth of about 1,600 meters and will be able to store around 2 million barrels of crude oil.

On 31 August 2020, SWS, a subsidiary of China State Shipbuilding Corporation, delivered the hull for the Liza Prosperity which will work on ExxonMobil’s Payara development project, also located in the Stabroek block.

RIAL

TechnipFMC, SBM celebrate deals as Exxon sanctions development

Mark Lammey
01/10/2020

US oil major ExxonMobil made a final investment decision to develop the $9 billion, 600 million barrel Payara field off Guyana.

Payara, the third project in the Stabroek Block, is expected to produce up to 220,000 barrels of oil per day after start-up in 2024. The field will be served by the Prosperity floating production, storage and offloading (FPSO) vessel, to be delivered by SBM Offshore. Ten drill centres are planned along with up to 41 wells, including 20 production and 21 injection wells.

TechnipFMC will provide the subsea system, having been awarded a contract worth somewhere between $500m and $1bn.

The block is holds recoverable resources of over 8 billion barrels.

ExxonMobil’s first offshore Guyana project, Liza Phase 1, began producing in late 2019, well ahead of the industry average for development time.

Liza Phase 2, remains on track to begin producing oil by early 2022. It will produce up to 220,000 barrels of oil per day at peak rates using the Liza Unity FPSO, under construction in Singapore.

ExxonMobil is evaluating additional development opportunities in the Stabroek Block, including Redtail, Yellowtail, Mako and Uaru resources and plans to have five drillships operating offshore by the end of this year.

Liam Mallon, president of ExxonMobil Upstream Oil & Gas Company, said: “ExxonMobil is committed to building on the capabilities from our Liza Phase 1 and 2 offshore oil developments as we sanction the Payara field and responsibly develop Guyana’s natural resources. We continue to prioritize high-potential prospects in close proximity to discoveries and maximize value for our partners, which includes the people of Guyana.

Argus

Beyond a watershed election

Approval of ExxonMobil’s Payara development plan is a milestone in Guyana’s emergence from uncertainty in the aftermath of disputed elections in March. A new government was installed in August, after US sanctions deposed a de facto regime to declare victory for descendants of British Indians, amid failure of UN, OAS, Commonwealth, diplomatic and CARICOM pleas to dislodge usurpers, now in opposition in parliament.

ExxonMobil is “eager to move forward” as Payara “remains a top priority in the company’s global growth plans,” Esso Guyana president Alistair Routledge said. Start-up of Payara tentatively scheduled for 2023, was unfortunately delayed to 2024. Payara, ExxonMobil’s third project on the Stabroek block, is central to its production target of 750,000 b/d of 32.1°API Liza crude by 2025. . ExxonMobil plans to launch the 220,000 b/d Liza 2 development in 2022.

The company suspended work on the floating production, storage and offloading (FPSO) vessel earmarked for the Payara project as it awaited government clearance of the development plan. Agreement was further stymied by negotiations on natural gas flaring and reservoir water . Details of fines have not been disclosed.

ExxonMobil operates Stabroek with a 45% stake. US independent Hess holds 30pc, and 25% belongs to SOC CNOOC unit Nexen of PRC. .The consortium began production at Liza in December 2019, and was producing around 85,000 b/d as of the end of August, short of a 120,000 b/d forecast, because of a faulty compressor.

Stabroek Block poised to produce 900,000 barrels of oil per day by 2025

September 30, 2020 – Rystad Energy

Discovery of over eight billion barrels of oil equivalent resources in the ExxonMobil operated Stabroek block, led Rystad Energy to predict that Guyana will be a new entrant this decade in the list of major offshore producing regions.

The energy research and business intelligence company said that close to four billion barrels will likely be sanctioned by 2025 and will require investments in the range of US$ 30 billion. The market can expect to see this contributing to over 900,000 barrels of oil per day at peak production.
Capital expenditure cuts announced by owners ExxonMobil and Hess Corporation will not significantly affect development of discoveries in Stabroek, an attractive asset even in the current low price scenario.

