ExxonMobil wants to submit a fourth FDP for approval by December – says Hess
– Development cost likely between US $ 6-9 billion
By Kemol King
Kaieteur News – ExxonMobil has set its sights on a fourth oil development in the Stabroek block, and plans to seek government approval, later this year. Hess Corporation’s Chief Operations Officer (COO) Gregory Hill revealed during the company’s Q4 2020 earnings calls yesterday that Stabroek’s block colleagues – ExxonMobil, Hess and CNOOC – anticipate the completion and submission of a field development plan (FDP) for Guyana Approval, by the fourth quarter of 2021.
The COO told Barclays Capital analyst Jeanine Wai that the Yellowtail area had a large, high-quality fund and that was the reason why it was moved up the queue for development.
In response to a question from Simmons Energy analyst Ryan Todd, Hill said Hess expects Yellowtail’s cost recovery to be “somewhere between US $ 25 and cost recovery US $ 32”. For those who are unaware, the break even price is the price at which the oil must be sold to cover the cost of production. Every extra dollar on the barrel would be the profit. The estimated cost recovery prices for Guyana’s oil developments are among the best in the industry. Hess Corporation’s Chief Financial Officer John P. Rielly had said during the previous earnings call that Liza Phase Two is arguably the best project in the industry.
When asked to comment on a likely development cost for the Yellowtail project, CEO (CEO) John Hess told Scotiabank analyst Paul Cheng, “you could assume development costs will be very similar somewhere between Step 2 and Payara. ”
Liza Phase Two’s development cost is estimated at US $ 6 billion, while Payara’s estimate is US $ 9 billion.
“These are very good reservoirs, which can be supplied very, very high quality crude oil,” said Hess. “That’s why the cost recovery is between the two, it depends on how much infrastructure you need …”
ExxonMobil announced the discovery of Yellowtail-1 in April 2019. Tom Madden’s Noble drill encountered approximately 292 feet (89 meters) of high-quality oil-bearing sandstone reservoir and drilled to a depth of 18,445 feet (5,622 meters) in 6,046 feet. (1,843 meters) of water. The well, Exxon says, is located about six miles (10 kilometers) northwest of the Tilapia discovery.
Subsequent appraisal drilling led to Westwood Global Energy’s assessment of more than 300 million barrels of oil-equivalent resources at the well.
Hess had said as early as last September, during his participation in a fireside conversation at the JP Morgan US All Stars Conference, that partners were looking at Yellowtail for the fourth development.
The Floating, Production, Storage and Unloading (FPSO) vessel is likely to have a production capacity of 220,000 barrels per day. This would take production capacity in the Stabroek block to 780,000 barrels of oil per day, once Yellowtail-1 follows first oil in Phase Two Liza and Payara.
Phase Two Liza is expected to join Phase One in 2022, with Payara scheduled for first oil in 2024. Stabroek’s block partners plan to produce 750,000 barrels of oil daily by 2026, and see the potential for 10 FPSOs to develop nine- billion-barrel reserve.