Exxon’s last oil discoveries offshore Guyana were with the Sailfin-1 and Yarrow-1 wells in the Stabroek Block. Sailfin-1 encountered 312 feet of hydrocarbon-bearing sandstone while Yarrow-1 found only 75 feet. This brings to the number of discoveries made by the Exxon-led consortium, where the largest energy is the operator with 45% with 30% controlled by Hess and the remaining 25% by CNOOC, in the Stabroek Block to 35 since 2015. Source: Hess Investor Relations Presentation May 2022. The Exxon-led consortium secured highly favorable terms from Georgetown for the development of the Stabroek Block, with some analysts describing it as one of the most favorable production sharing deals ever achieved. For this reason, these activities will be extremely profitable for Exxon, as well as partners Hess and CNOOC, due to forecasts of low industry breakeven prices of $25 to $35 per barrel of Brent. For this reason, Exxon is investing heavily boosting activity in the Stabroek Block with several projects ahead of schedule. The bloc is expected to become a major growth driver for the global energy supersize. Guyana is garnering a lot of attention from international energy companies. Canadian oil major Frontera Energy, which announced in May 2022 a light oil and condensate discovery in the Corentyne Block with the Kawa-1 well, has committed to spending $186 million in Guyana in 2022. This represents an increase of $46 million from the driller’s initial budget of $140 million. The northern part of the Corentyne Block is adjacent to the productive Stabroek Block and is believed to share the block’s oil channel which bodes well for further discoveries. Frontera owns 68% of the block with subsidiary CGX Energy, the operator, controlling the remaining 32%. Source: Frontera Energy August 2022 corporate presentation. The driller from its $186 million 2022 budget in Guyana has allocated $51 million to the Kawa well, $100 million to $130 million to drill the Wei well and $5 million to the Guyana port project. The Kawa-1 well encountered a net pay of 228 feet with the geological structure found to have similarities to the oil discoveries made in the neighboring Stabroek block. The Wei-1 well, located approximately 9 miles northwest of Kawa-1, will be spudded in the fourth quarter of 2022 with CGX stating in July 2022 that drilling was to proceed. Frontera confirmed plans to drill the Wei-1 well in its corporate presentation in August 2022. The intermediate oil producer said drilling was set to begin in October 2022 subject to the release of the rig by a third party. CGX’s 3D seismic survey of the northern Corentyne segment combined with the successful Kawa-1 well and nearby oil discoveries in the adjacent Stabroek Block to the northeast and Block 58 offshore Suriname to the west highlight the block’s significant potential. These latest developments indicate that Guyana’s oil boom will lead the country to become a major oil producer in Latin America, one day rivaling nearby Brazil, the region’s largest oil producer. To ensure that the former British colony’s oil industry continues to grow at an impressive pace, Georgetown is focused on creating the required infrastructure to support the oil industry. Construction of Guyana’s first deepwater port on the country’s east coast on the Berbice River began by CGX in 2021 with the multi-million dollar facility, which has already cost the company $21.8 million, to be completed by 2023. When operational, the port will be a key component of the infrastructure supporting Guyana’s growing oil boom, while supporting the two existing oil and gas ports, as it will be the country’s only deepwater facility. In October 2022 Georgetown announced the tender process for Guyana’s first oil refinery. The Government of Guyana is seeking proposals to finance, design and build a 30,000 barrels per day facility on state land near the Berbice River, which will further enhance the importance of CGX’s port. It is easy to understand Georgetown’s willingness to ensure that critical infrastructure needed by Guyana’s oil industry is built, given the significant financial gains that have already been delivered. During the 2020 pandemic, when almost every other country saw economic growth collapse, Guyana’s gross domestic product grew by 43.5% which then grew by another 23.8% in 2021. The IMF has predicted that Guyana’s GDP will grow by an impressive 57.8% during 2022 which is by far the fastest growing rate in the world and Guyana’s economy has held this title since 2020. This impressive economic performance will continue as the Guyana’s oil production and exports continue to expand with the country expected to pump up to one million barrels of crude oil by 2027. By Matthew Smith for Oilprice.com