Earlier ExxonMobil said that capital investments for 2020 are expected to be about US$23 billion, down from the previously announced US$33 billion. 15 percent decrease in cash operating expenses is driven by deliberate action to increase efficiencies and reduce costs and includes expected lower energy costs.

Partner on the block, Hess Corporation, revised its 2020 capital and exploratory budget to US$2.2 billion, an US$800-million reduction from the previous budget. Most discretionary exploration and offshore drilling activities, excluding its work in Guyana, will also be deferred.

Westmount Energy

Sep 30, 2020

The United Kingdom investment firm continues to expand its influence in the Guyana-Suriname basin by buying into companies which have stakes there. Westmount purchased 1,550,000 common shares in JHI Associates, one of the pioneers that farmed into the Canje block.

JHI has a 17.5 percent carried interest in the 4,800 square-kilometre Canje block, of immense value from proximity to petroliferous Stabroek Block. The Canje block is estimated to hold 7.1 billion oil-equivalent barrels. Westmount anticipates drilling to start in the block later this year at the Bulletwood-1 well, by the operator, ExxonMobil with a 35-percent stake.

Westmount said the purchase takes its holdings in the company to 6.9 percent of its issued common shares. The investment fits into its plan to seek opportunities in the Guyana-Suriname basin, a major emerging hydrocarbon province.

Companies like Westmount entered the basin, having to do less than license holders, since they buy into companies that have stakes in blocks, instead of buying into the blocks. Its stake in JHI associates represents 61.8 percent of the value of Westmount’s gross assets as at December 31, 2019. The remainder comes from interests in other companies in the basin. Westmount has small stakes in Cataleya Energy Corp. and Ratio Petroleum, each with a 25 percent stake in the Kaieteur block; and Eco Atlantic, which has a 15 percent stake in the Orinduik block. Westmount now has small stakes in three of Guyana’s oil blocks, providing vital investment funds which will bring rewards from major oilfields.

Payara project approved

September 25, 2020

ExxonMobil secured approval for its Payara project in the offshore Stabroek Block and an agreement, should be signed soon, Minister of Natural Resources Vickram Bharrat said.

“We are coming to the position where a production agreement is being drawn up and based on negotiations and consultations with the Attorney General’s Chambers.” A “workable agreement” should be signed within days, which would impose fines for flaring violations and a commitment that reservoir water be treated to international standards before dumping,

Details on applicable fines and new flaring provisions will be made public. “We will impose fines for flaring. Yes, we have an agreement… “

Guyana, ExxonMobil sign Payara deal

September 25, 2020

Guyana is on the verge of signing an agreement with ExxonMobil for its Payara Development Plan that would provide for hefty fines for flaring and the dumping of untreated water back into the sea, Minister of Natural Resources Vickram Bharrat said.

The actual fines would be ironed out before the draft agreement is approved by Cabinet and make way for its signing.

“We have managed to negotiate on a number of environmental issues…..flaring will carry a fine. Water will have to be treated to international standard before dumping. I think we have a better agreement than Liza,” he said.

Representatives of ExxonMobil and the Guyana government could very well sign the agreement before the end of September, making way for the consortium, Esso Exploration and Production Guyana Limited, to make its final investment decision (FID). Experts were still quantifying the amount and value of oil and gas contained in the Payara well.

The Natural Resources Minister credited Vice President Bharrat Jagdeo with pushing for no flaring and for the treatment of water being used in the production of oil and gas, acknowledging that no such provisions had been included in the review by the United Kingdom-headquartered oil and gas consultancy, Bayphase Limited. On the issue of delineating an overlap between the Payara and Liza wells, the Minister said that would be addressed under Section 44 of the Petroleum Act that provides for the securing of more effective recovery of petroleum from the specified reservoir.

On flaring, he said the floating production storage and offloading (FPSO) vessel, Liza Unity, being constructed for the Payara well, would be modified to prevent issues encountered with Liza Destiny. The President of ExxonMobil Guyana, Alistair Routledge earlier this month said he hoped that the issue of flaring at Liza Unity would be resolved by the end of this month.

