Japanese shipbuilder eyes FPSO contract for Exxon’s 7th project

Dec 10, 2024 News

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…in talks for a converted unit

Kaieteur News- While the contract has not yet been awarded for a seventh floating production, storage and offloading (FPSO) vessel for ExxonMobil’s Hammerhead development, Japanese floater specialist Modec has initiated discussions with Chinese yards for an engineering, procurement and construction (EPC) contract to convert a Very Large Crude Carrier (VLCC) into a FPSO for the seventh project. This is according to reports by Upstream.

Industry sources familiar with the talks told Upstream that Modec has shortlisted at least three yards, with the contract expected to be awarded next year. The FPSO under discussion will serve as the centerpiece of ExxonMobil’s seventh project in the prolific Stabroek block, with first oil expected in 2029. Upstream has previously reported that Modec has the upper hand against Dutch rival SBM Offshore for the Hammerhead FPSO contract. According to sources, Modec is already conducting preliminary engineering work on the vessel.

Back in October, ExxonMobil Guyana’s President Alistair Routledge highlighted the decision to utilize a converted unit for Hammerhead, citing the approach as a practical alternative to new build designs. While converted FPSOs may lack some of the customization and efficiency advantages of new build units, they can offer cost and time-saving benefits. This marks a shift in ExxonMobil’s FPSO strategy. Unlike its recent projects that have employed purpose-built FPSOs, Hammerhead will follow the model of the Liza Destiny—Guyana’s first FPSO—which was converted from a VLCC. The retrofitting process involves equipping an existing oil tanker with production, processing, and storage facilities to meet offshore oilfield requirements.

This year, ExxonMobil made an application to the Government of Guyana for its seventh project – Hammerhead. However, the chief policymaker for the sector, Vice President, Bharrat Jagdeo made it clear that there is no guarantee approval would be granted.

Following the official application by the company, Jagdeo was asked to comment on the project when he announced that the government has discontinued an advertisement for a consultant to review the Hammerhead project. According to him, the information the company presented was incomplete. However, Guyana’s Environmental Protection Agency (EPA) has advanced their part in relation to the application that was made for Environmental Authorisation for its seventh project

Exxon is aiming to receive environmental approval for the Hammerhead project next year. Routledge during a recently aired interview said, “Now, we’re initiating the Hammerhead project. The first step is securing the environmental permit, which is underway. We’re hopeful that process will conclude next year.”

Hammerhead is located in the south-central portion of the Stabroek Block, approximately 160 km from Georgetown. Current plans include drilling via drill ships to produce oil using approximately 14 to 30 production and injection wells. Production is expected to begin in 2029 subject to the necessary regulatory approvals and operate for at least 20 years.

In the Project Summary submitted by Exxon to the EPA, the company explained that the project is expected to add 120,000 to 180,000 barrels of oil per day production capacity. The Floating Production Storage and Offloading (FPSO) vessel will be capable of storing approximately 1.4 to 2 million barrels of oil. Third-party oil tankers will be scheduled to offload the oil from the FPSO, making the oil available for export to the international market. To date, Exxon has obtained approval from the Government of Guyana for six development projects in the Stabroek Block – Liza Phase One, Liza Phase Two, Payara, Yellowtail, Uaru and Whiptail. The first three projects are already producing oil at a daily estimated rate of 640,000 barrels per day (bpd).

If Modec secures the contract, the Hammerhead project would become its second FPSO in Guyana, joining the Errea Wittu floater, which is currently being built for ExxonMobil’s Uaru field and is set to begin operations in 2026.

The Uaru project is located about 200km off the coast of Guyana. The project has a crude oil production capacity of 250,000 barrels per day, a gas production capacity of 540 million cubic feet per day, a water injection capacity of 350,000 barrels per day, and a crude oil storage capacity of 2 million barrels. After construction, the project will be designed and constructed by SOFEC, a U.S. subsidiary of the Company.

It will be moored at sea at a depth of approximately 1,690 meters using a mooring system called spread mooring (multiple point mooring).

Modec said that it plans to provide operation and maintenance services to ExxonMobil for the vessel.

(Japanese shipbuilder eyes FPSO contract for Exxon’s 7th project)

(Japanese shipbuilder)

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• Exxon, FPSO, MODEC, Stabroek Block, VLCC

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