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Zainab Calcuttawala

Zainab Calcuttawala

Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…

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Exxon Treats Guyana To 6th Offshore Discovery Since 2015

Guyana’s nascent oil and gas industry just gained a new discovery: ExxonMobil’s drilling team found 230 feet of high-quality, oil-bearing reservoir just outside the Liza phase one project, according to a newswire by Dow Jones.

Exxon’s first discovery off of Guyana’s coast occurred back in 2015. This new announcement constitutes the company’s sixth since that initial find.

The American major’s Guyanese subsidiary, Esso Exploration and Production Guyana Ltd., began drilling the Ranger-1 well northwest of Liza back in November. Production is expected to begin by 2020, less than five years after discovery of the field.

Esso holds a 45 percent stake in the 6.6-million acre Stabroek block, while Hess Guyana (30 percent) and China’s CNOOC Nexen Petroleum Guyana Ltd (25 percent) owns the remaining shares.

Pumping from offshore Guyana is slated to be lucrative. Low-cost shale projects in Texas’ Permian Basin attracted $7 billion in new investments just from Exxon in early 2017, but experts have said the Guyanese project could be “just as attractive and competitive at the Permian.”

Analysts expect a 33 percent internal rate of return, a two-year payback term, and profit margins of $32 a barrel, according to figures from BMO Capital seen by Seeking Alpha.

Phase 1 of the operation will make the Guyanese project, which should pump 120,000 barrels per day by 2020, feasible despite bearish markets, Exxon said last year. The lease for the required floating production storage and offloading (FPSO) facility costed $1.2 billion.

"We're excited about the tremendous potential of the Liza field and accelerating first production through a phased development in this lower cost environment," Liam Mallon, head of development for Exxon, said in a statement in June. “We will work closely with the government, our co-venturers and the Guyanese people in developing this world-class resource that will have long-term and meaningful benefits for the country and its citizens."

By Zainab Calcuttawala for Oilprice.com      

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