Mr Routledge is already on record as defending the safety of discharging treated water into Guyana’s Exclusive Economic Zone where several deepwater exploration and production wells are being drilled. In the context of reported preferences for the production water from the Payara well to be re-injected into the reservoir, Mr Routledge warned that doing so could possibly cause some problems. “There are some potential risks to doing that. There are some chemistry issues between the produced water and the reservoir fluids into where we would inject which can cause problems, potentially raising fractures in that part of the reservoir,” the ExxonMobil official has said. Noting that these are “quite complex balancing acts,” he has said treatment of water for re-injection could cause more air-emissions from the treatment facilities.

ExxonMobil has publicly cautioned that it could shift its investment resources to other projects instead of waiting for much longer on Payara. This latest Payara review is being conducted by a team led by Canadian Queen’s Counsel, Alison Redford who was picked by the Canadian government at the Guyana government’s request. The Guyana government, in the face of criticisms about Ms Redford, has sought to shore up her credibility by highlighting her work in the area of energy regulatory reforms in several countries and organisations such as Canada, Pakistan and the World Bank.

Significance of Stabroek Block

September 25, 2020

The region rejoices as oil and gas operators become increasingly aware of the legal concept of “good faith” when drawing up future contracts and megawatt deals. Local businessmen in GOGEC, GCCI and PSC can launch a new oil company on the Guyana stock exchange to create a shareholding democracy.

ExxonMobil, Hess Corporation, and CNOOC.NEXEN, record US$ 3.5B in expenses for the Liza Phase One Project. Liza Phase Two is expected to be within the US$ 6B range. For the remaining wells, the consortium estimated that gross capital cost can be as much as US$ 50 billion, bringing the total to approximately US$ 60 billion to be recovered.

Taking this enormous sum into consideration, Canada-based engineer, Darshanand Khusial, says the Government must monitor these costs as it is 40 times the 2020 budget. Khusial, a member of the Oil and Gas Governance Network (OGGN), said that unlike the budget, it is not clear that Guyana knows upfront what it is receiving for that money expended by Exxon and its partners and what are the alternatives at its disposal.

“The Liza Phase One gross capital costs were initially estimated at US$4.4 billion then it was reduced to US$3.7 billion and finally to US$3.5 billion. That is an approximate saving of a billion dollar, about 2/3rds of the 2020 Guyana budget. But there was no detailed breakdown of the types of savings.”

More concerning is the fact that there is no indication that these types of savings can be applied to reduce the cost on the US$6 billion Liza Phase Two project. The government needs to ask a few key questions. Some of these include:

• • How involved it is in the deciding and monitoring of capital costs associated with the oil projects?
  • Does it have a detailed breakdown of the upfront costs for the projects?
  • Does it have a voice in the selection of the contractors to build the billion-dollar FPSOs?
  • And has it hired experts to question the oil companies’ selection of various suppliers?

Guyana will be paying off US$60 billion for years to come. The government he articulated should treat this cost the same as it does with the budget.

Oct. 5, 2020

Summary of Stabroek

SA

• ExxonMobil took a final investment decision to proceed with the Payara phase 3, after approval for the field development from the Guyana government.
• The development plan includes 5 FPSOs with a plateau production gross capacity of above 750K barrels of oil per day targeted by 2025.
• XOM is an excellent long-term investment despite a harsh environment.

Stabroek Block, a crucial project for Exxon Mobil, counts 18 discoveries and is delivering oil since late December 2019.

Credit Suisse reported the tremendous importance and size of this new oil field. 

Stabroek Block for 9 development phases would push production well above 1 million barrels of oil per day and the resource estimate on the block will further increase beyond the more than 8 billion barrels of oil equivalent resources.

Exxon Mobil has three phases in different development stages, with phase 1 already producing since late December 2019 and phase 3 that received final investment decision (FID).

Stabroek development plan includes 5 FPSOs with a plateau production gross capacity of above 750K barrels of oil per day targeted by 2025.

