ExxonMobil strikes new ‘Lancetfish-1’ discovery in Stabroek Block

Apr 27, 2023 News

---

…says success shows continued exploration potential

Kaieteur News – ExxonMobil Guyana on Wednesday announced its second discovery for this year, the Lancetfish-1 well in the Stabroek Block, offshore Guyana. This adds to the 39 discoveries already recorded by the oil giant so far in the country’s Exclusive Economic Zone (EEZ).

The first discovery for this year was recorded on January 25, at the Fangtooth SE-1 well. ExxonMobil Guyana in a statement revealed that the Lancetfish-1 well encountered approximately 92 feet (28 meters) of oil-bearing sandstone. The well was drilled in 5,843 feet (1,780 meters) of water and is located southeast of the Fangtooth-1 discovery.

President of ExxonMobil Guyana, Alistair Routledge noted, “Initial results from the Lancetfish-1 well are encouraging and demonstrate the Stabroek block’s continued exploration potential.” The Lancetfish-1 was drilled by the Noble Don Taylor, one of six drillships supporting ExxonMobil Guyana’s exploration and appraisal activities off the country’s coasts.

In addition to the discovery news, the oil company also shared that progress is being made on the infrastructure to support future field development. To this end, it pointed out that the third Floating, Production, Storage and Offloading (FPSO) vessel- Prosperity- arrived in Guyanese waters on April 11 and is targeted for production start-up later this year. Prosperity will join the Liza Destiny and Liza Unity FPSOs, which together produced 375,000 barrels a day during the first quarter of 2023.

In a separate missive, the Ministry of Natural Resources said, “The Government of Guyana welcomes the continued success of exploration and discovery work conducted by the Stabroek Block consortium – Esso Exploration and Production Guyana Limited (EEPGL), Hess Corporation and China National Offshore Oil Corporation (CNOOC).”

Noting that this new discovery adds to Guyana’s growing legacy as an oil-producing and exporting nation, Minister of Natural Resources, Vickram Bharrat, reaffirmed the government’s commitment to ensuring that the hydrocarbons sector is sustainably and judiciously managed.

The revenue earned from this sector, he reminded, will be prudently invested to transform the nation’s social and economic landscape. The Minister said, “The Guyana government is devoted to ensuring that the benefits of Guyana’s petroleum resources benefit all Guyanese, paving the way for a thriving future. With the nation’s third and largest floating, production, storage and offloading (FPSO) vessel – Prosperity – joining the current fleet, our pledge to guarantee that this sector is managed against industry standards remains unmoved.”

The Stabroek Block is 6.6 million acres (26,800 square kilometers). ExxonMobil affiliate Esso Exploration and Production Guyana Limited is operator and holds 45% interest. Hess Guyana Exploration Ltd. holds 30% interest and CNOOC Petroleum Guyana Limited holds 25% interest.

It is the largest oil block in the country and some argue, even the World. The unusual size of the Stabroek Block is however no more unusual than the agreement which governs the acreage.

The Production Sharing Agreement (PSA) which was signed by the former government in 2016 extends favourable terms to the oil companies, while Guyana is left with the shorter end of the stick.  The agreement allows for abrasive tax waivers and shortchanges Guyana in several of the clauses therein. For instance, Exxon is allowed to recover costs flagged by an audit, while Guyana can only reclaim these after an arbitration process.

Presently, there is no ring-fencing provision, which means the Contractor can use the resources in the producing fields to develop another. Exxon also enjoys holding the country’s decommissioning or clean-up fees, amounting to hundreds of millions of US-dollars. Additionally, up to 75 percent of the earnings are also deducted towards cost recovery or repaying the investments made to develop the natural resource. The remaining profits are shared 50-50 between the parties, with an additional two percent royalty for Guyana. Importantly, Guyana is yet to secure full liability coverage from Exxon for these activities, meaning if there is a large spill, the country will have to stand these costs too. The country only has a US$600 million policy in place per oil spill event.

Despite calls from several sections of society and even foreigners advising the leaders on the grave necessity of renegotiating the contract, both sides of the political divide are unwilling.

---

• discovery, ExxonMobil, Lancetfish-1, oil, second

---