Opportunities await Guyana in 2022
AS Guyana heads into a promising new year, it is important to look back to understand the strong foundation the country has already built and how this will continue to support exploration, discovery, and development in 2022.
Since 2015, 26 oil discoveries have been made in Guyana, mostly located in the Stabroek Block. Within the next few years, operating companies predict that many additional commercial discoveries could be made in the Stabroek and elsewhere, especially as wider drilling efforts in new blocks are approved and exploration continues in established ones.
Guyana is currently producing about 120,000 barrels of oil equivalent per day with the Liza Destiny floating production storage and offloading (FPSO) vessel, which came online in late 2019. In November 2021, the government announced that the country successfully completed its fifth and final oil lift for the year, its ninth lift overall. This is an excellent jumping off point as Guyana looks forward into the next few years, and is already thinking about adding more production to its portfolio.
Due to discoveries throughout 2021, Guyana’s reserves are now estimated to stand at more than 10 billion barrels of oil equivalent. In the second half of 2021, ExxonMobil discovered significant oil reserves in the Whiptail-1&2, Pinktail, Turbot-2 and Cataback wells in the Stabroek Block, adding about one billion barrels of oil equivalent to Guyana’s overall reserves. Most significantly, Guyana’s Yellowtail field will be a focal point in 2022. While this area’s FPSO is not expected to come online until 2025, the operating company has plans to continue drilling new wells and increase exploration efforts near the Yellowtail-1, Yellowtail-2, and Redtail wells, where oil has already been found.
In late October 2021, the Liza Unity, Guyana’s second FPSO arrived in the country’s waters. This FPSO will also service the Liza field and has a production capacity of 220,000 barrels of oil per day, more than doubling Guyana’s current output. The Unity is expected to begin production early in 2022, with a slow ramp up to full production by the end of the year.
The Stabroek Block operating company, ExxonMobil, has already commissioned the country’s third FPSO, which will service the Payara project, which reached a final investment decision in late 2019, and will be operational by 2024. Finally, ExxonMobil is in talks with SBM Offshore for the construction of a fourth FPSO that will service the Yellowtail fields and is expected to come online in 2025 with a production capacity of 250,000 barrels per day. These four FPSOs will serve as the foundation for Guyana’s longer-term production as operating company ExxonMobil has stated it hopes to install up to ten FPSOs to develop current resources.
With the introduction of additional FPSOs, consultancy Wood Mackenzie expects Guyana to reach production levels of 1.1 million barrels of oil per day by the end of the decade, which will make Guyana only the eleventh country in history to pass the one-million-barrel per day production milestone. And with recent and ongoing exploration and new discoveries, this goal does not seem far from reality.
Over the next four years, ExxonMobil alone expects to drill 37 new wells in Guyana’s Stabroek Block, which experts say will more than double estimated reserves. As of now, efforts are focused on exploration in the Fangtooth and Lau Lau-1 wells. While efforts remain focused on the Stabroek Block, which has already proven lucrative, the Canje, Kaieteur, Orinduik, Kanuku, and Demerara Blocks will also experience some action.
Spain’s Repsol plans to drill the Beebei-Potaro well in the Kauku Block in mid-2022, while Exxon plans a campaign in the Canje Block in 2022 which could potentially boost oil reserves. CGX Energy also recently announced a US$85 million investment in the exploration of the Kawa-1 well in the Corentyne Block.
As Guyana looks to 2022, the future is bright. In addition to ongoing exploration and new investment from current production companies, the government recently announced that it would hold an auction for additional offshore blocks in the third quarter of 2022.
As Vice President Bharrat Jagdeo said in August, the country is pursuing a strategy of “getting as much oil out of the ground as quickly as possible,” while demand and prices remain high. As producers across the globe ramp up exploration and production efforts, Guyana has successfully positioned itself to run among the big players in international energy markets.