Continually growing international recognition of the size and commercial significance of Guyana’s recently unearthed oil and gas resources has again been reflected, this time, in this week’s announcement days by the United States-based global energy company Hess that the country could attract the lion’s share of its US$3 billion exploration and production budget for 2020.
On Wednesday Hess announced that it will be targeting projects in Guyana and the Bakken oilfields in Eastern Montana and Western Dakota for exploration and production pursuits in 2020. The two locations are expected to attract more than 80 per cent of the investment.
Hess’ net oil production for this year is expected to average between 330,000 and 335,000 barrels of oil equivalent per day this year.
John Hess, the company’s Chief Executive Officer is quoted as describing Guyana as one of the two “highest return investment opportunities” in the oil and gas industry, “that will become significant, long-term cash generators for our company.” Hess credits the company’s Guyana offshore pursuits as having positioned it to “deliver industry-leading cash flow growth while also achieving significant reductions in unit costs which will…….. lower our break even oil price to below $40 per barrel Brent by 2025,”
Offshore Guyana, with the Liza Phase 1 development now in production, the company says that this year its focus will be on the Liza Phase 2 development and on “front-end engineering design work to develop the Payara Field.” Its 2020 pursuits, it says, will include continued investment in “an active exploration and appraisal programme in Guyana on both the Stabroek and Kaieteur Blocks.”
The company says in its statement that of its US$3 billion 2020 oil hunt budget, US$1.69 billion (56%) is allocated for production, US$860 million (29%) for offshore Guyana developments and US$450 million (15%) for exploration and appraisal activities.
“In terms of Stabroek Block,” developments, the release says that US$100 million is associated with the Liza Phase 1 development offshore Guyana, US$400 million for the Liza Phase 2 development, where first production is expected by mid-2022 and US$360 million to take forward development plans for the Payara Field, from which production is expected as early as 2023, as well as “front end engineering and design work for future developments,”
The drilling exploration and appraisal wells on the Stabroek and Kaieteur Blocks and seismic acquisition and processing in Guyana waters are also expected to attract further Hess investment.
At the end of October last year Hess and ExxonMobil disclosed that the two were moving the start date for first oil production in Guyana to December last year, from the previous early 2020 timeline. Recovery and shipping in accordance with the new timeline is currently on stream. It was the Hess company boss, John Hess, who had reportedly made the disclosure regarding the adjusted timeline.
The disclosure that oil recovery operations are attracting significant financial investment in 2020 is unsurprising given what is, for both ExxonMobil and Hess the biggest current growth area. International assessments of the fortunes of Hess say that Guyana’s oil resources is the primary reason why Hess’ stock value rose by more than 35% last year.
Since May 2015 Exxon and Hess have disclosed sixteen separate oil discoveries offshore of Guyana with more expected to be announced, going forward.
Exxon owns a 45 percent stake in what, currently, is one of the most eye-catching oil recovery projects anywhere in the world with Hess controlling 30 percent and the remaining 25 percent owned by the China National Offshore Oil Corp. (CNOOC).
