Exxon begins talks with Govt. on 4th Field Development Plan

Nov 20, 2021 News

…despite incomplete consultations

Kaieteur News – Esso Exploration and Production Guyana Limited (EEPGL) is pressing ahead with its fourth planned project in the Stabroek Block and has commenced talks with government regarding the company’s Field Development Plan.

EEPGL and Government Officials during the Zoom meeting as part of the first engagement on the Yellowtail

The company is yet to complete its Environmental Impact Assessment (EIA) and obtain Environmental Authorization for the project.Notwithstanding this, the company met with Natural Resources Minister, Vickram Bharrat and a delegation from his ministry on Thursday, for “the first engagement” with EEPGL on the Yellowtail Field Development Plan.
According to the ministry, during the interactive session, the EEPGL team responded to queries by the Technical Team from the Petroleum Management Unit of the Ministry of Natural Resources, and provided clarification and updates relating to submissions on the Yellowtail Field Development Plan.
Also participating in this engagement are senior representatives from the Ministry of Natural Resources, Ministry of Finance, Guyana Geology and Mines Commission (GGMC), Guyana Revenue Authority (GRA), and the Environmental Protection Agency (EPA.
According to the project summary, submitted to the EPA for environmental authorization, Yellowtail will consist of drilling 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 the operation of a Floating, Production, Storage and Offloading (FPSO) vessel in the eastern half of the Stabroek Block and— ultimately—project decommissioning.
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 stage, with approximately 600 persons at the peak of the installation stage, and 100 to 140 persons during production operations.
Additionally, it was noted that even though the Yellowtail Project, the fourth to be developed in the Stabroek Block, is poised to see its costs going beyond US$9B, it is still regarded by EEPGL’s Stabroek Block Partner, Hess Corporation as having “outstanding economics” that will work in the company’s favour.
Specifically, the company’s Chief Operating Officer (COO), Greg Hill, recently disclosed that the final numbers have not been decided for the project, as this would only follow approval by the government.
Be that as it may, it has predicted that inflationary pressures on the market will push the cost beyond the preliminary estimate of US$9B. Hill was keen to note, however, that the “superefficient” provisions of the Stabroek Block Production Sharing Agreement (PSA) will allow for all expenditure to be recouped.
Hill noted, too, that the economics of the project work in the company’s favour, as it has a breakeven of US$25 to US$32 a barrel. Taking these factors into consideration, the COO said that the Yellowtail Project is, “One of the best projects on the planet…”
Chief Executive Officer, John Hess agreed with Hill’s perspective as he said, “This development has simply outstanding financial returns, some of the best in the industry…So, it’s outstanding economics. Yes, the costs are higher, but the resource we’re recovering is much higher, and these are some of the best economics in the industry.”
As regards the production capacity of the project, Hill said it is poised to be at 250,000 barrels of oil per day, but noted that it is not unusual to see a 10 to 20 percent increase after the relevant data has been gathered.
The operator of the Stabroek Block explained via the project’s Environmental Impact Assessment (EIA) that the costs for developing Yellowtail are expected to be higher, since there would be a greater number of development wells and associated drilling costs when compared to its Payara project, which will also cost Guyana $1.8 trillion.
Despite the astronomical costs, Exxon believes that the project should be supported, as it would generate benefits for the citizens of Guyana in several ways, which would otherwise not be there in the absence of the project.

Discover more from Kaieteur News

Subscribe to get the latest posts sent to your email.

Latest News