Exxon gets green light for US$6B Liza Phase 2 development
– to produce 220,000 barrels of oil per day
As the United States oil giant gears up for oil production in the first quarter of 2020, ExxonMobil has been granted approval to go ahead with its Liza Phase 2 Development offshore Guyana, which will commence in mid-2022.
This was confirmed by Director of the Energy Department, Dr Mark Bynoe at a press conference on Friday.
“The Liza Phase 2 Field Development Plan (FDP) was approved by the Minister responsible for petroleum on Monday, 29 April, 2019. The approval is for the second phase of development on the Liza field. The DE and GGMC Petroleum Division, together with its external consultant, Bayphase, conducted an in-depth review of the Liza Phase 2 Field Development Plan (FDP) submitted by Exxon Exploration and Production Guyana Limited (EEPGL),” he noted.
According to Dr Bynoe, the approval is subject to a number of conditions and confirmatory studies. These includes the establishment of a Regional Capping Stack or other solution to ensure that a Capping Stack can be deployed within five days of a well control event with loss of containment; improving the targeted availability of the overall production system of the Liza Phase 2 FPSO to between 98 per cent and 99 per cent, and identifying potential cost savings synergies between Liza Phase 1 and Lisa Phase 2.
The others are for the Stabroek partners to enter into a Decommissioning Security Agreement and having EEPGL conduct annual third-party auditing on their drilling operations that would be consistent with Good International Oil Field Practice (GIOFP) and its own Operations Integrity Management System (OIMS) and the EEPGL shall follow the required practice in the US Gulf of Mexico in calculating “worst case discharge” and to validate the assumptions and calculations by obtaining an independent assessment to develop an estimate of the flow that would result from an open hole well control event with loss of containment.
This independent assessment, Dr Bynoe noted, will then be used as the basis for the oil spill response plan and oil spill modelling.
Meanwhile, ExxonMobil in a subsequent statement stated that it has funded the Liza Phase 2 development at the cost of some US$6 billion, including a lease capitalisation cost of approximately $1.6 billion, for the Liza Utility floating production, storage and offloading (FPSO) vessel.
The Liza Phase 2 will produce up to 220,000 barrels of oil per day and a total of 600 million from that development. For the Phase 2 Development, six drill centres are planned, along with approximately 30 wells – 15 production, nine water injection and six gas injection wells.
Nevertheless, the US oil giant noted that the Liza Phase 1 remains on track to achieve first oil by the first quarter of 2020 and will produce up to 120,000 barrels of oil per day at peak rates utilising the Liza Destiny FPSO, which is expected to arrive offshore Guyana in the third quarter of this year.
“With the Government of Guyana and our partners, ExxonMobil is bringing industry-leading upstream capabilities to build upon Phase 1 and further develop the shared value of Guyana’s resources,” said Liam Mallon, President of ExxonMobil Upstream Oil and Gas Company.
“We are actively pursuing significant development potential from numerous discoveries in the Stabroek Block,” he added.
In fact, pending Government and regulatory approvals, Exxon revealed that a final investment decision is expected later this year for a third phase of development, Payara, which is expected to produce between 180,000 and 220,000 barrels per day with start-up as early as 2023.
Moreover, the company is evaluating additional development potential in other areas of the Stabroek Block, including at the Turbot area and Hammerhead.
The missive further outlined that by the end of 2019, Exxon will have four drill-ships operating offshore Guyana. Following well completion activities at the recently announced Yellowtail discovery, the Noble Tom Madden will move to the Hammerhead-2 well. The Stena Carron is completing a well test at the Longtail-1 discovery, and will then move to the Hammerhead-3 well.
Later in 2019, according to the US oil giant, the Stena Carron will drill a second well at the Ranger discovery. The Noble Bob Douglas drillship is completing development drilling operations for Liza Phase 1. ExxonMobil will add another exploration drillship, the Noble Don Taylor, in the fourth quarter of 2019.
As the projects proceed, Exxon noted that its partners’ investment in the Guyanese economy continues to increase. In fact, it pointed out that the number of Guyanese nationals supporting project activities more than doubled in 2018 to over 1000.
“ExxonMobil and its co-venturers spent nearly $60 million with more than 500 Guyanese vendors in 2018. More than 1500 Guyanese companies are registered with the Centre for Local Business Development, which was founded by ExxonMobil and its co-venturers in 2017 with the mission of supporting local businesses to become globally competitive,” the company said on Friday.
With its 13th discovery on the Stabroek Block last month, the US oil giant now estimates recoverable resources at more than 5.5 billion barrels of oil equivalent. This creates the potential for at least five FPSO vessels producing more than 750,000 barrels of oil per day by 2025.
ExxonMobil affiliate Esso Exploration and Production Guyana Limited is an operator and holds 45 per cent interest in the Stabroek Block. Hess Guyana Exploration Ltd holds 30 per cent interest and CNOOC Petroleum Guyana Limited, a wholly-owned subsidiary of CNOOC Limited, holds 25 per cent interest.