ExxonMobil on Friday said it will proceed with the first phase of development, costing US$4.4 billion, for the Liza field, one of the largest oil discoveries of the past decade, located offshore Guyana.
The company also announced positive results from the Liza-4 well, which encountered more than 197 feet (60 meters) of high-quality, oil-bearing sandstone reservoirs, which will underpin a potential Liza Phase 2 development.
Gross recoverable resources for the Stabroek block are now estimated at 2 billion to 2.5 billion oil-equivalent barrels, which includes Liza and other successful exploration wells on Liza Deep, Payara and Snoek, ExxonMobil said in a statement.
The Liza Phase 1 development includes a subsea production system and a floating production, storage and offloading (FPSO) vessel designed to produce up to 120,000 barrels of oil per day. Production is expected to begin by 2020, less than five years after discovery of the field.
Phase 1 is expected to cost just over $4.4 billion, which includes a lease capitalisation cost of approximately $1.2 billion for the FPSO facility, and will develop approximately 450 million barrels of oil, the company said.
“We’re excited about the tremendous potential of the Liza field and accelerating first production through a phased development in this lower cost environment,” said Liam Mallon, president, ExxonMobil Development Company. “We will work closely with the government, our co-venturers and the Guyanese people in developing this world-class resource that will have long-term and meaningful benefits for the country and its citizens.”
The Liza Phase 1 development can provide significant benefits to Guyana, including jobs during installation and operations, workforce training, local supplier development and government revenues to fund infrastructure, social programs and services.
The development received regulatory approval from the government of Guyana.
Pablo Medina, Wood Mackenzie's senior analyst, Upstream, Latin America said: “Liza-Payara has a breakeven of US$46/bbl (Brent; using a 15% discount rate), which puts it in a very attractive position compared to other leading investment opportunities such as tight oil or deepwater Brazil. Very few deepwater projects have been pushed through FID during the oil price downturn.”
Medina said it forecasts the full development of Liza-Paraya to produce over 330,000 b/d of oil at peak, with reserves of over 1.5 billion barrels of oil equivalent (bn boe). “The successful exploration campaign has also led to the discovery of almost 3 trillion cubic feet of associated gas,” he said.
The Liza field is approximately 190 kilometers offshore in water depths of 1,500 to 1,900 meters. Four drill centers are envisioned with a total of 17 wells, including eight production wells, six water injection wells and three gas injection wells.
The Liza field is part of the Stabroek Block, which measures 6.6 million acres, or 26,800 square kilometers. Esso Exploration and Production Guyana Limited is operator and holds a 45 percent interest in the block.
Hess Guyana Exploration Ltd. holds a 30 percent interest and CNOOC Nexen Petroleum Guyana Limited holds 25 percent.
Esso Exploration and Production Guyana Limited is continuing exploration activities and operates three blocks offshore Guyana – Stabroek, Canje and Kaieteur. Drilling of the Payara-2 well on the Stabroek block is expected to commence in late June and will also test a deeper prospect underlying the Payara oil discovery.