…has potential to “underpin future oil development” – CEO
United States-based Hess Corporation on Wednesday announced yet another oil discovery offshore Guyana in the oil-rich Stabroek Block, where there is an estimated 11 billion-plus barrels of oil equivalent (boe) recoverable resource.
The discovery was made at the Fangtooth Southeast-1 (Fangtooth SE-1) well located approximately eight miles southeast of the original Fangtooth-1 discovery.
During the company’s Q4 2022 Earnings Conference Call on Wednesday, the Chief Executive Officer (CEO) of Hess Corporation, John Hess, explained that the Fangtooth SE-1 well encountered approximately 200 feet of oil-bearing sandstone reservoirs and was drilled to 5397 feet of water.
This new discovery comes on the heels of a January 2022 oil find at the Fangtooth-1 well.
Fangtooth is Hess Corp’s first standalone deep exploration prospect in the Stabroek Block, and according to the CEO, “this area has the potential to underpin a future oil development”.
“By investing only in high-return low-cost opportunities, we have built a differentiated and balanced portfolio focused on Guyana, the Bakken, the Deepwater Gulf of Mexico, and Southeast Asia. Key to our strategy is Guyana… We also will continue an active exploration and appraisal programme in Guyana with approximately 10 wells planned for the Stabroek Block in 2023,” Hess stated during his remarks.
Only on Tuesday, the US company announced a 2023 Exploration and Production capital and exploratory budget of US$3.7 billion, of which more than 80 per cent will be allocated to Guyana and the Bakken.
The CEO noted that the company’s capital programme reflected the continued execution of its strategy to invest only in high-return, low-cost opportunities within its portfolio.
“More than 80 per cent of our 2023 budget is allocated to Guyana, which is positioned to be one of the highest-margins, lowest-carbon intensity oil developments in the world, and to the Bakken…,” Hess stated.
Hess Corp has a 30 per cent interest in the Stabroek Block, which is operated by ExxonMobil (45 per cent interest), and with CNOOC Petroleum Guyana Limited, a wholly-owned subsidiary of CNOOC Limited, holding the remaining 25 per cent interest.
With 6.6 million acres (26,800 square kilometres), the Stabroek Block is considered one of the largest oil provinces discovered in the world over the past 20 years. Since 2015, more than 30 discoveries have been made in the block – nine of which were found last year.
It is anticipated that there are billions of barrels of exploration potential remaining in the oil-rich block, where production activities have been ongoing since December 2019.
According to Chief Operating Officer (COO) of Hess Corp, Greg Hill, the company’s focus in 2023 will be on advancing high-value oil developments and continuing an active exploration and appraisal programme in the Stabroek Block.
“We continue to see multi-billion barrels of additional exploration potential on the Stabroek Block. And in 2023, we plan to drill approximately 10 exploration and appraisal wells that will target a variety of prospects and play types. These will include lower risk wells near existing discoveries and several penetrations that will test deeper intervals,” he stated.
According to Hill, this latest discovery at the Fangtooth SE-1 well is moving up the field to form the basis for a future oil development in the Stabroek Block.
“So, we are going to continue to appraise that this year, probably get a drill stem test (DST) in it …there are some other channels in and around Fangtooth, there is one called Lancetfish that’s northeast of Fangtooth, and there is a prospect called Basher, which is actually west of Fangtooth and the combination of all that is pretty exciting. And as John [Hess] mentioned in his opening remarks, it could mean a potential future oil development in there. We will also continue to explore the deep as we kind of go through the next couple of years. But I think it’s very encouraging,” the COO posited.
Currently, the Liza phase 1 and phase 2 developments in the Stabroek Block are operating at a combined gross production capacity of more than 360,000 barrels of oil per day (bopd) using the Liza Destiny and Liza Unity Floating Production, Storage and Offloading (FPSO) vessels, respectively.
The third development in the Stabroek Block – Payara – is on track to come online by the end of 2023 with a gross production capacity of approximately 220,000 bopd; while the Yellowtail – the fourth development – is slated for 2025 with a production capacity of some 250,000 bopd. Both these development projects have been approved by the Guyana Government.
Uaru is the fifth development and is expected to come online at the end of 2026 with a gross production capacity of approximately 250,000 bopd with first oil anticipated at the end of 2026. The development plan for Uaru was submitted for Government approval in November 2022 and final approval is expected by the end of the first quarter of this year.
Nevertheless, as Hess Corp continues to push oil development, the company has reiterated its commitment to ensuring sustainability remains a top priority.
In fact, this is reflected in the December 2022 forest preservation agreement between the Guyana Government and Hess Corporation. The company agreed to purchase high-quality, verified REDD+ carbon credits for a minimum of US$750 million between 2022 and 2032 from the Government – a move aimed at not only preventing deforestation but also supporting sustainable development in Guyana
“The Government of Guyana plans to invest the proceeds from our carbon credits purchase agreement in sustainable development to improve the lives of the people of Guyana, with 15 per cent of the proceeds directed to Indigenous communities. This agreement adds to our company’s ongoing and successful emissions reduction efforts and is an important part of our commitment to achieve net zero Scope 1 and Scope 2 greenhouse gas emissions on a net equity basis by 2050. The agreement further strengthens our strategic partnership with Guyana and demonstrates our long-term commitment to the country and its people, building upon the national healthcare initiative we announced earlier in 2022,” CEO Hess noted.