The resource estimate on the block is now above 8 BBoe.

CEO, Darren Woods, stated:

Guyana remains an integral part of our long-term growth plans and as such is a high priority,

Stabroek block: Three phases
1 – Phase 1: Liza-1 Has Been Producing Since December 20, 2019

On December 20, 2019, Exxon Mobil announced that oil production commenced from the Liza field offshore Guyana and less than five years after the first discovery the Liza-1 well, which is above the industry average for deepwater developments. Production from phase I of the Liza field is expected to reach 120K Boep/d these coming months.

On June 22, 2020, XOM was forced to curtail production temporarily in Liza-1 field by 50%, on June 19, 2020, “to curb gas flaring after problems with gas reinjection equipment were detected.” Production is now ramping up.

2 – Phase 2: The Liza 2 in Mid-2022

The development includes a second FPSO, Liza Unity, designed to produce up to 220K Boep/d.
Liza phase 2 is comparable to Liza phase 1, but with six drill centers with around 30 wells, including 15 oil-producing wells, nine water injection wells, and six gas injection wells.
On September 27, 2019, the second FPSO had been ordered and was called the Liza Unity for the Liza phase 2 in 2022.

“The FPSO is designed to produce 220,000 barrels of oil per day, to have associated gas treatment capacity of 400 million cubic feet per day and water injection capacity of 250,000 barrels per day. The FPSO will be spread moored in water depth of about 1,600 meters and will be able to store around 2 million barrels of crude oil.”

3 – Phase 3: The Payara phase, on-line by 2024

On October 2, 2020, Exxon Mobil made a final investment decision(FID) for the Payara field, following the receipt of Guyana government approvals for the development plan on September 25, 2020. Phase 3 is called the Payara with a start-up delayed to 2024:

The Payara development plan will use the FPSO, named Prosperity; it is expected to produce 220K Boep/d by 2024.
The development is similar to the Liza phases 1 and 2. Payara counts ten drill centers with 41 wells — including 20 production wells. The rest is water injection and gas injection wells.
The Payara development startup is anticipated to be 2024.
The development of the field is expected to cost $9 billion and have a resource base of 600 million barrels of oil equivalent.

On October 1, 2020, TechnipFMC (NYSE:FTI) announced that it had won a sizeable subsea contract from Esso Exploration and Production Guyana Ltd., ranging in value from $500 million to $1 billion.

TechnipFMC will manufacture and deliver the subsea production system for the proposed Payara project in the Stabroek Block offshore Guyana. The system will comprise 41 enhanced vertical deep water trees and associated tooling, six flexible risers and 10 manifolds as well as associated controls and tie-in equipment.

Exxon Mobil and the entire oil industry suffer an unprecedented bearish cycle that may extend into 2021. Among the Oil supermajors group, XOM underperformance is not specific to the company.

Guyana close to deal with Exxon for Payara development

Sep. 25, 2020 : Carl Surran, SA News Editor

Guyana is near a deal with Exxon Mobil to approve the Payara project, after the company committed to stricter environmental restrictions on gas flaring and wastewater.

“We are almost in the final lap to having a workable agreement for both sides,” Natural Resources Minister Vickram Bharrat said.

Exxon and consortium partners Hess and CNOOC, expect the Payara project in the offshore Stabroek block eventually will produce 220K bbl/day of crude.

The potential breakthrough on Payara would come after months of government review, delayed in part due to a rigged March election and transfer of power in August.

Exxon warned the delays put its plans to bring the project online in 2023 in jeopardy.

ExxonMobil extends Noble drillship charter

10/08/2020

ExxonMobil has awarded Noble Corp. plc’s ultra-deepwater drillship Noble Tom Madden a long-term contract extension for work offshore Guyana

LONDON – Noble Corp. plc’s ultra-deepwater drillship Noble Tom Madden has received about 6.5 years of additional contract term under the commercial enabling agreement (CEA) with ExxonMobil for work offshore Guyana.

The Noble Tom Madden was previously contracted until mid-February 2024, and the additional term will extend the rig contract to mid-August 2030.

