ExxonMobil has announced a $10 billion commitment to a new development in Guyana’s prolific offshore Stabroek block.
The company has received approval from the government of Guyana for the Yellowtail project, which would be the company’s largest to-date asset in the country. Production is slated for 2025 and is expected to hit 250,000 b/d.
“Yellowtail’s development further demonstrates the successful partnership between ExxonMobil and Guyana, and helps provide the world with another reliable source of energy to meet future demand and ensure a secure energy transition,” said Liam Mallon, president of upstream operations. “We are working to maximize benefits for the people of Guyana and increase global supplies through safe and responsible development on an accelerated schedule.”
Yellowtail production from the One Guyana floating production storage and offloading (FPSO) vessel will develop an estimated resource of more than 900 million bbls of oil. The project will include six drill centers and up to 26 production and 25 injection wells.
The development is the company’s fourth on the Stabroek block, and ExxonMobil sees potential for up to 10 projects to develop the resource. Offshore exploration in Guyana has so far yielded the company a recoverable resource of more than 10 billion boe.
The first offshore project, Liza Phase 1, began production in late 2019. Production at the second offshore oil development, Liza Phase 2, began in February and is expected to increase total production capacity to more than 340,000 b/d.
ExxonMobil sees four FPSOs with a total capacity of 800,000 b/d in operation on the Stabroek block by the end of 2025. Payara, the third project, is expected to produce 220,000 b/d of oil with a vessel currently under construction.
More than 3,500 Guyanese are supporting ExxonMobil’s activities in Guyana, an increase of more than 50% since 2019. ExxonMobil and direct contractors have spent more than $600 million with more than 880 local suppliers since 2015.
ExxonMobil affiliate Esso Exploration and Production Guyana Limited is the operator and holds 45% interest in the Stabroek block. Hess Guyana Exploration Ltd. holds 30% interest and CNOOC Petroleum Guyana Limited holds 25% interest.
Last year, Hess CEO John Hess called offshore Guyana “one of the industry’s best investments.” Oil developments offshore Guyana have a Brent breakeven estimated at $25-35/bbl.
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With oil prices above $100/bbl, Guyana is also one of the few Latin American nations expected to ramp up production in 2022. In its latest oil market report, OPEC said that non-OPEC supply growth this year would be led by the United States, Russia, Brazil, Canada, Kazakhstan, Guyana and Norway.
Other nations in Latin America such as Mexico, Venezuela, Ecuador and Colombia, meanwhile, have seen production drop or stagnate in recent years.
Worldwide, around 80 offshore oil and gas projects worth a total of $85 billion are up for approval in 2022. Latin America will be responsible for around 24% of these total offshore sanctioning values, tied for No. 1 as a region with Europe, according to Rystad. Guyana and Brazil should account for the majority of these approvals, according to Rystad.