ExxonMobil could wipe out Stabroek Block’s proven reserves by 2036

Feb 08, 2021 News

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By Kemol King
Kaieteur News – Many countries have had their time with oil, and found decades after first oil that there was a lot they could have done better to secure value for their people. Trinidad & Tobago, for instance, took decades to realize some of its mistakes, which have resulted in billions in losses in revenue to the State. One example of this, told to Kaieteur News by Energy Strategist, Anthony Paul, is the fact that that country ended up losing US$17 billion between 2010 and 2017 due to ignorance on gas trading. Despite a century with this industry, Trinidad and Tobago is still learning in some ways, how to manage.
Turn to Guyana. Six years after the first commercial oil discovery, the country has failed to place basic regulatory mechanisms and legislative necessities in place to manage this sector. Guyana’s preparation for oil has been slothful, and the pace at which ExxonMobil intends to develop the reserves it has discovered shows that, unlike Trinidad, Guyana does not have 100 years to get it right.
It is very likely ExxonMobil will wipe out the proven reserves of the Stabroek Block in less than two decades. Using a simple projection of production numbers based on public statements by ExxonMobil and its partners, Kaieteur News can show that ExxonMobil could wipe out the proven reserves by 2036.
Currently, ExxonMobil estimates that the proven reserves in the Stabroek Block stand at nine billion oil-equivalent barrels. Make no mistake. This doesn’t mean there are nine billion barrels of oil. The term ‘oil-equivalent’ covers oil and gas reserves. This is how ExxonMobil and its partners publicly report the reserves.
Kaieteur News had made several inquiries a year ago with the government and the oil companies to determine how much of the estimate at the time accounted for gas. The Energy Director at the time, Dr. Mark Bynoe, had told the media in February 2020 that the eight billion barrels estimated then, included 25 percent gas. Later in late August, ExxonMobil’s country president, Alistair Routledge had said that gas accounts for about 20 percent of the proven reserves. Two months later, Chief Executive Officer of Hess Corporation, John Hess said that the reserve estimate had increased to nine billion barrels.
In this projection, let’s assume that gas accounts for 20 percent of the nine billion barrels of proven reserve. This would mean that there are about 7.2 billion barrels of oil.
ExxonMobil has been producing oil at the Liza Phase One operation since December 2019 with a nameplate capacity of 120,000 barrels per day. However, production levels varied throughout the year due to government-mandated curtailments after Exxon flared way longer than it had to. This year, ExxonMobil is still flaring but the new administration does not find it necessary to curtail production. ExxonMobil is allowed to produce at its nameplate capacity, and Hess has even said that it intends to increase nameplate capacity later this year.
Using its initial nameplate, it is a simple assumption that in 2021, ExxonMobil will produce over 43.8 million barrels of oil. When Liza Phase Two comes on in 2022, it will be producing 220,000 barrels of oil a day. The combined nameplate capacities of the two vessels will produce 248.2 million barrels of oil in the two years following first oil at Liza Phase Two.
In 2024, Payara will come on stream, adding 220,000 barrels a day of production. This will take the combined nameplate capacities over 560,000 barrels of oil a day. In the 12 months after Payara achieves first oil, the vessels operating will produce almost 205 million barrels of oil. Combined with production in the preceding years, ExxonMobil will have already produced more than 500 million barrels of oil. These are the projects Guyana has already approved.
To determine how ExxonMobil will add development projects moving forward, let’s look at its public statements and those of industry analysts. So far, the Government of Guyana has indicated no intention to curtail production. Vice President, Dr. Bharrat Jagdeo has said that he is in favour of aggressive production of Guyana’s reserves, to beat the oncoming global energy transition to renewables.
ExxonMobil intends to have five Floating Production, Storage and Offloading (FPSO) vessels producing in the Stabroek Block by 2025 with production levels over 750,000 barrels a day.
Kaieteur News has shown that ExxonMobil would be producing about one million barrels of oil a day with five FPSOs. So far, the public knows that ExxonMobil intends to add an FPSO at the Yellowtail-1 area to produce 220,000 barrels of oil a day. Assuming that this receives government approval without hiccups after submission at the end of 2021, it would likely come on stream in 2025. This would take Exxon’s combined nameplate capacity in the block over 780,000 barrels a day. With the same nameplate, FPSO #5 would come on stream in 2026, taking ExxonMobil to one million barrels of oil production every day. By late 2026 – early 2027, ExxonMobil will have wiped out 1.15 billion barrels of Guyana’s oil. Just like that, 7.2 billion becomes 6.05 billion.
The super-major has said that it sees potential for seven to 10 FPSOs in the Stabroek Block. Rystad Energy, an energy research and business intelligence company, projected mid-2020 that ExxonMobil will be able to place one FPSO offshore Guyana, every year for the next 10 years. These statements will guide this newspaper’s assumptions.
If FPSO#6 comes on in 2027, ExxonMobil will produce 445 million barrels of oil in the 12 months following. If FPSO#7 comes on in 2028, ExxonMobil will produce 527 million barrels of oil in the 12 months following. That’s nearly one billion barrels produced in two years alone, taking the total produced since 2019 to 2.12 billion barrels of oil.
If Rystad is correct, the eighth, ninth and tenth vessels will start producing in 2029, 2030 and 2031 respectively. This would significantly increase the rate of production. At 220,000 barrels of oil a day, the combined capacities of the ten vessels would be producing 2.1 million barrels of oil a day.
Let’s assume though, that the final vessel is like Liza Phase One, and round the daily production to 2 million barrels a day, for simplicity. Former Head of the Environmental Protection Agency (EPA), Dr. Vincent Adams made this assumption too, during a panel forum at Moray House Trust on January 16, last.
By the end of the first year, after the tenth FPSO is placed, ExxonMobil will have wiped out 4.14 billion barrels of oil, leaving a little over three billion barrels left.
In the following years, it will produce about 730 million barrels of oil in each year. By 2032, there would be 2.32 billion barrels left. By 2033, that would be reduced to 1.6 billion barrels. By 2036, there would be nothing left.
These simple projections only serve to show how quickly ExxonMobil could deplete Guyana’s resources. It is highly likely that there will be more discoveries offshore Guyana. But is that what Guyana’s leaders are banking on? More discoveries? How much time does Guyana really have left?

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