The rig day rate will be updated at least twice per year subject to a scale-based discount and performance bonus under the CEA which also provides ExxonMobil the flexibility to transfer awarded term between the Noble Don Taylor, Noble Bob Douglas, Noble Tom Madden, and Noble Sam Croft.

Robert W. Eifler, President and Chief Executive Officer of Noble Corporation, was keen to note that his company is extremely pleased to further its relationship with ExxonMobil and their partners offshore Guyana. Eilfer said that the award demonstrates the capability of the Commercial Enabling Agreement to align the interests of Noble and ExxonMobil while continuing participation in one of the world’s premier offshore exploration and development opportunities.

In spite of the economic pains brought on by COVID-19, Noble remains one of the leading offshore drilling contractors for the oil and gas industry. It owns and operates one of the most modern, versatile and technically advanced fleets in the offshore drilling industry. It also performs, through its subsidiaries, contract drilling services with a fleet of 24 offshore drilling units, consisting of 12 drillships and semisubmersibles and 12 jackups, focused largely on ultra-deepwater and high-specification jackup drilling opportunities in both established and emerging regions worldwide.

Gas- to- shore project

October 13, 20

Payara permit provisions a “good sign”

With one of the highest electricity costs in the region, Americas Market Intelligence oil and gas expert Arthur Deakin, agrees that the ambitious gas to shore energy project will be crucial for the energy sector. Breaking dependence on heavy fuel oil (HFO) by integrating renewable energy into the grid is essential to lowering energy costs.

“I think the gas to shore project that they’re contemplating now from the associated natural gas coming from the Stabroek Block, developing that pipeline to transport that natural gas into a state-of-the-art pipeline, is going to be very important to diversifying the energy grid.”
“Guyana .. is very dependent on importing heavy fuel oil, which makes its electricity cost one of the highest in the region. So just by using this resource which will be available on extraction, will be fundamental to lowering energy costs and making the energy system more reliable.”

The analyst warned that while natural gas is a good solution, it is not the only solution. Government will have to keep developing other renewable energy solutions.
Having issued permit licences for the Payara Development Project, Vice President Bharrat Jagdeo announced that government will turn its attention to negotiating the gas to energy project.

Guyana is generating at nearly 17 to 20 cents per kilowatt/hour. The project could cut the cost of electricity by more than half. A team will start negotiations on the gas to energy project, expected to be completed by 2023. To further push this initiative, it has stipulated stiff fines and penalties in the Payara Licence against flaring of excess natural gas.

Exxon said that the gas for project is available. Estimates put the figure required at 30 to 35 million cubic feet of natural gas.  Rystad Energy indicated that a little less than 20 per cent of the 1.8 billion Barrels of Oil Equivalent (BOE) discovered last year was gas. The Haimara discovery holds 207 feet of high-quality gas condensate sandstone reservoirs.

For political reasons, the deposed regime stymied progress on the gas to shore project amid proposals for natural gas and liquid petroleum plants, including the pipe bringing the gas onshore at a location along the East Coast of Demerara (ECD) and integrating the power into the Guyana Power and Light (GPL) grid.

Payara
Deakin praised the environmental provisions within the Payara licence as a positive step.

“The fines for long-term flaring, .. that’s a good sign. Testing of the water before it’s discharged into the ocean is another good sign of greater consciousness to the environment.”
“I think that the $400,000 for annual auditing of the operations .. that’s very fundamental for keeping transparency at the forefront of the operations and ensuring that the money is being spent and managed wisely.”

The deal was signed when ExxonMobil was under time constraints to get its Payara permit by September to make its Final Investment Decision (FID) and secure funds. Deakin lauded the swiftness with which the Government secured an improved permit, as a good indication of the ability to deal with investors and high stakes investments.

“.. overall it was a good deal. And it’s important because there was already a long delay in approving that licence. So, approving it with somewhat of speed .. shows competence on behalf of the PPP. It shows that they are willing to move forward with important projects for Guyana. And it reflects to other investors and companies interested in operating in Guyana that this Government means business and is willing to sit down and negotiate.”

