EXXONMOBIL announced a promising new discovery last week in the southeast area of the Stabroek Block. Media reports have rightly cited the Exxon discovery, made at the Longtail-1 well, as more proof that Guyana’s oil future could extend well beyond the initial production from the Liza Phase 1 development.

Exxon and its partners found approximately 256 feet (78 m) of “high-quality, oil-bearing sandstone reserves” at a depth of 18,057 feet (5,504 m). Combined with the nearby Turbot discovery, Exxon is estimating that this new discovery raises the total estimated recoverable reserves in the southeastern area of the Stabroek Block to 500 million Barrels of Oil Equivalent (BOE).

Now, the question is: What does that mean, and, more importantly, what does it mean for Guyana?
First, let’s define a few oil industry terms that are important to be understood in evaluating the significance of the discovery. Barrels of oil equivalent (BOE) is a common industry measurement that includes natural gas and other petroleum liquids, as well as crude oil.

“Estimated recoverable reserves” doesn’t mean all the oil that’s there; it means the oil that would be cost-effective to extract, depending on the price of oil. Higher future oil prices could potentially mean that more reserves become economically “recoverable”.
500 million BOE is a lot of oil on its own; and when added to the huge discoveries at the Liza and the nearby Payara and Ranger discoveries, Guyana’s offshore enters the realm of a globally significant energy provider. With all areas included, the Stabroek Block now has a total estimated recoverable resources of well over 3.2 billion barrels.

While this new discovery is exciting, the well-established finds at the Liza site will be where Guyana’s first oil is extracted in 2020, and the next two phases of production will most likely be in or near the same area.
In terms of its role in Guyana’s oil future, the Longtail discovery is still a bit of a question mark. It points to promising reserves in the southeastern part of the Stabroek Block, but considering the strong progress already made in drilling wells at the much richer Liza find, it likely won’t make much of a difference in the next few years.

Widely-cited production estimates from Norwegian researchers at Rystad Energy, an energy consulting firm, put potential Guyanese government revenues from oil at around US$1B annually during the 2020s, but that still only includes projections for the Liza Phase 1 and potential Liza Phase 2 and Payara developments.

Any new production from the Stabroek Block’s eastern areas would have to be added on to the 600,000 barrels per day of production that Rystad has predicted for the mid-2020s; and without more exploration, it’s hard to know exactly how much that production might be.

But the Longtail-1 find does heighten the excitement that now surrounds Guyana’s energy future, and Exxon apparently considers the discovery promising enough to now bring in a second exploration ship in addition to the Stena Carron, which drilled the exploratory well.
This will bring the total number of Exxon vessels in Guyana to three, since the Noble Bob Douglas is already on site and drilling the 17 development wells that will form the Liza Phase 1 project, which will connect to a floating production, storage and offloading (FPSO) vessel above them.

These massive floating production facilities can take in, store, and process oil, up to 120,000 barrels per day, in the case of the planned FPSO for the Liza Phase 1 development. They host hundreds of crew members, and normally require substantial logistical support from onshore companies and contractors.

For Liza Phase 2, Exxon has announced plans to add a second FPSO, substantially increasing the number of jobs and the amount of oil to be produced. More FPSOs are definitely possible as the size of Guyana’s resource base grows with additional discoveries.