Depletion policy crucial to longevity of Guyana’s oil industry –TT expert, Anthony Paul

Nov 03, 2019 News

By Kiana Wilburg

If Guyana wants to lengthen the life of its oil industry, then it urgently needs to put in place, a depletion policy which will govern the pace extraction.
This was recently noted by Trinidadian Energy Expert, Anthony Paul.

TT Oil Expert, Anthony Paul

During his guest appearance on Kaieteur Radio’s programme, ‘Guyana’s Oil and You’, Paul spoke extensively about the importance of such a policy and the factors it must consider.
Paul told Kaieteur News that in crafting such a policy, Guyana needs to have a proper understanding of the geology of the basin.
The Chatham House Advisor said: “You need to understand the quality of your reservoirs. This means that you need to have good seismic data, good technology to acquire that data, and the experienced people who can read that data for you. Those people can tell you without relying on the oil companies, what wells have oil and which have gas. They will also advise on what should be developed now and how fast…”
The Energy Expert added: “You must also bear in mind that these companies will stumble on gas and most would not want to bring it up because economically, it is more profitable to bring up oil rather than gas. So if there is a reservoir that has more gas than oil, the company would not drill to complete it. It will stay in the ground …”
Taking this scenario into account, Paul stressed once more that Guyana needs experienced industry analysts who can put together a policy that will seek to tie those gas finds to proper development strategies.
The Trinidadian said: “It therefore means that Guyana needs a regulator who can interpret reservoir performance and make sure you have the right economics around the development plans too. Only then can you say to the company, ‘”Fine, we understand field by field what is going on but let us look at the country’s perspective, what the country needs. What is the right level of production for this country given the capacity we have to manage it?”
At the same time, the Energy Advisor cautioned that a depletion policy is in contrast to the company’s interest which is to extract the resources as fast as possible.
“Remember, these companies want to make quick money so there will be a conflict with the interest of the government. This is where you need skillful negotiators to manage that conflict in interests. And it can be done,” the official concluded.
EXXON RACES TO DRAIN
In the absence of this crucial policy, ExxonMobil and its partners, Hess Corporation and CNOOC/NEXEN, are steaming ahead with plans to extract Guyana’s oil as quickly as possible from the Stabroek Block.
Oil production was initially projected to occur between January and March of 2020. But due to ExxonMobil’s impressive progress on all the necessary installations, that target has been brought forward to December, 2019. While these plans are moving ahead for oil production from the Liza Phase One Project, ExxonMobil is ramping up its development plans for Liza Phase Two.
During its third quarter earnings call this past week, Hess Corporation disclosed that development drilling of Liza Phase Two will commence in the first quarter of 2020 with first oil expected by mid-2022.
Pending government approvals, ExxonMobil is also eager to start a third oil production field on the Stabroek block called Payara.
It is expected to utilize a Floating Production Storage and Offloading (FPSO) vessel with a gross production capacity of 220,000 barrels of oil per day. If the government grants the required approvals in keeping with the company’s expectations, oil can be produced from Payara as early as 2023.
As it pushes ahead with those plans, ExxonMobil is also conducting appraisals of other wells to determine their productivity, all in an effort to maximize profits for its shareholders as quickly as possible. Two of these wells include the Ranger Two and Hammerhead.
But that’s not all Exxon is busy doing on the Stabroek Block. It is also preparing to send the Noble Tom Madden drillship to drill another prospect called Uaru-1. It is located approximately 10 miles east of the Liza-1 well. Further to this, Kaieteur News understands that a fourth drillship, the Noble Don Taylor, is expected to arrive in Guyana to drill the Mako-1 exploration well, located approximately six miles south of the Liza-1 well.
Also on the block, Hess Corporation disclosed that the Stena Carron drillship is currently conducting well operations on the Ranger-2 appraisal well. Following Ranger-2, the rig will move to the previously announced Yellowtail-1 discovery to conduct a production test.