Comparison with the Payara licence and the licence for Liza Field 1 and 2 shows that the government secured improved terms.  Improvements include stiffer fines for flaring, requiring Exxon to supply daily, disaggregated production statements for both oil and gas and the requirement for Exxon to submit its development and operating cost estimates for the Payara field within 90 days from the date the licence is issued.

The licence also includes provisions for safety and compliance audits paid for by Exxon, which will evaluate management of waste for which Exxon will pay US$400,000 annually.
Another new provision is the requirement for Exxon to use a capping stack, within a specified period, in case there is a well blowout. A capping stack is a large-scale piece of sub-sea equipment which oil companies keep onshore, ready to deploy to essentially plug the leak of oil.

US$50 million power plant on track for April 2021 completion

 October 10, 2020

During a tour of the US$50M, 46.5-megawatt (MW) power plant at Garden of Eden, East Bank Demerara, Prime Minister, Brigadier Mark Phillips said Guyana Power and Light Incorporated (GPL) will be closer to providing more reliable electricity. The plant is on track for its April 2021 completion.

Wartsila is constructing the state-of-the-art power plant which will be dual fuel energy, utilising heavy fuel oil and natural gas simultaneously.

“With a project like this and many projects that we have planned, we will reach to a point where electricity will be 100 per cent reliable and there will be no power outages.”

While the project is massive, the Government plans to bring natural gas to shore which will revolutionise energy generation.

“By the estimations of the studies done so far, the gas-to-shore project itself will increase by 200 megawatts to what we are getting now and by December 2024, we will have that project completed in Guyana.”

Deputy Chief Executive Officer – Strategic Operations, Samaroo Ramtahal, said the project at Garden of Eden has four components. The first component, which entails the construction of the engines by Wartsila, is about 60 per cent complete, and is expected to be in Guyana by mid-November. The second component entails the construction of below zero civil works. This segment is about 36 per cent finished and will be completed when the engine is on the ground for commissioning in April 2021.

“The commissioning process is actually a lengthy process and the commissioning will start from February 2021. So, there will be testing from February to the end of April.”

The third phase is the construction of the above ground civil works which will start this month with a scheduled completion date of April 2021. Component four deals with transporting the transmission, transformers and other pieces to the project.

“We are about two per cent behind the project schedule, which is approximately a week delay and some of that is because of the COVID-19 restrictions, staffing and bad weather. So, we are very much on track to deliver this project for April of next year.”

The current engines at the power plant at Garden of Eden were constructed by Wartsila 26 years ago and have a capacity of over 22 MW.

Significant increase in electricity generation

October 9, 2020

– Gas to energy project set for 2024 completion
– 46.5-megawatt power plant to be completed by end of April 2021

During a tour of the Guyana Power and Light (GPL), Garden of Eden Power Station, where he inspected the progress of a 46.5-megawatt power plant being built by Wärtsilä, the Prime Minister, said that Guyana can expect to benefit from an exponential increase in electric power over the next four years.

The project is expected to be completed by the end of April 2021 at a cost of approximately US$52 million.

Guyana can also expect to benefit from the generation of 200 megawatts of power with a gas to energy project which is expected to be completed by December 2024. The country’s peak demand for power at this time is 125 megawatts.

The Government will continue to support the strategic development of GPL, to the benefit of all.

“I want to compliment the CEO, Deputy CEO and all the other staff of GPL for the hard work that they are putting in 24 hours a day to keep the lights on in Guyana. With a project like this and many projects that we have planned for the future, we will reach to a point where electricity will be 100 percent reliable and there will be no power outages”.

The new power plant is a modern dual fuel facility that will be able to utilise heavy fuel oil and natural gas simultaneously.

Gary Hall, Divisional Director, Administration of Power Producers and Distributors limited (PPDI), said there has already been a significant overhaul to the power generation system for 2020, which will result in a stable supply of power by December.

