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New discovery offshore Guyana
at Longtail-3 on Stabroek block

Platts

Liza Phase 2 production startup slated for early 2022

- Six drillships active in the Stabroek block
- Liza crude exports heading to China, Netherlands

By Jordan Blum /Platts

HOUSTON
Petroleumworld 06 14 2021

ExxonMobil said June 9 it made a successful crude oil discovery at its Longtail-3 well offshore of Guyana for its 20th total find from the Stabroek Block since 2015.

ExxonMobil, along with its partners Hess Corp. and CNOOC, increasingly have turned to the offshore waters of the small South American nation for future crude oil development for years to come. Adjacent to oil-rich nations such as Brazil and the economically struggling Venezuela, Guyana is a nascent energy nation gearing up for its own oil boom.

While ExxonMobil did not elaborate on the size of the latest discovery's oil and gas reserves, the Texas-based energy giant said drilling at Longtail-3 encountered 230 feet of net pay, including newly identified hydrocarbon reservoirs below the original Longtail-1 discovery intervals.

The well is located approximately two miles south of the Longtail-1 well. It was drilled in more than 6,100 feet of water by the Stena DrillMAX rig.

"Longtail-3, combined with our recent discovery at Uaru-2 (in April), has the potential to increase our resource estimate within the Stabroek block, demonstrating further growth of this world-class resource and our high-potential development opportunities offshore Guyana," said Mike Cousins, ExxonMobil senior vice president in a statement.

The potentially prolific Stabroek block spans 6.6 million acres offshore of Guyana.

The latest find would add to the estimated recoverable reserves of more than 9 billion barrels of oil equivalent discovered within the block, according to the development partners.

ExxonMobil has said it could potentially and eventually install as many as 10 FPSOs in the Stabroek block.

ExxonMobil initiated first oil production in late 2019 from the first phase of its Liza development, which was the first discovery made six years ago.

After producing at a nameplate 120,000 b/d from December 2020 through March 2021, production from the floating, production, storage and offloading vessel Liza Destiny was curtailed for several days in mid-April

The Liza Destiny was producing a nameplate 120,000 b/d for most of this year, although production was curtailed in April and May when a minor leak was detected in the flash gas compressor discharge silencer. Hess has said production would remain at 100,000-110,000 b/d until repairs are completed later this summer. The aim is to expand to 1 million b/d in just more than a decade and continue to grow from there.

S&P Global Platts Analytics expects Guyana crude production to rise to 1.4 million b/d by 2040.

Liza exports mostly shipped to Asia, especially China, and the US last year, according to Kpler data. However, since late last year, more of the shipments went to Panama, although those volumes are believed to be moving from there to China and other Asian nations. Exports to the US declined this year, but they have picked up to Europe, especially the Netherlands, Kpler data shows.

Two 1-million barrel cargoes were loaded offshore Guyana in May, each of which was sent to the Trans-Panama Pipeline Atlantic terminal. Kpler data shows crude regularly being exported from the Pacific terminal to Asia.

Spot market Liza crude price differentials have tightened recently. Liza was assessed at a 73 cents/b discount to the Dated Brent strip June 8, up from a $1.05/b discount in early April, S&P Global Platts assessments show.

Upcoming plans

ExxonMobil and its partners now have six drillships operating off of Guyana, including two added in the first quarter of 2021.

As the company advances its 15-well campaign in the offshore block, the DrillMAX rig next will move to Whiptail-1, while the Noble Sam Croft supports development drilling for Liza Phase 2.

With ExxonMobil's planned Liza Unity vessel, the $6 billion second Liza phase is expected to come online in early 2022. The project is expected to churn out up to 220,000 b/d. A $9 billion third phase, called Payara, is slated for 2024 with the same 220,000 b/d production estimate with the Prosperity FPSO.

A fourth project, Yellowtail, is slated for an expected startup in late 2025, assuming Guyana's government approves the project and a final investment decision is taken by the partners.

The project would develop the Yellowtail and Redtail fields about 19 miles southeast of the Liza developments.

In other drilling activity nearby, ExxonMobil said the Mako-2 evaluation well confirmed the quality and thickness of the reservoir. When integrated with the previously announced discovery at Uaru-2, ExxonMobil said, the data supports a potential fifth FPSO in the area east of the Liza complex.

The Koebi-1 exploration well in the Stabroek block has shown evidence of non-commercial hydrocarbons, ExxonMobil said.

ExxonMobil and its partners are facing criticism in Guyana over environmental and financial concerns.

"Citizens of Guyana are starting to push back on future oil and gas development by filing a constitutional case against the production of fossil fuels. The concerns are that future oil and gas development violates the citizen's rights to a healthy environment along with climate change concerns such as flooding and rising seas," said Matt Andre, Platts Analytics analyst.

"The financial concerns stem from the country's contracts with oil and gas companies that stipulate the country covers most of the upfront exploration and development costs which could grow to $20 billion by 2025. This would result in Guyana being fiscally reliant upon Exxon's production of crude oil."

______________

By Jordan Blum , edited by Jeff Mower from S&P Global Platts

spglobal.com 06 10 2021
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