Home Top Stories Guyana, Brazil wells are best oil recovery performers in industry – UK...
The oil reservoirs offshore Guyana and its Portuguese-speaking neighbour Brazil are said to be the best estimated ultimate recovery (EUR) performers in the industry, as deepwater oil fields are pegged to enjoy twice the average recovery of those already onstream.
This is according to a United Kingdom-based research and consultancy group, Wood Mackenzie (WoodMac) – a global energy, chemicals, renewables, metals and mining research and consultancy group supplying data, written analyses and consultancy advice.
In a recent report that focused on ‘Exploring the deepwater advantage’, WoodMac noted that while times are currently challenging for upstream oil and gas as the industry navigates unprecedented uncertainty, the advantage of deepwater production over non-deepwater is spectacular.
“Growth from deepwater is much faster than from upstream overall…with each well producing substantially more reserves than development wells in shallow water or onshore. EUR in deepwater averages 12 mmboe (million barrels of oil equivalent) for oil wells and 43 mmboe for gas wells. That compares with the global industry average EUR of less than 1 mmboe per well,” the report has stated.
According to the consultancy group, this advantage is about to get even better.
“Future deepwater oil fields will enjoy twice the average EUR of fields already onstream. And this is not a symptom of over-optimistic project plans overdue for a dose of reality. Instead, it largely reflects the industry’s recent exploration success, which has led to opening reservoirs in new basins such as Guyana and Brazil’s Santos which are the best EUR performers in the industry,” WoodMac noted, adding that technology gains and portfolio highgrading are also contributing factors.
WoodMac explained that higher EUR means fewer wells are needed, and this is especially critical since deepwater wells and associated subsea equipment are expensive and typically amount to more than half of project capital expenditure.
It added that fields with fewer wells enjoy lower costs, faster cycle times, and better breakeven prices.
“This economic advantage also correlates with carbon advantage. Most flagship, high-EUR deepwater developments now contribute strongly to corporate emissions intensity targets,” the reported detailed.
It further outlines that with deepwater growing faster than upstream, production is set to rise from 10 mmboe per day in 2021 – that is, six per cent of global supply – to over 17 mmboe per day by 2030, which is a 10 per cent growth.
WoodMac anticipates that almost half of the oil and gas reserves being sanctioned for development over the next five years will be in deepwater. It further added that exploration will, no doubt, also add more.
“The sector’s outperformance stems from its reservoir fundamentals. Deepwater is no place to tackle marginal rock properties or difficult fluids. With few exceptions, the industry has chosen to develop only its best reservoirs. These allow high flow rates and exceptional estimated ultimate recovery (EUR) per well,” the report from the UK consultancy group has statd.
Currently, United States oil major ExxonMobil has operating stakes in the three oil blocks offshore Guyana, where exploration activities, and in one case production, are ongoing.
Exxon’s affiliate, Esso Exploration and Production Guyana Limited (EEPGL), is the operator of the 6.6 million acres (26,800 square kilometres) Stabroek Block, and holds a 45% interest. It’s operating partner Hess Guyana Exploration Ltd holds 30% interest, and the other operating partner, CNOOC Petroleum Guyana Limited, a wholly-owned subsidiary of the Chinese state-owned CNOOC Limited, holds 25% interest.
There have been 20 discoveries in the Stabroek Block, which is estimated to have over 9 billion oil-equivalent barrels of oil. Production of the “light sweet crude” started in December 2019 at the Liza-1 project, after being discovered there in 2015.
With the Liza Phase 1 development currently averaging 120,000 barrels of oil per day (bpd), it is expected that Guyana’s oil production is likely to exceed 500,000 bpd by 2024, when the Liza Phase 2 and Payara developments on track to come on stream.
This was based on the figures and development schedules quoted by Hess Chief Operating Officer Greg Hill during the company’s 2021 first-quarter earnings call.
He explained that at the Liza Phase 2, the project is progressing according to plan, with approximately 90 per cent of the overall installation work having been completed. This means that first oil for Liza Phase 2 remains on track for early 2022.
“The Liza Unity FPSO (Floating Production Storage and Offloading vessel), with a production capacity of 220 thousand gross barrels of oil per day, is preparing to sail from the Keppel yard in Singapore to Guyana midyear,” Hill also explained during the call back in May.
The Payara development, meanwhile, is also progressing. According to Hill, 38 per cent of the overall work on this project, which will utilise the Liza Prosperity FPSO vessel, has been completed.
“The project will utilise the Liza Prosperity FPSO, which will have the capacity to produce up to 220 thousand gross barrels of oil per day. The FPSO hull is complete and topsides construction activities have commenced in Singapore. First oil remains on track for 2024,” Hill stated.
Meanwhile, exploration activities are ongoing in the Kaieteur Block, Orinduik Block and Canje Block.