New oil finds boost Guyana’s offshore boom

The former British colony of Guyana, a nation whose economy has been hit hard by the pandemic, has become the hottest offshore drilling site in the world. Since 2015, global energy giant ExxonMobil along with its partners Hess Corporation and CNOOC have made a slew of quality oil discoveries in the Stabroek offshore block, which have yielded resources of over 11 billion barrels of oil. . This leads to a massive economic boom for Guyana, which was among the poorest countries in Latin America and the Caribbean. According to the IMF, the gross domestic product of the microstate the product increased by just under 20% in 2021 and is poised for further strong expansion. The sharp rise in oil prices that sees the international community Brent reference up 58% from a year ago to trade at $110 a barrel, coupled with the push by big oil companies to decarbonize their operations, add considerable momentum to the boom. The Guyanese government is should cash in over $1 billion in oil revenues in 2022 which industry consultancy Rystad Energy says will reach $7.5 billion by the end of the decade. This will lead to a huge economic boom which will see Guyana’s economy grow fivefold over this period. Key to this tremendous economic opportunity is the rapid ramp-up of crude oil production, with Exxon estimating that its operations will have the capacity to pump 1.2 million barrels per day by 2027, representing new discoveries of oil. Exxon and its partners in the 6.6 million acre Stabroek Block have made more than 25 quality discoveries, with the crude found being light and sweet with an API of 32 degrees and a sulfur content of 0.58%. The latest discoveries were at the Seabob and Kiru-Kiru wells in the Stabroek block southeast of the Payara project. Exxon also announced that production from the Liza oilfield in the Stabroek block has exceeded its original target of 340,000 barrels per day. Earlier this month, it was revealed that Exxon had filed an application with Guyana’s Environmental Protection Agency to drill 35 exploration and appraisal wells in the Stabroek Block. When the energy supermajor’s exploration success in the block is taken into account with the five discoveries made in the Stabroek block earlier this year, the drilling campaign will make additional discoveries increasing the 11 billion barrels already discovered. This crude oil is also economical to extract. Break even price range from $35 per barrel of Brent for the Liza Phase 1, $25 per barrel for the recently commissioned Liza Phase 2, and $32 per barrel for the 220,000 capacity Payara project barrels, whose production is scheduled for 2024.

While it is the Exxon-led consortium that is key to Guyana’s epic oil boom, which will see the Caribbean country become a top oil producer, other international energy companies are also engaged in drilling oil. ‘exploration. British driller Tullow Oil, which is the operator of the world-class Jubilee field off Guyana discovered in 2007, announcement Repsol, a 37.5% partner, with TotalEnergies holding the remaining 25%, had drilled the Beebei-Potaro well in the Kanuku block. This wild well, which follows the 2020 Carapa medium oil discovery in the block where 13 feet of net oil production has been identified, targets a prospect that Repsol estimates contains around 200 million barrels of oil. raw. The Kanuku Block sits below the southeastern tip of the Stabroek Block, where Exxon made almost all of the discoveries off Guyana and is believed to be on the same oil channel. To the east of Kanuku Block is Block 58 off Suriname, where TotalEnergies and partner Apache made five light-grade oil discoveries with modeling estimating the block contains 6.5 billion barrels. These factors, including the multitude of high-quality oil discoveries made by Exxon in the southeastern tip of the Stabroek Block, bode well for further discoveries by Repsol and its partners in the Kanuku Block.

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Most of the crude oil found so far offshore Guyana has been medium to light and relatively sweet, meaning it is cheaper and easier to refine into high-quality, low-contaminant fuels such as gasoline and diesel. This means, especially compared to neighboring Venezuela, Colombia and Ecuador, all of which pump mainly heavy sour crude oil, that oil produced in Guyana has a low carbon footprint. These features are especially important in a world where major global efforts are being made to drastically reduce carbon emissions while tightening pollution restrictions and regulations. Unfortunately for Tullow, its exploration wells in the Orinduik block, Jethro-1 and Joe-1, found high sulfur heavy crude oil, which compared to the light sweet crude oil pumped by Exxon from the block Stabroek, is less economically viable.

Guyana is a rapidly growing offshore drilling hotspot, accounting for nearly a fifth of the world’s discovered oil and natural gas resources and nearly a third of oil-only discoveries. The latest discoveries, made by Exxon and Repsol, coupled with a growing production of light oil will make Guyana the third largest oil producer in Latin America after Brazil and then Mexico. This will provide a tremendous economic boon to the deeply impoverished South American nation that will grow with Georgetown focusing on attracting increased energy investment and building badly needed industrial infrastructure.

By Matthew Smith for Oilprice.com

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