“We have had to do eleven overhauls this year… we have at least three to finish before the end of the year, all of our maintenance activity should be finished on or before the first week of December, so we should have full generation availability”.

 Cost of energy to fall at least 50 percent in five years

October 7, 2020

– substantial upgrades to energy sector
The Prime Minister told a Ministerial Roundtable of the International Energy Agency (IEA) and the Latin American Energy Organisation (OLADE) that Government is committed to providing stable and reliable energy for domestic and commercial purposes with the aim of reducing costs by at least 50 percent over the next five years. High on the agenda of the Government is to significantly upgrade the energy sector.

“[We] will pursue a programme with an energy mix that includes hydropower, natural gas, solar and wind, which will lead to more than 400 megawatts of newly installed capacity for residential and commercial users over the next five years, and a reduction in the cost of energy by at least fifty percent,.”

Government will take urgent action to improve and upgrade the transmission and distribution of energy (the national grid). In keeping with the theme: “Leaving no one behind – how to build inclusiveness into sustainable recovery,” Guyana’s policy to develop a low carbon and climate resilient economy is outlined in the its Low Carbon Development Strategy (LCDS), which mandates maintaining low deforestation rates and the sustainable use of resources over generations. Government is committed to exploring all possibilities for the use of natural gas for electricity production.

The completion of the Amaila Falls Hydroelectric project, the expansion of the Hinterland Electrification Programme to benefit 25,000 households and the development of mini-hydropower grid-tied systems in towns such as Lethem and Bartica, are also on the agenda.

“These actions will lead to a modernised energy sector with an increased mix of clean and renewable resources that provides affordable, reliable and clean energy services for all in the most sustainable manner.”

Latin America and the Caribbean can ensure energy access and inclusiveness as an integral part of recovery measures, through improved data collection and knowledge sharing, support for investment promotion, access to grant funding and concessional financing, and the sharing of policies and programmes among other initiatives.

Head of the Energy Division, International Development Bank, Ariel Yépez, hailed Guyana’s energy agenda as ambitious.

“We are glad to hear that you are working on a huge commitment to reduce the energy access gap … congratulations.”

The ILA-OLADE Ministerial Roundtable is a virtual high-level dialogue in collaboration with the Inter-American Development Bank (IDB), aimed at creating “insights for defining Latin America’s regional energy agenda for a post COVID-19 era.”

The event involved the participation of ministers from Latin American countries, leaders of international organisations, and officials from the International Energy Agency (IEA).

Ministers and representatives with responsibility for Energy from Guatemala, Honduras, Belize, Argentina, Ecuador, Brazil, Chile, Costa Rica, Panama and Colombia were in virtual attendance. The outcome of the meeting is expected to form part of the discussions in next month’s OLADE’s 50th Meeting of Ministers.

ExxonMobil to follow best practices on decommissioning

Oct 10, 2020

Near to the end of life of an oil project, the operator engages in a process of decommissioning, with plugging of wells and removal of equipment and other   materials attached to the sea floor for extraction of oil. The cost of this activity can run into billions of dollars for the operator and proper safety standards guide the process to prevent environmental damage. ExxonMobil will adhere to international best practices regarding decommissioning for the Stabroek Block, as outlined in the provisions of the Production Licence approved for Payara.

The Minister and his representatives along with ExxonMobil are expected to meet and discuss the principles to be addressed in the Stabroek Block Decommissioning Security Agreement 30 days after the licence has been awarded,, from September 24, 2020.

Thirty days following the discussion between the parties, ExxonMobil will submit to the Minister, a draft Stabroek Block Decommissioning Security Agreement, containing information on the timely posting of security for the anticipated costs for the safe removal of infrastructure from the Stabroek Block.

The costs are expected to follow the United Kingdom Industry Model Form Decommissioning Security Agreement or be consistent with international best practice standards. One month after receiving and reviewing this document, the Minister is expected to provide ExxonMobil with feedback and host discussions. No later than March 31, 2022, ExxonMobil is expected to present the Minister with the final agreement to be signed at least 21 days after review by the Minister.