ExxonMobil has confirmed a new discovery offshore Guyana at the Snoek well, as the supermajor continues its efforts in the area by drilling the Liza-4 well.
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Image from Exxon. |
Exxon encountered more than 82ft (25m) of high-quality, oil-bearing sandstone reservoirs. The well was safely drilled with the Stena Carron drillship to 16,978ft (5175,) at 5128ft (1563m) water depth on March 18.
Snoek is in the southern portion of the Stabroek Block, about 5mi (9km) to the southeast of the 2015 Liza-1 discovery. Stabroek covers 6.6 million acres (26,800sq km).
According to the supermajor, the drilling at Snoek targeted similar aged reservoirs as encountered in previous discoveries at Liza and Payara.
“The latest discovery at Snoek demonstrates the continued success we have achieved in this technically complex play, which is just part of the significant exploration province offshore Guyana,” says Steve Greenlee, president of ExxonMobil Exploration Co.
Exxon’s affiliate Esso E&P Guyana started drilling the Snoek wildcat on 22 February.
Following completion of the Snoek well, the Stena Carron has moved back to the Liza area to drill the Liza-4 well.
"Our base case for Liza-Payara is 1.5 billion bbl of oil. Snoek adds another 220-370 MMbbl in our estimate," says Wood Mackenzie.
Earlier this month, Exxon announced its plans to make a final investment decision on its Liza discovery this year, with first oil expected by 2020.
Further exploration wells are planned offshore Guyana during the rest of the year, including a prospect beneath Payara. Wood Mackenzie says that Exxon and its parnters have identified a further five prospects to drill in Stabroek through 2018.
In the company’s investor presentation held on 1 March, the firm's CEO Darren Woods said a Phase 1 development at Liza, on which front-end engineering and design is underway, would see a floating production project that would produce 100,000-120,000 b/d, at a cost of US$40/bbl. The supermajor said that it could increase to 300,000 b/d with a second phase development, which would involve a second floating production, storage and offloading vessel. Produced gas will be initially be re-injected.
In January 2017, ExxonMobil made a discovery at the ultra deepwater Payara-1 well, encountering more than 95ft (29m) of high-quality, oil-bearing sandstone in two upper Cretaceous reservoirs of Maastrichtian-Aptian age similar to the Liza discovery.
During its Q4 earnings call, Exxon said that two sidetracks have been drilled at Payara to better define the reservoir.
Wood Mackenzie said in January that some issues may arise in the area, with the lack of infrastructure becoming a growing concern.
“We estimate wellhead gas volumes of 2.1-2.5 Tcf between Liza and Payara,” Wood Mackenzie said at the time. “With no offshore infrastructure or nearby gas market, the partners will face high costs to dispose whatever gas that cannot be reinjected or flared.”
However, there is plenty of activity scheduled in the area, the analyst says.
According to WoodMac, ExxonMobil has also farmed into and took operatorship of two blocks north of Stabroek, while Hess farmed into Block 42 in Suriname. And, in Suriname, Apache is currently drilling the Kolibri-1 well on Block 53, and Tullow will drill in Block 54 later in the year.
“A key unknown is whether this Cretaceous fan play extends across the Guyana basin or if it is isolated to this discovery cluster,” says WoodMac. “The three Stabroek discoveries benefit from close proximity (around 30km). Economies of scale can be achieved if FPSOs and subsea infrastructure are shared.”
“With each discovery, the disposal of associated gas (we estimate over 3 Tcf) becomes a bigger challenge. Initially, the (Exxon) JV will target low-GOR areas and will re-inject produced gas, but FLNG or a long pipeline may be required as well.
“The partners are taking a phased approach to the area’s development. We model two large FPSOs to develop Liza and Payara. We assume Snoek will require another vessel.
“We modelled two scenarios for Snoek: a high case with reserves of 370 MMbbl oil exploited by a 120,000 b/d FPSO and a base case assuming 220 MMbbl producing to an 80,000 b/d FPSO. Snoek's NPV10 would vary between $0.6-1.3 billion, assuming a long-term Brent oil price of $65/bbl. Under this case, national production will peak at 400-450,000 b/d in the next decade.
“Guyana's fiscal terms were set at a level to attract high-risk wildcatting in a frontier area. When success improves prospectivity, a tightening of fiscal terms may follow as a country's expectations shift.
“A forthcoming update of terms for future entrants is likely, given the continuing success of the Stabroek JV,” says WoodMac.
Esso E&P Guyana is the operator of the Stabroek Block and holds 45% interest. Partners include Hess Guyana Exploration (30%) and CNOOC Nexen Petroleum Guyana Ltd. (25%).
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