-company forging ahead with two more offshore oil projects
Still on target for first oil in the first quarter of next year from its Liza 1 project, offshore Guyana, ExxonMobil is forging ahead with plans for two other offshore developments in the Stabroek Block that are expected to see Guyana receiving additional revenue as there will be increased production.
Upbeat about the two projects – Liza Phase 2 and Payara – ExxonMobil’s Country Manager Rod Henson told Sunday Stabroek in an interview that with more oil being produced, more revenue will be generated and there will be additional local content opportunities for nationals.
“Having this third project will bring additional revenue but in terms of local content, [it] will increase the current momentum,” Henson said.
“Having these additional projects sees increased local and international content, the confidence to spend money; capital to train people and so it is going to really help that local content picture,” he added.
ExxonMobil, in May this year, announced that it has funded its Liza Phase 2 development project offshore Guyana and it is expected to cost US$6 billion and produce up to 220,000 barrels of oil per day, with startup expected in mid-2022. The decision followed “exhaustive” negotiations between regulatory agencies and the oil major.
The company said Liza Phase 2 will further capitalise on the significant development potential of the Stabroek Block, where it estimates producing more than 750,000 barrels of oil per day by 2025.
“[Approval for] Liza Phase 2 was granted after a very exhaustive period with the EPA (Environmental Protection Agency) and the DoE (Department of Energy) using internally recognised third party companies. Like Liza 1, that one is on schedule too and we would envision first oil on that middle of 2022,” Henson said.
“For Payara, it is very similar to Liza Phase 2. This will develop the resource. We are starting the government review process now and would envision that one coming on a year later; that is, of Liza Phase 2, in 2023. We are looking forward to proceeding down that path as well. The other thing that Payara does is having this third project will in bring additional benefits…,” he added.
The company has said that pending government and regulatory approvals, a final investment decision is expected later this year for that third phase of development. Payara is expected to produce between 180,000 and 220,000 barrels per day, with startup as early as 2023, even as ExxonMobil continues evaluating additional development potential in other areas of the Stabroek Block, including at the Turbot and Hammerhead areas.
Giving an update on works thus far, Henson said, “Everything is going just amazingly well. You may have seen recently we had our naming ceremony in Singapore. This is the first ship – the Lisa Destiny – and it was christened and will be leaving Singapore to come here in another couple of weeks. It is expected to arrive in Guyana’s waters in September. Then we will start a process called hook up and reassembly of the Liza Destiny to all the subsea equipment. We will then go through this testing period; pressure testing, function testing, make sure everything is perfect,” he said.
When the vessel was dedicated, ExxonMobil stood the expenses for Head of the DoE Dr Mark Bynoe and First Lady Sandra Granger’s trip to the ceremony.
Henson was questioned about the appropriateness of funding for Bynoe and if conflict of interest concerns should be raised, given that he is the head of the agency “No. It is a business related activity with officials that have authority over the work activity,” he replied.
He said that the company was looking forward to the vessel’s safe arrival to begin the process that would enable production next year.
But, he noted, it would be a process and they would “slowly bring the production on line from one well at a time so it will actually take a few months to [get to] our rate of 120,000 per day.”
‘Not overnight’
Cost recovery in the first year would be at the maximum 75 per cent cap provided for in the contract. “Yes it will start at that [75 per cent]. A good term was to cap that cost recovery number so that guarantees that Guyana starts making revenue right away. It will for the first couple of years,” Henson said.
Asked about total investment to date, he said that he couldn’t tell as he “really just don’t have that figure on the top of my head but it is billions of US [dollars].”
Asked if the company would be open to giving a direct figure of monies spent from 1999 to 2019 he responded, “Probably not.”
The ExxonMobil Country Manager said that the public should understand that the country would not see significant revenue in the first years and should not have high expectations during that period.
“That is why setting expectations is important. This is just a fantastic thing for the country and it truly will be a transformative thing. It is important for people to know that the world is not going to change overnight when we turn on first oil. It is going to take a few years but it is going to be a fantastic decade,” Henson said.
The company is not allowing the current political climate to hinder its operations and says that it has not been impacted by the politics of the land. “We haven’t seen any impact and we don’t envision any operational impact,” Henson said.
“We are moving as quickly as we safely and prudently can. I would love to have first oil in December but that is not our current estimate. We certainly are not manipulating at all first oil and that is important to know because I know it is an election season. We are not changing anything we are doing in terms of first oil based on the election. We are going as fast as we can. We are a company. We already invested billions. We need to start making revenue. We are going as quickly as [we] safely and responsibly can, irrespective of any election,” he said.
Henson pointed out that ExxonMobil is considered to be a generally conservative company in giving timelines. “We want to meet our commitments but we are not fudging any numbers or anything. That is why we don’t set a date. We are not going to say ‘it is January 12th’ or whatever…we will have first oil in the first quarter of 2020,” he added.
