New Discoveries

EARLY this month, the Exxon-led consortium drilling for oil in the Stabroek Block announced more good news for Guyana—two additional discoveries that could add substantially to Guyana’s already impressive series of oil finds.

These discoveries are the 11th and 12th made in the offshore Stabroek Block so far, cementing Guyana’s place as a rapidly developing industry success story. So far, the success rate for commercial oil and gas finds has been more than 80 per cent, compared to 20 per cent in other frontier exploration regions which don’t have any history of oil production.

In a press conference which addressed the new finds, Department of Energy Director, Dr. Mark Bynoe, noted that these discoveries at the Tilapia-1 and Haimara-1 wells closely follow the find in December at the Pluma-1 prospect that pushed Guyana’s reserves to over 5 billion barrels. Although the estimated reserves of these new finds haven’t been released yet, they could add substantially to that figure.

Tilapia-1 was the fourth find in the Turbot area, 3.4 miles west of the older Longtail-1 find and near the Turbot and Pluma discoveries. Drill ships found 93 metres of oil-bearing sandstone at a depth of more than 5700 metres in this increasingly important corner of the Stabroek Block.

Haimara-1 contained 63 metres of “high-quality gas condensate bearing sandstone” in an area farther to the east of the Pluma well that is being closely studied by the consortium for further development.

Dr. Bynoe noted that these discoveries continue to de-risk the deepwater areas off the coast but until full production commences, and more finds are made outside the Stabroek, the area will remain relatively risky. Drilling efforts outside the Stabroek are still in their infancy, but UK-based Tullow Oil has indicated that it plans to drill a new well on the Orinduik Block later this year.

The series of discoveries, of which these are just the latest, helped propel unusually strong growth in Guyana last year.

According to a new report from the Caribbean Development Bank (CDB), Guyana grew at 3.4 per cent—well above the regional average of 1.9 per cent and trailing behind only three countries: Grenada, Antigua, and Barbuda. Guyana’s growth is especially impressive since much of the growth in Antigua and Barbuda was a consequence of a one-time construction boom caused by the recovery from 2017’s Hurricane Irma.

The Bank attributed this increase to a boom in construction and investment from the energy industry to prepare the country for first oil production in 2020. The involvement of local companies has been rapidly accelerating with several joint ventures announced in the past few months and growing interest from the Guyanese business community.

The interest in development and investment will hopefully continue to accelerate with Liza Phase 1 going into production next year, followed by Liza Phase 2. As has been noted before, Guyana may eventually see as many as five floating production, storage, and offloading vessels in operation, which could produce more than 750,000 barrels per day on the Stabroek. Offshore operations of this scale will entail substantial investment into shore facilities, support vessels, and contractor services.

Recent reports from international oil and gas analysts at Wood Mackenzie have predicted that Guyana will easily have a place within the top four oil producers in Latin America and the Caribbean by the mid-2020s and could potentially even surpass Mexico and Venezuela if their production continues to decline. That would put Guyana’s production in the number two spot just behind Brazil and establish Guyana as a major international oil producer. This outlook closely matches the projections made by the CDB.

According to Exxon executives quoted in media reports, the next target for the drillship, Tom Madden, will be the Yellowtail prospect near the Tilapia-1 discovery. Exxon-contracted vessels are currently doing 4-D seismic surveys in that area to get a better picture of what the sub-sea geology might look like.

According to reports from Wood Mackenzie, there are still around 17 target sites left to drill on the Stabroek Block, which could contain significant additional reserves and there is always the possibility that Exxon’s renewed sub-sea seismic exploration campaign finds more locations for exploratory drilling and, hopefully, more opportunities for Guyana.

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