US$10B Yellowtail project running ahead of schedule - Hess

US$10B Yellowtail project running ahead of schedule – Hess

May 02, 2023 ExxonMobil, News, Oil & Gas

Kaieteur News – Chief Operating Officer (COO) for Hess Corporation, Greg Hill recently told shareholders that Guyana’s fourth oil project at the Yellowtail field in the Stabroek Block is running way ahead of schedule.

He said, “Yellowtail, our fourth development, is approximately 45% complete and remains on track for first oil in 2025.” He said the ‘ONE GUYANA’ floating, production, storage and offloading (FPSO) vessel which will produce 250,000 barrels of oil per day from the Yellowtail project is advancing too. In this regard, he told shareholders that the FPSO hull entered dry dock in Singapore on April 2.

Hill also noted that topside fabrication and installation activities have commenced and development drilling is underway. Hill said, “Yellowtail is running ahead of schedule right now. It’s looking really good, but remember these are major projects. So I think just right now, expecting first oil to still be in 2025 is the right way to think about it. And obviously, as we get further down, we’ll narrow the window on those dates.”

Map showing the location of the Yellowtail field in the Stabroek Block

The Petroleum Production Licence for the Yellowtail Project was granted on April 1, 2022 to ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL). While the project is pegged at a whopping US$10B, the licence provides enough leeway for EEPGL and its partners to adjust development plans as well as costs as needed. Importantly, government approval is required for any future modifications.

According to the provisions of the Petroleum Production Licence (PPL), “The Licensee may, with the written approval of the Minister, amend the Development Plan with respect to work and expenditure contained in the Development Plan, but the amendment shall not have effect so as to reduce any minimum requirements.”

It noted further that, “Unless the Minister has approved any such amendment, expenditures made to carry out operations to implement the amendment will not be cost recoverable.” The PPL states as well that EEPGL shall carry out all activities under this Licence in keeping with good international oilfield practice and in compliance with the nation’s outdated oil laws, the lopsided Stabroek Block Petroleum Agreement, the Development Plan, and any other law or instrument or agreement with the Government to which the licence may be subject, as may be amended, enacted or modified from time to time.

The foregoing is listed under “Duties of the Licensee” in the PPL. Kaieteur News previously reported that the project will develop approximately 925 million barrels offshore by drilling approximately 45 to 67 development wells (including production, water injection, and gas re-injection wells) and using a Floating Production, Storage, and Offloading (FPSO) vessel to process, store, and offload the recovered oil. The FPSO will be connected to the wells via associated equipment, collectively referred to as Subsea, Umbilicals, Risers, and Flowlines (SURF) to transmit produced and associated fluids (i.e., oil, gas, and produced water) from production wells to the FPSO, as well as treated gas and water from the FPSO to the injection wells.

It should be noted that the exact locations of the Yellowtail development wells have not yet been finalised; however, the wells will be drilled from six drill centres. Additionally, natural gas will be produced in association with the produced oil. EEPGL will use some of the recovered gas as fuel on the FPSO and proposes to re-inject the remaining gas back into the reservoir, which will assist in optimising management of the reservoir. Alternative uses of gas for future phases are being studied and any such uses would be addressed in an environmental impact assessment.