ExxonMobil in talks with SBM to build 4th FPSO despite no Govt. approval

Nov 12, 2021 News

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Kaieteur News – Esso Exploration and Production Guyana Limited (EEPGL)—ExxonMobil Guyana—is currently in talks with Dutch Floater Specialists, SBM Offshore for the construction of another multi-billion dollar Floating Production Storage and Offloading (FPSO) Vessel.

That vessel is for ExxonMobil Guyana’s fourth and largest oil field development which is to operate in the Stabroek Block at the Yellowtail site to comprise up to 67 wells—production and reinjection. Notably the company only on Thursday wrapped up its public scoping exercise via a zoom session, to inform its Environmental Impact Assessment studies after which the Environmental Protection Agency (EPA) would, after an assessment, decide on whether to provide environmental authorisation.

According to international reports, the talks include the potential for some future platform assembly in Guyana. This publication understands discussions include potential made-in-Guyana requirements to build part of future production units.
This according to a Reuters report, which attributed the sentiments to Vice President, Bharrat Jagdeo. “We are hoping that more and more of the components could be fabricated in Guyana,” Jagdeo said this week

It was noted that the deal for the fabrication of the latest FPSO could be had within six months.
Netherlands-based SBM Offshore has been awarded Exxon contracts to build Guyana’s first three FPSO, namely the Liza Destiny for the Liza I Oil Field, the Liza Unity currently being hooked up to the subsea installations while the third development, Payara is well underway.
That oilfield will be produced using the FPSO—Prosperity—another of the production vessels that ExxonMobil had proceeded with constructing, even before receiving government’s approvals.
The company has in recent years been coming under increasing public scrutiny and receiving criticism over its high handed approach towards projects in Guyana with negotiations being done for project costs to be recovered through cost oil and for which the Guyanese authorities have little to no input.
This much is illustrated in the current situation where the company is already in talks with the Dutch Ship Builder even before it completes the public scoping exercises locally.
Exxon has said it sees potential for installing 10 FPSOs in its massive Stabroek oil block, which encompasses 6.6 million acres (27,000 square km) off Guyana’s coast.

The first six vessels are expected to bring the country’s daily production rate to some 1 million barrels of oil and gas per day (bpd) by 2027, consortium member Hess Corp, said last month.

Hess in its recent earnings call with shareholders had indicated that the first FPSO produced 124,000 bpd in the third quarter while the second floating platform that can produce 220,000 bpd arrived in October, with initial output due early next year.
SBM has already started building the third vessel for the Payara Field in the Keppel Shipyard, Singapore, with output from it expected in 2024. The fourth vessel is aimed at producing 250,000 bpd starting in 2025, pending government approval and project sanctioning, Hess said.
According to reports, with the fifth FPSO, Exxon is expected to organize bids and open competition for contractors, welcoming new builders to one of the world’s largest offshore markets, one of the people familiar with the talks said.

Kaieteur News had reported that EEPGL, on behalf of itself and its co-venturers, Hess Corporation and CNOOC Petroleum Guyana Limited, is seeking an environmental authorisation from the EPA for its fourth project development in the eastern half of the Stabroek Block.
The area that will be developed as part of the project is located approximately 203 kilometres (approximately 126 miles) northeast of the coastline of Georgetown, Guyana.
As part of its regulatory role, the EPA, considering recommendations from the Environmental Advisory Board and other government entities, is responsible for deciding whether and under what conditions to grant EEPGL’s application for environmental authorisation which was filed with the EPA on April 1, 2021. Based on an initial assessment of the application, the EPA determined that an EIA was required in support of the Application.

The purpose of the EIA is to provide the factual and technical basis required by the EPA to make an informed decision on EEPGL’s application for environmental authorisation.
According to project documents, Yellowtail will consist of the drilling of approximately 41 to 67 development wells (including production, water injection, and gas re-injection wells); installation and operation of Subsea, Umbilicals, Risers, and Flowlines equipment; installation and operation of a Floating Production, Storage, and Offloading (FPSO) vessel in the eastern half of the Stabroek Block; and— ultimately—project decommissioning.
EEPGL has said the FPSO will be designed to produce up to 250,000 barrels of oil per day.
Onshore logistical support facilities and marine/aviation services will be used to support each stage of the Project. EEPGL is expected to use proven and good international oilfield practices. The company said it has incorporated many embedded controls into the overall Project design to reduce environmental and socioeconomic impacts.
The initial production is expected to begin by the end of 2025–early 2026, with operations continuing for at least 20 years. The project is expected to employ up to 540 persons during development well drilling, approximately 600 persons at the peak of the installation stage, and 100 to 140 persons during production operations.

 

 

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