When one takes into consideration the impact of the COVID-19 pandemic on global demand for oil as well as increasing calls for a shift to renewable sources of energy, many industry stakeholders have been moved to question whether the days of oil exploration are numbered.
In an effort to provide the market with guidance on this matter, analysts at Wood Mackenzie conducted an assessment of the company’s base cases, and therein found that oil and gas fields that are on-stream or under development would not meet all future demand in the next 20 years. This is irrespective of what steps are taken to limit global warming.
OilNOW understands that the volume of new supply needed could be at least 460 billion boe or as much as 760 billion boe in the Wood Mackenzie base case. The Analysts noted that some of that will come from existing resources while exploration can take its share if it can deliver advantaged barrels. That is to say, production fields that are low cost and provide low carbon intensity barrels with competitive economics.
So where does this leave Guyana which is hopeful to monetize the over eight billion barrels of oil equivalent resources in the Stabroek Block? According to Luiz Hayum, a Senior Analyst in Wood Mackenzie’s Latin America Upstream Research team, it leaves Guyana “in a safe and advantaged” position.
During an interview with OilNOW, Hayum said one must bear in mind that there is still a need for exploration barrels, especially if they can replace more expensive and more carbon-intensive barrels. The Senior Analyst commented, “Liza’s barrels are very well positioned in our cost curve with breakeven below the US$40-50/bbl scenarios that companies are adopting to approve new oil projects. So, the Stabroek block discoveries and even interest in further exploration is still a safe bet.”
Hayum said that a good demonstration of how “well-positioned” Guyana is, was when ExxonMobil and Hess Corporation slashed capital expenditure even in the Permian Basin but maintained the Guyana investments.
Hayum also alluded to the fact that there is a “narrow window” for Guyana to ensure the commercialization of its assets as he noted that all companies in the industry are taking steps towards de-carbonization.
He said that one has to factor in that there are demands from investors and the population of nations in general for greener economies. The Wood Mackenzie analyst said it therefore means that in a decade from now, it is likely that there can be changes, at least to the criteria for projects to move ahead.