Guyana’s oil fortune rapidly increasing

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The Stena Carron is searching for oil off the coast of Guyana in the Stabroek Block

‘Unprecedented’ is the one word that sums up the remarkable string of oil discoveries which US supermajor ExxonMobil has been making off the Guyana coast since 2015. The company’s success rate for finding crude in an area five and a half times the size of neighbouring Trinidad and Tobago is a record 80 percent.

Discoveries in the 6.6 million acres (26,800 square kilometers) Stabroek Block now exceed 4 billion barrels of oil, which ExxonMobil Guyana Country Manager, Rod Henson, has aptly described as a “lighter, sweet crude.”

The nine discoveries – with just 2 dry holes to date – have elevated optimism to such an extent that the company has contracted another drill ship – the Noble Tom Madden – to join the Stena Carron late October to continue the search for more crude. Another vessel; the Noble Bob Douglas, is currently drilling development wells for the first round of production – the Liza Phase 1 development set to come on stream by March 2020.

Ruaraidh Montgomery, a Houston-based analyst at Wood Mackenzie says, “There’s multi-billion barrel potential remaining on the block… It’s such a large block. We’re talking 1,000 times bigger than the average Gulf of Mexico block.”

Even so, Bloomberg in a July 24 report reminded that exploration is no sure thing. Rivals such as Total SA, Tullow Oil Plc and Repsol SA, which are also exploring for oil in Guyana’s waters, have yet to find anything substantial.

The total estimated recoverable reserve discovered so far in the Stabroek Block is enough to push Guyana above OPEC-members Equatorial Guinea and Gabon, and about half the level of Angola. Production at 750,000 barrels a day by 2025 would put the South American country just below Libya’s 2017 output, Bloomberg said.

Rystad Energy estimates that the country can rake in more than 20 billion US dollars in profits. And this estimate did not factor in the most recent 9th discovery.

Exxon’s Neil Chapman, management-board member, called Guyana a “fairy-tale” discovery at the company’s analyst day in March. That’s in part due to timing. In 2015, when the company first struck oil, crude was plunging and reached a 12-year low of about $26 a barrel in 2016. Since then ExxonMobil has struggled to grow production, making Guyana essential to reviving the oil major’s fortunes.

All eyes are now set on the next target on the block – Pluma – where the Tom Madden will be gunning to bring the total discoveries to 10, before the close of 2018.