Guyana will be producing oil for decades to come. A series of deepwater development projects being executed by U.S. oil major ExxonMobil is rapidly transforming the South American country, catapulting it from a non-producer less than five years ago, to what will ultimately be the second largest deepwater producer in the world, according to Rystad Energy. The country’s first discovery – Liza 1 – was made just nine years ago.
The latest project to be targeted for approval by Exxon is Hammerhead, located 160 kilometers off the country’s coast at the prolific Stabroek Block, which, according to Guyana regulators, hold around 11.6 billion barrels of oil equivalent resources. Other estimates put this much higher, closer to 20 billion boe.
Exxon points to major upcoming milestones in South America hotspot
Hammerhead is expected to achieve first oil around 2029 and will be in production for approximately 20 years. The project follows Liza Phase 1, Liza Phase 2, Payara, Yellowtail, Uaru and Whiptail. The first three are now in production, with output exceeding 600,000 barrels of oil per day. By the time Hammerhead comes online, it is likely to take total production capacity offshore Guyana to 1.5 million b/d.
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ExxonMobil’s Chief Executive Officer, Darren Woods has said the company’s “design one, build many” concept is a huge factor in the consistent production ramp-up at its Guyana projects. At present, all the floating production storage and offloading units at Stabroek have been built and are being operated by SBM Offshore.
“We have tried to maintain consistency from boat to boat,” Woods said during Exxon’s Feb. 2 Q4 2023 earnings conference. “As the subsurface and the complexity of the developments change, we have to make adjustments. It is not quite a cookie-cutter approach, but we tried to maintain a level of consistency.”
That consistency is resulting in billions of U.S. dollars in oil revenue for Exxon, its co-venturers Hess and CNOOC, and the Guyana government.
In June, the company reported comprehensive income (profit) of GY$614.6 billion (US$2.9 billion) for 2023. This represents a 6% increase from its GY$577.7 billion (US$2.75 billion) 2022 profit.
“It’s not just about the revenues that we generate. It’s what we can do with the investment dollars,” said Vice President and Business Services Manager, Phillip Rietema. Exxon and its co-ventures have committed to investing GY$5 trillion over the next few years, as outlined in its 2023 Financial Report. This financial injection complements the GY$6 trillion already invested in the Stabroek Block, bringing the total commitment to GY$11 trillion (approx. US$55 billion).
And for Guyana, government is poised to get way more revenue than was projected for 2024, due to higher-than-expected oil production. S&P Global projected 632,000 barrels per day (b/d) oil production for Guyana this year, a more than 60% growth from the prior year. Such a projection would translate to approximately 230 lifts of crude oil, rather than the 202 lifts projected by the government. This leaves room for a proportional increase of more than US$2 billion in export value on top of the US$16.8 billion January projection from the Ministry of Finance.
Oil revenues to both the Exxon consortium and Guyana government will further increase in the coming years, as more cost is recovered for investments made, and additional projects come online.
In addition to Hammerhead, an eighth project – Longtail – is being considered. “They are already moving ahead with Hammerhead, and we have heard talks that Longtail will come after that,” Vickram Bharrat, Guyana’s Minister of Natural Resources, told reporters at a press conference last week.
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“In my 40-year career, I have never worked on anything so exciting and so prolific,” Exxon’s Upstream President, Liam Mallon said earlier this year at CERAWeek, reflecting on the remarkable story unfolding in Guyana.
