ExxonMobil hires Japanese company to build fifth oil ship without key Govt. approvals

Nov 03, 2022 News

---

– company also gets 10 year contract to operate vessel

Kaieteur News – Mitsui Ocean Development & Engineering Company (MODEC) which is based in Japan announced this week that it has signed a contract to perform Front End Engineering and Design (FEED) for a Floating Production, Storage and Offloading vessel (FPSO) for ExxonMobil Corporation’s “Uaru” development project in the Stabroek Block.

It should be noted however that the award was made in the absence of Government’s approval for Exxon’s Field Development Plan for Uaru. Even the Environmental Impact Assessment (EIA) for the project has not been made public as is customary to allow for nationwide consultations. These engagements are usually made prior to the Environmental Protection Agency (EPA) issuing an Environmental Authorization for the project.

Be that as it may, ExxonMobil has awarded the contract for construction works to begin on the ship. MODEC noted that the FEED contract award relates to the initial funding by ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), to begin FEED activities related to the FPSO design and to secure the second M350TM hull for FPSO service.

Following FEED and subject to Government approvals in Guyana of the development plan, project sanction including final investment decision by ExxonMobil, and EEPGL’s release of the second phase (EPCI) of work, MODEC said it is expected to construct the FPSO and install in Guyana. MODEC is also anticipated to operate the FPSO for an initial duration of 10 years, with potential options for continuation.

Additionally, MODEC said it will design and construct the FPSO based on its M350 new-build design. The FPSO will be designed to produce 250,000 barrels of oil per day, will have associated gas treatment capacity of 540 million cubic feet per day, and water injection capacity of 350,000 barrels per day.

The FPSO will also be installed in a water depth of about 2000 meters, using a SOFEC Spread Mooring System and will be able to store around 2 million barrels of crude oil. “We are extremely honored and proud to be selected to provide the FEED services for an FPSO for the UARU project,” commented Takeshi Kanamori, President and CEO of MODEC. “We are equally proud of our robust track record of successful project deliveries in the South America region, and we look forward to cooperating closely with the client and its partners to make this project a success.” The FPSO will be MODEC’s first for use in Guyana, however it will be the 18th FPSO/FSO vessel delivered by MODEC for use in South America.

MORE THAN US$10B

American energy company, Hess Corporation, recently put Guyana on notice, that the fifth project targeting 1.3 billion barrels of oil in the Stabroek Block’s Uaru field, will cost way more than US$10B. The company issued this forewarning about the most expensive development to come during its 2022 third quarter earnings call.

Hess Executives told shareholders that they were able to insulate development costs for Payara and Yellowtail to some extent, from inflationary pressures by locking in key contracts early. With respect to the Uaru Project, Hess officials said the circumstances will be different, adding that the cost for the Floating, Production, Storage and Offloading (FPSO) vessel, will surely reflect current market conditions, as well as scope changes.

In its project summary that was submitted to the Environmental Protection Agency, Esso Exploration and Production Guyana Limited said the Uaru Project will be located in the eastern portion of the block, approximately 200 km from Georgetown and amid previous Stabroek Projects.

Current plans include drilling to produce oil from approximately 40-76 wells which costs millions of dollars. Production is expected to begin between the fourth quarter of 2026 and the second quarter of 2027, with an expected field life of at least 20 years. EEPGL said the production facilities to be installed include subsea equipment attached to the seafloor as well as processing equipment on the ocean’s surface known as a Floating, Production, Storage, and Offloading vessel.

EEPGL told the EPA that it has undertaken additional studies to obtain an even more comprehensive understanding of potential impacts of effluent discharges to water, the feasibility of alternative handling of produced water, cradle to grave waste management in Guyana, emergency response capabilities, and environmental compliance monitoring and verification. The company said the learnings from current operations and environmental studies will enhance the design and implementation of the Uaru Project, thereby increasing environmental performance and economic value. It concluded that the Uaru Project will contribute positively, directly and indirectly, to economic growth in Guyana.

---

---