Oil and gas exploration activities offshore Guyana have an 80 per cent success rate and according to President Dr Irfaan Ali, all signs point to the tripling of oil production by next year, thus signalling continued growth in the sector.
On Monday, President Ali used the occasion of his address to the Harvard Business School to market opportunities in Guyana. When it comes to the oil and gas sector, the President explained that Guyana has had an 80 per cent success rate when exploring for oil.
“The petroleum sector. To date, the rate of success is roughly 80 per cent, with 26 commercial discoveries. By 2025, the operating cash flow of total investments is expected to reach $3.5 billion. These discoveries are highly resilient.”
“Approximately 10 per cent return at US$35 per barrel. The first well, Liza 1, has achieved nameplate capacity. Liza phase 2 is on schedule for a start-up in 2022. The second FPSO (Floating Production, Storage and Offloading vessel) has already arrived. Overall, six drill ships are operating offshore Guyana,” President Ali said.
According to Ali, oil production is being measured at approximately 100,000 barrels per day (bpd) currently. But by the second half of 2022, production levels are expected to increase to 320,000 barrels.
“We anticipate by the end of 2024, when Payara comes on stream, production will reach 550,000 barrels per day. And in 2026, surpass the one million barrels per day following the development of Yellowtail. In the Canje and Kaieteur Blocks, quality reservoirs have been identified. Liza phase 1, 2, and Payara development break-evens are at US$35 and US$25 per barrel,” the President said.
Meanwhile, during the question-and-answer phase, President Ali was asked by the academic audience about the measures that will be in place to prevent corruption. In response, Ali pointed to the Natural Resource Fund and the Petroleum Commission, all initiatives that will be implemented to insulate oil funds and critical decisions on the oil sector, from the politicians.
It has been estimated that Guyana, which is already considered one of the world’s hottest new oil hotspots, could well be sitting on 20 billion barrels of oil equivalent in just the Stabroek oil block. At least, this is according to projections from analyst Americas Market Intelligence (AMI).
International giant ExxonMobil has 25 oil discoveries as the operator in the Stabroek Block. In all, six ExxonMobil-operated Guyana producing projects are predicted by 2027, with plans for an eventual 10 in total.
Besides the Liza 1 field, ExxonMobil already has approval from the Environmental Protection Agency (EPA) for two other projects; the Liza 2 and Payara developments. Yellowtail, their fourth project, has an anticipated start date of late 2025 pending governmental approvals and project sanctioning.
Developmental drilling has already started on the Liza Phase 2 project. Back in May 2019, ExxonMobil subsidiary Esso Exploration and Production Guyana Limited (EEPGL) was granted approval by the Environmental Protection Agency (EPA) to go ahead with its Liza Phase 2 Development offshore Guyana.
The oil company had said that the project will have the capacity to produce 220,000 barrels of oil per day. ExxonMobil had also revealed that the Liza Phase 2 development was funded at the cost of some US$6 billion, including a lease capitalisation cost of approximately $1.6 billion, for the Liza Unity FPSO vessel. For the Phase 2 Development, six drill centres were planned, along with approximately 30 wells – 15 productions, nine water injection and six gas injection wells.
The US$9 billion Payara development, the third development, will meanwhile target an estimated resource base of about 600 million oil-equivalent barrels and was at one point considered to be the largest single planned investment in the history of Guyana.
The Yellowtail development, which will be oil giant ExxonMobil’s fourth development in Guyana’s waters, will turn out to be the single largest development so far in terms of barrels per day of oil, with a mammoth 250,000 bpd targeted.
