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Drilling rigs count collapsing globally but Guyana offshore remains resilient

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Even as the number of rigs drilling for oil and gas continues to collapse globally, activities offshore Guyana not only continues, but is being ramped up, particularly in the ExxonMobil-operated acreages, including Stabroek Block where the company has so far found more than 8 billion barrels of oil equivalent resources.

Experts have said exploration and production operations which have clear strategic drivers, robust economics and operators with strong balance sheets are advantaged and likely to remain active.

“Advantaged deepwater oil in places like Guyana and Brazil…will progress,” Rob Morris, from consultancy group Wood Mackenzie, has pointed out.

“You’ve got two things that are going for you in Guyana,” Schreiner Parker, Rystad Energy’s Vice President for Latin America and the Caribbean, told OilNOW. “One, is that the operator is Exxon, and the second is the nature of the assets, especially from a breakeven point of view and development costs point of view. For offshore assets, the Stabroek Block is very competitive in breakeven terms, so even in a low oil price scenario that asset class is still very attractive.”

According to a recent report from Bloomberg, the Baker Hughes worldwide rig count dropped by 43 to 1,030 in monthly data, with regions beyond the U.S. and Canada accounting for almost 90% of the drop. “The international rig count fell to 743 in July, meaning the number of active rigs outside of North America was at its lowest since 2003,” the report stated.

It said drilling collapsed after crude prices plunged earlier in the year due to the coronavirus pandemic. “Though weekly data suggest activity in the U.S. may have bottomed out in recent weeks, the decline outside of North America appears to have continued.”

According to the report, the biggest drop in July was in the Middle East when many producers in the region were adding supply back to the market, due to an agreed easing of OPEC+ production curbs.

Meanwhile in Guyana, following a slowdown in drill operations at Stabroek Block due to pandemic related measures, ExxonMobil said in June that it was back to full drill capacity.

“We have been able to make adjustments to ensure our workforce remains safe as we maintain some amount of continuity, Deedra Moe, Senior Director of Public and Government Affairs, had said. “Operations on two of our drillships, the Stena Carron and the Noble Tom Madden, which were temporarily suspended, are now back to full operations as we are able to increase the number of rotational offshore crew passing through our screening process.”

ExxonMobil has also awarded a new 6-month contract to the drillship Noble Sam Croft for operations offshore Guyana, set to begin in the fourth quarter of 2020. This new contract was awarded under the previously announced Commercial Enabling Agreement (CEA) established with ExxonMobil for Guyana earlier this year.

The Sam Croft will bring the total number of drillships operating at the Stabroek Block to five and joins the Tom Madden and Bob Douglas which are currently drilling development wells just over 100 nautical miles of the country’s coast, as well as the Don Taylor, which is conducting drill operations at the Redtail-1 prospect.

The Stena Carron drillship has since moved to the Kaieteur Block to spud the Tanager-1 well.

ExxonMobil is targeting five offshore developments in Guyana by 2026 which it says are expected to produce upwards of 750,000 bpd. So far, its first development at the Liza field has started with phase 2 expected by 2022. A third development at Payara is awaiting government approval.

“Continual development of projects will help further progress local content and provide opportunities and confidence to the local business community, which will lead to additional opportunities for workers and continued capacity building,” said President of ExxonMobil Guyana Alistair Routledge, in an activity update on Wednesday.

Rystad Energy has said ExxonMobil is projected to expend around US$50 billion in project sanctioning over the next 10 years for its offshore development activities in Guyana.

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