Whiptail permit mandates ‘Drill Baby, Drill’ policy

May 02, 2024 ExxonMobil, News, Oil & Gas

Kaieteur News – Guyana does not have a depletion policy in place, with which to guide the rate crude is extracted and produced from the Stabroek Block. In fact, the permits being handed out enshrine maximum production.

This much, is made clear in the most recently approved Permit issued to the ExxonMobil-led consortium, operating in the Stabroek Block. According to the Permit, the holder must “ensure the development plan, and the level of production proposed therein is consistent with the maximum efficient rate of production which conforms to sound reservoir engineering principles in accordance with, best international industry standards and practice.”

Enshrined in the Whiptail Permit, the holder is also obligated to ensure the most efficient development, production and beneficial use of the commercial discovery concerned.

This, taking “into account best international industry standards and practices as defined in the Act, and as applicable in relation to production operations, to mean all those uses and practices that are, at the time in question, in accordance with the most up to date international standards that are generally accepted in the international oil and gas industry as being state-of-the-art or otherwise appropriate to the operations in question, safe, economical, environmentally sound and efficient in developing, producing, processing and transporting petroleum.”

Vice President Bharrat Jagdeo’s personal position has become the bedrock of what the People’s Progressive Party /Civic’s depletion policy–“Drill baby drill!”

ExxonMobil Guyana Limited (EMGL) last month received the green light from Government to pursue a sixth oil project in the Stabroek Block, the Whiptail development.

The $12.7 billion Whiptail development is targetting an estimated resource base of more than 850 million barrels of oil and include up to 10 drill centers and 48 production and injection wells. The floating production, storage and offloading (FPSO) vessel for Whiptail, which will be called Jaguar, is already under construction.

ExxonMobil also announced its Final Investment Decision (FID) for the project that is expected to produce approximately 250,000 barrels per day (bpd) by the end of 2027.

Liam Mallon, President of ExxonMobil Upstream Company at the time said, “Our sixth multi-billion-dollar project in Guyana will bring the country’s production capacity to approximately 1.3 million barrels per day.” He noted that the company’s unrivaled success in developing the Guyana resource at industry-leading pace, cost and environmental performance is built on close collaboration with the government of Guyana, as well as its partners, suppliers, and contractors.

Mallon further pointed out, “We are committed to helping spread the benefits throughout the country by investing in local Guyanese communities and projects to support the country’s phased and sustainable development.”

Currently, three FPSOs – the Liza Destiny, Liza Unity and Prosperity – are operating offshore Guyana and are producing more than 640,000 barrels of oil per day. Construction is underway on FPSOs for the Yellowtail and Uaru projects, with Yellowtail anticipated to start production in 2025 and Uaru targeted in 2026.

There are currently 6,200 Guyanese working in support of Stabroek block operations—which is 70% of the workforce. The cumulative spend of ExxonMobil Guyana and its contractors with Guyanese suppliers since 2015 surpassed $1.5 billion at the end of 2023.

Exxon said production from the six Stabroek block developments will generate tens of billions of dollars of revenue and significant economic development for Guyana. Since first production in 2019, more than $4.2 billion has been paid into the Guyana Natural Resource Fund.

ExxonMobil affiliate, ExxonMobil Guyana Limited is operator with a 45 percent interest in the Stabroek block while Hess Guyana Exploration Ltd. holds 30 percent interest, and CNOOC Petroleum Guyana Limited holds 25% interest.