Guyana’s Liza-1 oil field has produced over eight million barrels of oil since extraction started last December and its top projected capacity of 120,000 barrels per day is expected to be attained by early June 2020.
This information was released today at a press conference by Head of the Department of Energy (DE), Dr Mark Bynoe who said that the major challenge faced by oil operators at the moment is the changing out of crews amid the COVID-19 pandemic.
A statement by Bynoe at the start of the press conference follows:
DE’s Press Conference
4th May 2020
Introduction
Good morning ladies and gentlemen I am coming to you at a very interesting time in our country’s history given the furore over our national and regional elections, and the instability created in world market due largely to over-supply of crude and us being in the throes of the pandemic affecting economies across the. This saw West Texas Intermediate (WTI) going into negative territory two weeks ago, and Brent crude trading in the low $20s.
More recently, as the historic oil cuts agreed to by the Oil Producing and Exporting Countries plus (OPEC+) and the partial opening up of some economies, we are beginning to see a gradual increase in Brent, moving up to the mid $20s and WTI trading at just around $19 per barrel.
Of course, many of us are experiencing the effects of these first-hand, at a personal, operational and economic level. The DE continues to work closely with the Covid-19 Task Force and the operators, reinforcing the importance of the sector to the country as a whole in the short-, medium- and longer term.
In light of the above, a number of questions have been posed to the Department of Energy. To bring clarity to the situation, we hope to be able to address as many of these as we can. At the same time, we wish to request that you keep checking our webpage and FaceBook page for updates and we would ask that all questions be submitted to the Press and Publicity Unit rather than to the Director of the DE.
Key Messages
1. Operations
The major challenge that all operators face at the moment is to be able to change out crews in a time when most international travel remains curtailed. Additionally, with the quarantine period in place in most economies, one can expect slippages in the work plans for most of the operators. In the case of the Liza Destiny we have seen operational slippages due to the inability to complete the commissioning phase of operations and ramp up to steady state production, as some the operations have encountered some challenges with the gas compressor.
• Drilling
• Currently there are 2 Active Rigs: Focused mainly on drilling water injection wells for the Liza Destiny
• 2 Hot-stack Rigs: that are on standby as they require crew change and there has been some restriction on drilling operations as we all look to reduce our exposure due to the global pandemic and the state of the industry.
• Liza Phase 2
• The laying and installation of riser campaign has commenced and work is continuing apace, but they will need a crew change out soon. The DE continues to work closely with the Covid-19 Task Force, MARAD and the Ministry of Citizenship, amongst others, to facilitate a smooth flow of operations without contravening the country’s laws and regulations.
2. Marketing and Revenue Acquisition
Since our last press conference Guyana lifted her first cargo on February 19 under the entitlement regime that netted nearly US$55 million for its approximately first 1 million barrels of oil. This was the first of three cargoes that were contracted to Shell Western Supply and Trading. The revenue from the first sale was deposited into the Natural Resource Fund (NRF) on March 11, 2020. Guyana’s second lift of approximately 1,000,000 barrels of crude is projected for the third week of May 2020.
Additionally, the country received its first royalty payment, which is paid quarterly 30 days after each quarter on gross production with Guyana receiving approximately US$4.9 million that was deposited on April 28, 2020 into the NRF.
3. Institutional Strengthening
The DE has contracted the services of a Petroleum Accounting Specialist, and has been working to secure the services of a Contract Administration Specialist, Sub-Surface Engineer and an Oil and Gas Advisor to the Director of the DE. The DE continues to work assiduously to build out its structure for more efficient management of the sector.
The DE hopes to conclude the Market Price Determination Procedure and Provisional Crude Oil Basket for marketing Guyana’s crude as per Article 13 of the PSA. Reaching consensus was necessary as it has implications for entitlement scheduling and liquidation of the cost pool, i.e., costs incurred by the operators during exploration and production activities. Thus, this has taken longer than we had anticipated but we are now very close to concluding the process.
4. Production from the Liza 1 Field
To date the Liza 1 field has produced over 8 million barrels of oil, with average daily production of between 75 – 80 kbd, with an expected ramp up to 120 kbd by early June 2020.
5. Lisa Unity FPSO
· Topsides Fabrication is progressing well with all 19 modules under construction.
· Several trees/tubing heads have been completed, with the first two trees having been shipped to Trinidad from Brazil, with trees 3-8 expected to be shipped shortly.
· Development drilling has commenced, as well as the installation of the risers. This project remains on schedule.
· The Operator is working with the DE to include Guyanese expertise in various stages of the Unity’s completion as per the FDP approval.
6. Payara FDP
· The review of the Payara FDP is fairly advanced with some preliminary issues raised with the Operator. The DE continues to engage with the Operator in a collaborative manner before finalization of the comments to be shared with the Operator.
7. Local Content
Local Content Policy has been completed and is now being implemented.
8. Cost Recovery Audit
This contract is progress well with a multi-agency team working alongside the consultant, i.e., IHS Markit. This contract received a no-cost extension because of the impact of the Covid-19 pandemic.