EPA approves another 35-well drilling campaign for Exxon without full protection against oil spills

Jul 05, 2023 ExxonMobil, News, Oil & Gas

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Kaieteur News – The Environmental Protection Agency (EPA) in a Public Notice, updated to its website on Sunday revealed it has approved ExxonMobil’s 35 Multi-well Exploration and Appraisal Drilling Campaign in the Stabroek Block, offshore Guyana.

The proposed drilling activities are expected to commence in the third quarter of this year, while Guyana is yet to be fully protected against an environmental disaster caused by an oil spill. Exxon’s project summary for the multi-well programme has indicated that at least 50 simultaneous development projects will be pursued in the resource rich acreage.

This not only increases the chance of a massive spill but also could see Guyana footing any cleanup costs above the US$600 million insurance and the US$2 billion affiliate company guarantee that Esso Exploration and Production Guyana Limited (EEPGL) has since provided to the EPA.

Exxon has cautioned the local authorities, “The drilling of the exploration/appraisal well(s) in the Stabroek Block is expected to potentially occur simultaneously with other drilling activities, including: The Liza Phase 1 Project well drilling and production operations ; the Liza Phase 2 Development Project well drilling program and production operations;  The Payara Development Project well drilling program, installation, and start of production;  Ongoing exploration/appraisal well drilling operations in the Stabroek Block covered under a 25-well campaign and the Yellowtail Development Project well drilling program and installation operations.”

The company is also seeking environmental authorization from the EPA for a 12 well exploration/ appraisal programme in the Kaieteur Block and for another 12 wells in the Canje Block.

It explained that it manages its Simultaneous Operations (SIMOPs) through a structured process that includes weekly planning meetings to verify that simultaneous activities between different offshore teams (Drilling, Installation, Production, and Logistics) are managed safely.

Guyana has not been opposed to the rapid pace in which its petroleum sector has been moving, even as it struggles to keep up. The country not only lacks the expertise it needs to properly monitor and regulate the sector, but has also been failing to conduct and complete timely audits to ensure it is not being shafted by the oil companies, out of the costs they incur to develop the sector.

Under the existing Production Sharing Agreement (PSA) Guyana inked with ExxonMobil and its co-ventuers, 75 percent of the revenue earned in the Stabroek each month is deducted towards cost recovery. The remaining 25 percent is then shared as profits between the two parties.

The Opposition in the past had said it does not agree with the pace in which the sector is moving as this may very well set the nation up to lose billions of dollars and even expose the nation to a greater risk of disaster.

During a press conference in April this year, the Opposition shared this view, suggesting that the government instead take a step back in production activities, to allow for the country to benefit greater within the existing provisions of the PSA.

The Economic Advisor to the Leader of the Opposition, Elson Low explained, “At the moment, the 50/50 split gets Guyana only 12.5 percent of oil revenues–a percentage that seems unlikely to budge under the ongoing oil rush. With five (Floating Production Storage and Offloading vessels) FPSOs already in operation or already approved, the country is now well-positioned to seek a larger cut of the pie. In terms of numbers, the 25 percent profit oil must be allowed to increase so that the 50/50 split would earn Guyana an increase of more than 12.5 percent.”

With more investments being made daily, he has made the point that Guyana’s share of profit is not likely to increase in the near future, especially with the government’s recent announcement to fast track such development. In this regard, the Opposition is calling for a phased development plan that would allow for greater profits for the country.

Vice President Bharrat Jagdeo had indicated that with a limited window available for Guyana to extract its oil resources, the development must continue unhindered and will in fact be fast tracked over the next 15 years. The official said such an approach would include the timely award of production licences as well as encouraging investment in the sector. See link for more: https://www.kaieteurnewsonline.com/2023/04/05/jagdeo-vows-to-fast-track-oil-sector-for-15-years-minimum-has-no-shame-about-that/

35-well campaign

The Stabroek Block 35-well exploration/appraisal drilling campaign, pending EPA approval, is expected to commence in the third quarter of 2023. Exxon said if discoveries are made, well test(s) may be performed. It is expected to run until the fourth quarter of 2028. Be that as it may, the schedule, according to the oil company, could be influenced by new discoveries, determination of the need for sidetracks, and/or well tests—all of which could extend the drilling period for the Project.

EEPGL currently has six drill ships operating offshore Guyana: the Stena Carron, the Stena DrillMAX, the Noble Bob Douglas, the Noble Tom Madden, the Noble Don Taylor, and the Noble Sam Croft. The oil company did not state whether additional drill ships will be required to support its planned developments.

So far, the company has said that the exact locations of the 35 wells comprising the Project have not been finalized. The operator said that while some of the wells will be drilled for exploration purposes, it is also possible that some of the wells may be drilled as appraisal wells within the proximity of previously drilled exploration areas. Appraisal wells are drilled to better define the physical attributes of petroleum resources that have been discovered through prior exploration activities.

If discoveries are found at particular locations, subsequent wells could be drilled in the same area to further assess the potential commerciality of the discoveries.

The Stabroek Block is located approximately 200 kilometers offshore in Guyana waters, where EEPGL has conducted substantial exploration and development activities to date.

Even though the company is seeking to extract the resources from the Guyana basin, it is not equally prepared to offer the country a guarantee that states its commitment to clean up an oil spill that may occur as a result of its offshore activities.

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• 35-well, approves, Drilling, EPA, oil, spill

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