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Installation activities for start-up of third oil project underway
Kaieteur News – ExxonMobil, through its subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), has commenced installation works in anticipation of the start-up of production activities later this year at the third deep water oil project in the Stabroek Block, Payara.
According to a notice published in Thursday’s edition of the Kaieteur News by the Maritime Administration Department (MARAD), the operator recommenced installation activities in the Payara Field of Guyana Exclusive Economic Zone on March 7, 2023.
The exercise is scheduled to conclude on November 30, 2023 and will incorporate the use of the vessel ‘PLV Saipem Constellation’. Mariners have been advised to stay clear of the vessel and navigate with extreme caution when in the area.
The area is situated approximately 102.27 nautical miles or 189.4 kilometers off the coast of Guyana and covers an area of 136.8 square nautical miles or 469.3 square kilometres.
In November 2019 Saipem announced the contract award of the Payara subsea development project by EEPGL, subject to final investment decision (FID), for the detailed Engineering, Procurement, Construction and Installation (EPCI) of a large subsea production facility.
The Saipem Constellation vessel that will be conducting the installation activities in the Payara field (Photo credit: Saipem)
The Payara discovery is located 200 kilometres offshore Guyana in 1,800 metres water depth. Ten drill centres are planned along with up to 41 wells, including 20 production and 21 injection wells. The project will utilise onshore infrastructure which includes shore bases, warehouses, storage and pipe yards, fabrication facilities, fuel supply facilities, and waste management facilities in Guyana.
On February 19, the Floating Production Storage and Offloading (FPSO) Vessel that will develop the resources in that field left the Keppel Shipyard, Singapore for Guyana. The vessel, Prosperity, was built by SBM Offshore, a Dutch shipbuilder headquartered in the Netherlands.
Prosperity is expected to arrive in Guyana on April 18, 2023. It is the largest vessel constructed so far and will boost Guyana’s oil production by some 220,000 barrels of oil per day. Production at the Payara field was initially set to commence in 2024.
While the FPSO is designed to produce 220,000 barrels of oil per day, it also features an associated gas treatment capacity of 400 million cubic feet per day and a water injection capacity of 250,000 barrels per day. It will be spread moored in a water depth of about 1,900 meters and will be able to store around 2 million barrels of crude oil.
Currently there are two FPSOs operating offshore Guyana at the Liza One and Liza Two deepwater projects. They produce approximately 360,000 barrels of oil per day.
Even as production is poised to increase, the revenue from this source is hardly likely to significantly enlarge as well, due to the lopsided 2016 Production Sharing Agreement (PSA) Guyana signed with ExxonMobil.
Activists in Guyana have been lobbying for changes to be made to the 2016 PSA as Guyana receives a mere two percent royalty for its sweet light crude and settled for 50 percent profit sharing, after Exxon takes 75 percent of the earnings to clear its expenses.
The deal that the oil company often brags about to its shareholders, also forces Guyanese to pay their share of taxes, amounting to millions of US dollars each year. This figure is likely to further balloon as more operations come on stream.
In addition, the country is allowing ExxonMobil to operate offshore without full liability coverage in the event of an oil spill, which means that the risk is borne by Guyana.
Another key provision that is lacking in the document is ring-fencing provision, which would avoid the oil company from using the petroleum revenue in one field to cover for expenses in another.
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