Exxon’s Whiptail permit now caters for decommissioning fund

– strict timelines for submitting insurance also included

The Guyana Government has approved ExxonMobil Guyana’s sixth project offshore, the Whiptail project, but some changes have been made to strengthen the regulation of production, among which are the imposition of a decommissioning fund and a timeframe within which the company must submit its insurance.
It was announced on Friday that the Guyana Government has approved the US$12.7B Whiptail Project. And after receiving these required Government and regulatory approvals, ExxonMobil had said in a statement from its Texas, US headquarters that it has made a final investment decision (FID) for the Whiptail development.

One of the changes in the Whiptail permit is the inclusion of a decommissioning fund, in accordance with section 61 (4) of the Petroleum Activities Act (2023). Additionally, Exxon will be required, within 24 months of the date of the licence, to agree to the terms and conditions that administer the decommissioning fund.
They will also be required to agree to the “terms and conditions for the disbursement of payments for the cost of decommissioning, to protect the state from the risk of having to fund decommissioning liabilities.”
It was explained that the terms and conditions agreed on shall consider, among other things, the creation, structure, role, ownership and governance of the fund; as well as verification, investment strategies, payment and disbursement procedures, and winding up the fund.
In the Uaru permit, Exxon’s fifth project, provision was made for a decommissioning plan which the licensee would detail in consultation with the Minister and appropriate Government regulators.

Insurance
However, the Whiptail permit also mandates that the licensee must have, at all times, insurance in keeping with the Petroleum Act. The permit also noted that copies of said insurance must be provided within 90 days before startup.
In the Uaru permit, it had said that copies of the insurance shall be provided to the Minister.
“The licence holder shall provide copies of the said insurance documentation to the Minister no later than 90 days before start-up, and shall provide such additional documentation and details in such form and manner as the Minister may require from time to time,” the Whiptail permit further states.
Whiptail is expected to add approximately 250,000 barrels of daily capacity by the end of 2027, when it is slated to come on stream, thus bringing the country’s production capacity up to approximately 1.3 million barrels per day. The multi-billion-dollar Whiptail project, which is expected to last for at least 20 years, would include up to 10 drill centres with 48 production and injection wells.
“Our unrivalled success in developing the Guyana resource at an industry-leading pace, cost, and environmental performance is built on close collaboration with the Government of Guyana as well as our partners, suppliers, and contractors. The Stabroek block developments are among the lowest emissions-intensity assets in ExxonMobil’s upstream portfolio, and will provide the world with additional reliable energy supplies now and for years to come,” President of ExxonMobil Upstream Company, Liam Mallon, has said in the statement.
Meanwhile, the floating, production, storage, and offloading (FPSO) vessel for the Whiptail project, to be named Jaguar, is under construction. Back in October 2023, SBM Offshore announced that it was awarded the front-end engineering and design (FEED) contract for the Whiptail FPSO. The Dutch company had said, upon completion of the FEED contract, that it would eventually construct and install the FPSO, but this second phase of work is dependent on project approval by the Guyanese Government.
On Friday, SBM Offshore announced that ExxonMobil had confirmed the award of contracts for the Whiptail development, thus cementing the construction and installation of the Jaguar FPSO by the Dutch company.
Under the contract, ownership of the vessel would be transferred to Exxon before the FPSO’s installation, and SBM Offshore is expected to operate the FPSO for 10 years under the Operation and Maintenance Enabling Agreement signed in 2023.
The Jaguar FPSO’s design is based on SBM Offshore’s industry-leading Fast4Ward® program that incorporates the company’s 7th new build, a multi-purpose floater hull combined with several standardized topside modules.
The FPSO will be designed to produce 250,000 barrels of oil per day, will have an associated gas treatment capacity of 540 million cubic feet per day, and a water injection capacity of 300,000 barrels per day. The FPSO will be spread-moored in a water depth of about 1,630 metres, and will be able to store around 2 million barrels of crude oil.