– recoverable resources move to 9 billion barrels of oil equivalent
By Navendra Seoraj
RECOVERABLE resources at the Stabroek Block, offshore Guyana, have moved from eight billion barrels of oil equivalent (BOE) to nine billion BOE, a positive sign for the fledgling petroleum state, Guyana, which is still realising its full potential in the oil and gas sector.
This increase in the estimated “gross discovered” recoverable resources, was announced by Hess, a 30 per cent shareholder in operations at the Stabroek Block. ExxonMobil affiliate Esso Exploration and Production Guyana Limited holds 45 per cent interest in the Stabroek Block, while CNOOC Petroleum Guyana Limited, a wholly-owned subsidiary of CNOOC Limited, holds 25 per cent interest.
There have been 18 discoveries offshore Guyana since May 2015, with the most recent discoveries being made at the Yellowtail-Two and Redtail-One wells.
Hess, in its third quarter report for 2020, said Guyana has sanctioned the development of Payara, the third oil development on the Stabroek Block, which will have the capacity to produce up to 220,000 gross barrels of oil per day (bopd), with first oil expected in 2024. For this, Payara will utilise the Prosperity floating production storage and offloading (FPSO).
The US$9 billion development will target an estimated resource base of about 600 million oil-equivalent barrels. Ten drill centres are planned, along with up to 41 wells, including 20 production and 21 injection wells.
As it is now, according to Hess, at the Stabroek Block, the corporation’s net production from the Liza Field, which commenced in December 2019, averaged 19,000 bopd in the third quarter of 2020.
During the third quarter, the operator, Esso Exploration and Production Guyana Limited, continued work to complete the commissioning of the natural gas injection system that should enable the Liza Destiny FPSO to reach its capacity of 120,000 gross bopd in the fourth quarter.
Phase two of the Liza Field development, which will utilise the Liza Unity FPSO with an expected capacity of 220,000 gross bopd, remains on target to achieve first oil by early 2022.
Despite the positive prospects, Hess Corporation reported a net loss of US$243 million, or US$0.80 per common share, in the third quarter of 2020, compared with a net loss of US$212 million, or US$0.70 per common share, in the third quarter of 2019.
On an adjusted basis, the corporation reported a net loss of US$216 million, or US$0.71 per common share, in the third quarter of 2020, compared with an adjusted net loss of US$105 million, or US$0.35 per common share, in the prior-year quarter.
The decrease in adjusted after-tax results compared with the prior-year period primarily reflects lower realised selling prices and higher exploration expenses, said Hess.
In talking about the way forward, Chief Executive Officer (CEO) of Hess Corporation, John Hess, said: “We continue to execute our strategy and achieve strong operational performance while prioritising the preservation of cash, capability and the long term value of our assets during this low price environment.
“Our differentiated portfolio of assets, including multiple phases of low cost Guyana oil developments, positions us to deliver industry leading cash flow growth and drive our company’s breakeven price to under US$40 per barrel Brent by mid-decade.”
On a national level, it was reported that Guyana is on course to ending 2020 with close to US$200 million (roughly GYD$42 billion) in its Natural Resource Fund (NRF), which has remained “untouched” since its creation in January this year.
These funds, banked in an account at the US Federal Reserve Bank, are generated from the sale of crude oil, which is being produced by ExxonMobil’s Liza Phase One development, offshore Guyana, in the Stabroek Block.
Guyana, new to the oil-and-gas sector, sold its first one million barrels of crude on February 19, 2020, raking in nearly US$55 million. In its second million-barrel sale, the country received US$35 million and US$46 million as proceeds from the sale of its third million-barrel of crude.
Along with these deposits and the US$4.9 million in royalties received from first-quarter gross production and interest, Guyana has over US$140 million in its NRF. The country had agreed to sell its first three cargoes to a trading arm of Shell on a dated ‘Brent’ basis. The oil market is volatile, but Brent price was listed as US$42.94 per barrel of oil on Thursday.
Guyana’s fourth shipment of crude is expected early December and government is working to secure a suitable firm to market Guyana’s crude.
The country is entitled to five crude cargoes for this year, as part of its profit share with ExxonMobil and its joint-venture (JV) partners. This means that with Shell having received its three cargoes, the country can market its crude to another company or location.
“We have a special evaluation team of local and foreign experts, who are looking at those tenders to ensure we have the best suited company to market our oil,” said Minister of Natural Resources, Vickram Bharrat, during a recent interview with the Guyana Chronicle.