Oil and gas exploration in Guyana expects to drill 35 new wells

The coming period is witnessing a revival of oil and gas exploration activity in Guyana, as the success achieved by Exxon Mobil there has increased the appetite of the American company to explore for more fossil fuels in the deep waters off the coast of the South American country.

In this regard, a consortium of companies led by ExxonMobil obtained environmental approval to begin exploration and drill 35 new appraisal wells, according to a report published by the “Offshore Engineer” website (oedigital), and viewed by the specialized energy platform.

The consortium includes the US oil company Hess and the China National Offshore Oil Corporation (SinoC), which generated profits of approximately $5.8 billion in Guyana during the past year 2022.

New details

Exploration for oil and gas in Guyana is expected to start during the third quarter of this year (2023), and may continue until 2028, according to ExxonMobil estimates.

The 35 new wells will be drilled within the offshore Stabroek block, which extends over an area of ​​6.6 million hectares (26,800 square kilometres).

The volume of reserves discovered within the offshore oil square so far exceeds 11 billion barrels of recoverable oil and gas.

Exxon Mobil says that the project is being implemented with the aim of discovering new recoverable oil and gas reserves in the Stabroek block, and re-evaluating the existing ones, in order to enable potential development projects in the future.

In turn, the Environmental Protection Agency in Guyana, which granted the ExxonMobil consortium the environmental license, says that the new drilling work “can be conducted in accordance with environmental practices, and in a way that avoids, prevents and minimizes any negative effects that may result from the activity.”

So far, Guyana has given the green light to 5 projects of the alliance, which are expected to produce more than 1 million barrels of oil equivalent by 2027.

And Guyana achieved more than two billion dollars in revenues and profits from the alliance’s oil projects.

ExxonMobil in Guyana

ExxonMobil is Guyana’s first and largest oil producer, and operates the Stabroek, Kanji and Kayator blocks, according to the company’s official website.

Since entering the market there in May 2015, the company has so far announced 25 major discoveries and started production in December 2019 from the Lisa-1 well development project in the Stabroek block.

The two largest wells in Guyana (Lisa-1 and Lisa-2) produce about 360,000 barrels per day, and their capacities exceed expectations.

A new project called “Bayara” is expected to be established by the end of 2023, and a fourth project, “Yellow Tail”, will start in 2025.

ExxonMobil is also seeking to obtain environmental licenses for a fourth project called “Uru”.

By the end of the current decade in 2030, ExxonMobil expects Guyana’s oil production capacity to reach more than 1 million barrels per day.

The Stabroek offshore block is managed by Esso Exploration and Production Guyana, a subsidiary of Exxon Moby, with 45% of the shares, while the rest is distributed between Hess Guyana Exploration (30%) and Sinopec Petroleum Guyana (25%).

He gave up 20% of Stabroek Square

Negotiations are taking place between the authorities in Guyana and the ExxonMobil consortium, to relinquish a 20% stake in the Stabroek oil block, which has not yet been developed.

Indeed, the company has identified the areas to be ceded, and ExxonMobil says that exploration for oil and gas in Guyana will continue even in the event of a waiver.

This comes as a prelude to issuing the first tender for the development of 14 offshore blocks in Guyana, for international companies, some of which are in Qatar and the UAE, according to a report published by Reuters, which was seen by the specialized energy platform.

Energy Minister Vikram Bharat said that Qatar Energy and ExxonMobil have shown interest in developing and exploring oil in the bidding areas.

The country is also seeking to loosen the alliance’s grip on Guyana’s oil wealth, which is concentrated in the giant Stabroek block, which will produce 1.2 million barrels per day by 2027.

The Starbrook square development license granted by the country to Exxon Mobil stipulates the return of a share of the undiscovered areas this year (2023), but the country extended the date until next year 2024.