After a year of significantly reduced activity in oil and gas operations, production shut-ins and a major decline in investments brought on by the pandemic, deepwater success in places such as Guyana will provide its own shot in the arm to an industry under pressure.
Over the last 12 months, Oilfield Services (OFS) companies faced the largest demand decline as a result of oil and gas producers cutting their capex and operating expenditure, followed closely by drillers.
According to Fitch Ratings, the impact was felt across the entire OFS sector, although diversified companies and service providers working in regions with low breakeven oil prices were better placed to withstand the downturn.
The largest cut in oil and gas producers’ capital programmes was in the exploration segment with reductions exceeding 30% in 2020, year-on-year.
But Norway-based Rystad Energy says the outlook is about to change and results from deepwater action in places like Guyana will be playing a key role in this regard.
Exploration and appraisal drilling is set to ramp this year offshore the South American country where U.S. oil major ExxonMobil is operator at the giant 6.6 million acres Stabroek block.
“ExxonMobil’s fleet of contracted drillships in Guyana is set to increase to six with the arrival of the Noble Sam Croft in April,” Rystad Energy said in a report published last week.
The Rystad Energy Offshore Rig tracker shows that three drillships are currently located in the greater Liza area performing development drilling activity. The recently arrived Stena DrillMAX already initiated drilling activities on the Longtail-2 appraisal well, while the Stena Carron drillship, which recently concluded drilling Bulletwood-1, has now spud the Jabillo-1 exploration well in the Canje block.
“The operator and its partners plan to deploy four floating production, storage and offloading units (FPSOs) to develop the existing resources within the block. However, the supermajor is expected to ramp up drilling activities, as it plans to have at least five FPSOs online by 2026,” Rystad Energy said. The five FPSOs will be part of a total of 10 expected to be operating offshore Guyana by the turn of the decade.
“In the middle of this booming exploration activity, Guyana is mulling over a new bidding round that could see the light of day in 2022,” Rystad Energy pointed out. “Drilling results will be eagerly watched by the services industry, as more exploration success off Guyana would translate into welcomed opportunities after the market slump of 2020.”
