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Matthew Smith

Matthew Smith

Matthew Smith is Oilprice.com's Latin-America correspondent. Matthew is a veteran investor and investment management professional. He obtained a Master of Law degree and is currently located…

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The Oil Eldorado: Guyana's Stabroek Block Surpasses Analyst Expectations

  • Oil estimates for the Guyana Suriname Basin, particularly Guyana's Stabroek Block, are being revised upwards, with Exxon's 35 discoveries believed to contain over 11 billion barrels of oil.
  • Various oil discoveries in both Guyana and Suriname indicate the presence of up to 32 billion barrels of oil resources in the basin, a number that is likely to grow as exploration and development operations escalate.
  • The surge in oil resources is attracting foreign energy companies and investment, fueling what is projected to become South America's largest oil boom and promising significant economic benefits for Guyana and Suriname.
Offshore Oil

Tiny South American country Guyana, which has a population of less than one million, recently emerged as the world’s hottest offshore frontier drilling location. After Exxon’s slew of world-class oil discoveries in the offshore Stabroek Block, the first occurring in 2015, big oil was captivated by the petroleum potential held by the Guyana Suriname Basin. This saw foreign energy companies, including Malaysia’s Petronas, France’s TotalEnergies and U.S.-based Chevron in recent years acquire interests in a range of blocks in offshore Guyana and Suriname. Both impoverished former colonies possess the petroleum potential to become major oil producers and exporters, with Guyana well ahead of Suriname when it comes to developing its considerable oil resources. There are clear signs that the Guyana Suriname Basin contains significantly more petroleum than originally estimated.

It is becoming increasingly evident that the U.S. Geological Survey (USGS) grossly underestimated the volume of oil contained in the Guyana Suriname Basin. In a May 2001 assessment of undiscovered conventional oil and gas resources in South America, the USGS determined the Guyana Suriname Basin contained 2.8 billion to 32.6 billion barrels of oil with mean resources of 15.2 billion barrels. At the time, due to the lack of drilling success in the basin, the assessment appeared accurate. Nonetheless, those conservative numbers are now being challenged by Exxon’s 35 discoveries in the Stabroek Block alone, where the supermajor believes it has discovered more than 11 billion barrels of oil.

There has been a slew of other discoveries in Guyana’s territorial waters. The most recent occurred at CGX Energy’s Wei-1 wildcat well in the northern tip of the Corentyne Block, which is contiguous with the Stabroek Block, where 210 feet of hydrocarbon-bearing sands in the Santonian interval was identified. Analysts believe the success of the Wei-1 exploration well, along with CGX’s earlier discovery at the Kawa-1 exploration well roughly nine miles to the southeast of the Wei well, is particularly important for the oil boom occurring in the Guyana Suriname Basin. This indicates the prolific petroleum fairway contained in the Stabroek Block runs through the north of the Corentyne Block and into neighboring Block 58 in offshore Suriname, where TotalEnergies and partner Apache have made five discoveries.

Frontera Energy, CGX’s 68% partner in the Corentyne Block and majority owner, had an independent resource evaluation for its Guyana Blocks conducted during 2021. This evaluation determined the Corentyne Block contains 1.7 billion to 10.7 billion barrels of oil resources with nearly one billion barrels of mean risk oil resources. In a late 2022 report, industry consultancy S&P Global Commodity Insights determined that more than 15 billion barrels of oil have been discovered in Guyana’s territorial waters since Exxon’s first Liza discovery in 2015. That number alone indicates that the USGS substantially underestimated the volume of petroleum contained in the Guyana Suriname Basin. 

This becomes more apparent when it is considered that Block 58 offshore Suriname, where 50% partners TotalEnergies and Apache have made five commercial discoveries, is thought to contain up to 6.5 billion barrels of oil resources. Already flow testing at the Sapakara and Krabdagu discoveries in the block has identified there are over 800 million barrels of oil resources in place, with more to be discovered. Based on the numbers for the Stabroek as well as Corentyne Blocks in Guyana’s territorial waters and Block 58 in offshore Suriname, there are easily up to 32 billion barrels, or even more, of oil resources contained in the Guyana Suriname Basin.

That number will only grow as the tempo of exploration and development operations in the basin gain pace. There have been other discoveries in the Guyana Suriname Basin that have yet to be evaluated and determined whether they are exploitable. These include Exxon, along with partner Malaysia’s national oil company Petronas finding oil with the Slonea-1 exploration well in offshore Suriname Block 52 and Apache’s Baja-1 discovery in Block 53. Since 2015, there have also been a series of non-commercial discoveries in Guyana, which despite being deemed unexploitable for assorted reasons, including being water-bearing, further underscore the considerable oil potential contained in the Guyana Suriname Basin.

While TotalEnergies delayed the multi-billion-dollar final investment decision for Block 58, expected in 2022, because of conflicting drilling results and seismic data as well as a high oil-to-gas ratio, Paramaribo is pushing to attract other energy companies. This saw Surname’s government launch a series of oil auctions for the shallow water underexplored Demerara acreage, the latest of which closed at the end of May 2023 with several companies making qualified bids for three of the six blocks offered. In a series of earlier auctions, supermajor Chevron acquired interests in shallow water Block 5 and 7 as well as deepwater Block 42, where the operator Shell, in 2022, drilled the Zanderij-1 wildcat well where a non-commercial oil discovery was made.

Guyana is also focused on attracting further investment in its burgeoning offshore oil boom. Georgetown announced the first-ever petroleum auction in late-2022, which has since been delayed 3 times, now until mid-August 2023, as the government seeks to implement new contractual terms for the country’s production-sharing agreements. That auction sees a total of 14 blocks on offer, comprised of 11 deepwater and three shallow-water blocks, with a view to reducing dependence on the Exxon-led consortium lifting 400,000 barrels per day in the Stabroek Block. According to Reuters, Shell, Brazil’s national oil company Petrobras and Chevron were weighing whether to make bids earlier this year.

At the start of July 2023, it was announced that Guyana’s Environmental Protection Agency had approved Exxon’s ambitious drilling campaign in the Stabroek Block, where it plans to drill 35 exploration and appraisal wells. With the prolific petroleum trend in the Stabroek Block yet to be fully explored and the large volume of discoveries already made that have yet to be appraised, there are significant odds of further oil discoveries being made as that campaign progresses. Other companies such as CGX, Repsol and Shell are pushing ahead with their own drilling campaigns in offshore Guyana.

As foreign energy companies and capital pour into Guyana and Suriname, advancing further exploration and development activity, there is every indication that further world-class oil discoveries will be made. That will significantly boost the volume of exploitable oil resources in the basin to levels well above those estimated by the USGS, with the government organization claiming the geological body contains 15.2 billion barrels of mean undiscovered oil resources. Indeed, there is an estimated 16 billion barrels of exploitable oil resources discovered to date in the Guyana Suriname Basin, with various estimates indicating that it contains at least 27 billion barrels of oil resources. This considerable petroleum potential will fuel what is South America’s largest oil boom and deliver a tremendous economic windfall for Guyana and Suriname.

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By Matthew Smith for Oilprice.com

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