THE Environmental Protection Agency (EPA) announced, on July 2, that it granted the ExxonMobil Guyana-led consortium approval for a 35-well exploration and appraisal drilling campaign in the Stabroek Block.

With drilling expected to begin by third quarter this year, the consortium has permission to explore offshore with a combination of well types beginning in 2023 and concluding in 2028, or potentially sooner. This is the single largest drilling campaign ever approved in Guyana.

The EPA’s decision comes after nearly a year of careful assessment. The agency announced last July it would require an Environmental Impact Assessment (EIA) to assess any cumulative effects from the proposed project and surrounding activities in the block.

Prior to issuance of the approval, the law required the Environmental Assessment Board (EAB) to ensure that both the Environmental Impact Statement and EIA submitted by the companies were in accordance with the Environmental Protection Act. In its statement, the EPA said that the campaign could be conducted in “a manner that avoids, prevents and minimises any adverse effects which could result from the activity.”

While sites for the 35 wells are yet to be finalised, ExxonMobil Guyana said, “The project is being developed to discover new and re-evaluate existing recoverable hydrocarbons from reservoirs in the Stabroek Block, thereby enabling potential future development projects.”

This is important as estimates are often based on the best available data at the time of drilling. Further drilling could show additional resources in previously assessed areas in the Stabroek Block and identify new resources in frontier areas that remain less explored.

The wells campaign will include appraisal wells and exploration wells. Appraisal wells are drilled to establish the extent and size of a petroleum deposit that has already been discovered and an exploration well is drilled to establish the existence of a possible petroleum deposit or to acquire information to map an established deposit.

Four areas of interest have been identified by the company and, while exact locations are unknown, it is expected to be mostly in the centre and south-eastern sections of the block, home to Liza, Payara and Yellowtail discoveries. These prolific discoveries have put Guyana on the map and in the lead for offshore discoveries over the past few years, according to Rystad Energy.
Guyana’s Stabroek remains the only producing block, with proven reserves of about 11 billion barrels of oil resource. Analysts estimate that total reserves could be almost double that number, but it will likely take substantial investment and exploration to uncover them.

While the Stabroek Block has boasted an impressive series of discoveries, it took decades of initial exploration and billions of US dollars in investments to open that door. The reserves that have been found are in “ultra-deepwater” areas that require sophisticated operations and heavy investments to develop.

Many areas offshore that are yet to be explored are even deeper and remain high-risk for investors.

Although Guyana’s reserves are impressive for a previously non-producing nation, they are just a drop in the global bucket. A recent analysis from Rystad Energy found that global recoverable oil reserves saw an increase of 52 billion barrels from 2022 and now stand at more than 1.6 trillion barrels.

Of global recoverable oil reserves, mega-producer Saudi Arabia and the United States account for 250 and 200 billion barrels respectively. Although Guyana lags far behind these mammoth numbers, it will still hold the title of one of the world’s largest per capita oil producers in the next few years.

With Guyana expected to offer up to 14 blocks in the upcoming oil block auction, proven reserves will hopefully rise quickly in the years to come and continue to generate significant revenue for the country.

Already, the two producing projects in the Stabroek Block, Liza Phase One and Liza Phase Two, generated close to US$2 billion for the Natural Resource Fund since production started, with a record GY$240 billion in 2022, a 200 per cent increase in royalty payments and 13 lifts of profit oil barrels.

Guyana has demonstrated that its regulators have the capacity to safely advance projects on a timely basis while adhering to the strictest international standards and best practices. The newly sanctioned campaign is expected to yield additional positive results for Guyana, and the EPA should be standing by to ensure that the interests of the people and the environment are protected in the process.