Preparations for the 220,000 barrels per day (bpd) Liza Phase 2 and Payara developments offshore Guyana are moving ahead on schedule and will soon add to the 120,000 bpd Liza Phase 1 project, effectively pushing Guyana’s output at peak well over the 500,000 bpd mark by 2024.
Speaking during Hess Corporation’s 2021 first quarter earnings call on Wednesday, Chief Operations Officer, Greg Hill said ‘first oil’ for the Liza Phase 2 development remains on track for early 2022. “The Liza Unity FPSO (Floating Production Storage and Offloading unit) with a production capacity of 220,000 gross barrels of oil per day is preparing to sail from the Keppel Yard in Singapore to Guyana mid-year,” he told stakeholders.
Meanwhile, he said the overall work for Payara—which will utilise the Prosperity FPSO—is about 38 percent complete. “The FPSO hull is complete and topsides construction activities have commenced in Singapore. First oil remains on track for 2024,” Hill reported.
It was also disclosed that Front End Engineering and Design work continues for the fourth development on the Stabroek block at Yellowtail. ExxonMobil, operator of the block, will submit a development plan to the government in the second half of this year. “Pending government approval and project sanctioning, the Yellowtail project is expected to achieve first oil in 2025,” Hill said.
John Riley, Hess Corporation’s Chief Financial Officer, said for the first quarter of this year the company sold three million barrels of Liza Crude. When Liza Phase 2 comes on stream, this number is expected to increase. “We’ve had a strong first quarter and we’re seeing market conditions favourable for oil right now. It is still our plan, our strategy, as Phase 2 comes on, and that’s a 220,000 barrels-a-day ship, so we’ll get our entitlement there [and this] will significantly drive our cashflow inflection next year.” Cash flow is also expected to continue to grow as Payara and Yellowtail come into operation.
Chief Executive Officer (CEO), John Hess affirmed that Guyana continues to be the company’s growth engine. “Guyana is positioned to become a significant cash engine as multiple phases of low-cost oil development come online, which we expect will drive our portfolio breakeven brent oil price below $40 by the middle of the decade,” he said.
The South American nation remains one of the company’s top priorities, with its low-cost supply and industry-leading financial returns. “Guyana isn’t a longer term (project). We’re bringing it forward every year, first in 2022 with Liza 2 and then in 2024 with Payara, then Yellowtail in 2025,” the CEO stated. “The payouts are very quick, and returns are very high so we are going to be bringing value forward and you can look at the cadence most likely of bringing on one of these low-cost developments every year, thereafter.”
Hess has a 30% stake in the Stabroek block with operator ExxonMobil holding 45% interest and CNOOC holding 25%.