American oil firm ExxonMobil is seeking to acquire more acreage offshore Guyana and a top executive has reiterated that the plan for production is “probably early into the next decade at this point.”
In a quarterly earnings call with analysts yesterday, ExxonMobil’s Vice President, Investor Relations and Secretary Jeffrey J. Woodbury reported that the firm’s quarterly profit fell nearly 60 percent from a year ago as commodity prices remained low and its refining margins were weak. Exxon earned US$1.7 billion in the second quarter of this year compared with US$4.2 billion for the same period last year.
Woodbury also reported on the company’s operations in Guyana and said that ExxonMobil recently entered into an agreement with The Ratio Companies to acquire a 50% interest in the Kaieteur Block offshore Guyana and will become the operator. Kaieteur is approximately 250 kilometers offshore Guyana in ultra-deepwater north and adjacent to the Stabroek and Canje blocks. “Pending government approval, this deal will bring our total acreage position in Guyana to 11.4 million acres over the three blocks,” he said.
Earlier, the company executive noted that drilling operations on the Liza-2 appraisal well has been completed. “The well test confirmed a world-class discovery, with a recoverable resource estimate of 800 million to 1.4 billion oil equivalent barrels.
The test also confirmed high-quality oil from the same high-porosity sandstone reservoirs we saw in the Liza-1 discovery well,” he said. The company first discovered significant quantities of oil at its Liza-1 well in the Stabroek block last year.
According to Woodbury, ExxonMobil along with its partners is pursuing development planning activities on an early production concept involving a floating production, storage, and offloading facility, along with related subsea production systems. A final investment decision will be based on a variety of factors, including further Liza appraisal drilling, regulatory approvals, and market conditions, he said.
Further, Woodbury pointed, on July 17, the company began drilling the Skipjack prospect, which is located approximately 25 miles northwest of the Liza-1 discovery well. This is the third well on the Stabroek Block.
In response to a question about whether the company could be producing oil here as early as 2018, Woodbury responded that “what we were laying out in our permitting activity is probably early into the next decade at this point.
There’s a lot to consider to make sure that we are maximizing the value for the resource owner and for the co-ventures.”
In response to another question, he said Exxon is excited by the prospects. “We’re integrating the data that we’re picking up from the drill wells and the seismic analysis real time. You can appreciate there’s a good effort around development planning.
And as I said in the prepared comments, the current plan right now is an early production concept as an initial start. It’s probably too early to discuss too much of those details. Clearly, there has been some initial work that we’ve done for regulatory purposes. But as I said, we have a lot of work to do, and we’ll continue to manage it,” he said.
In terms of bringing in a second rig, Woodbury said that this will depend on a lot of issues. He emphasized that there must be a really good understanding of what the prospects look like and the dependencies on them. “You don’t want to outrun your headlights on it. Good success so far, we’re encouraged about the growth in Guyana and the development capability, but we want to manage this in the most effective way to make sure we maximize the value,” he said.
Woodbury also disclosed that after drilling the Skipjack prospect, the plan is to move back to Liza for another appraisal well. He said that Skipjack is testing a similar play to Liza with comparable resource potential.
“Clearly, Liza helped to de-risk a new play in a new basin. But as you know, all exploration wells do carry inherent risk. We do have a lineup of other prospects in the block.
As I said, we’ve added two additional blocks, one that’s got a seismic survey in progress and the next one in which we anticipate once the deal is concluded that we will do the same there. And that will continue to be fed into our list of options, and we’ll decide what the next best opportunity is to pursue after Skipjack. But right now, the plan is that the rig will move from Skipjack back to Liza for another appraisal well,” he said.
On Wednesday, Exxon’s Country Manager in Guyana Jeff Simons said the company will not start the actual extraction of oil from its huge offshore well for another five years.
Speaking before the Parliamentary Committee on Natural Resources, Simons stated that “… five years is a good estimate.”
Minister of Natural Resources Raphael Trotman, who also appeared before the committee, said government is very optimistic that Guyanese will enjoy the wealth of oil and this will happen “relatively soon.” He did clarify that this will be within the next five to ten years.
