Exxon strikes oil at Uaru-2 well

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Exxon strikes oil at Uaru-2 well

Published: April 29, 2021

Exxon strikes oil at Uaru-2 well

A pictorial representation of ExxonMobil’s operations offshore Guyana, in the various blocks (Photo courtesy ExxonMobil)
A pictorial representation of ExxonMobil’s operations offshore Guyana, in the various blocks (Photo courtesy ExxonMobil)

–estimated recoverable resources to surpass 9 billion barrels
–at least six projects, 10 FPSOs to be active in Guyana’s waters by 2027

(Guyana Chronicle) ESTIMATED recoverable resources at the Stabroek Block, offshore Guyana, is expected to surpass the projected nine billion barrels of oil equivalent, as operator of the block, ExxonMobil, has announced the discovery of high-quality oil-bearing reservoirs at the Uaru-2 well.
With this find, the company, which is the operator of the Stabroek, Canje and Kaieteur blocks offshore Guyana, now boasts 19 discoveries in the Stabroek Block alone.
The Stabroek Block is 6.6 million acres (26,800 square kilometres). ExxonMobil affiliate, Esso Exploration and Production Guyana Limited is the operator, and holds a 45 per cent interest in the Stabroek Block, while Hess Guyana Exploration Ltd. holds a 30 per cent interest, and CNOOC Petroleum Guyana Limited, a wholly-owned subsidiary of CNOOC Limited, holds a 25 per cent interest. According to ExxonMobil, drilling at Uaru-2 encountered approximately 120 feet (36.7 meters) of high-quality oil-bearing reservoirs, including newly-identified intervals below the original Uaru-1 discovery.

The well was drilled in 5,659 feet (1,725 meters) of water, and is located approximately 6.8 miles (11 kilometers) south of the Uaru-1 well.
ExxonMobil’s Senior Vice-President of exploration and new ventures, Mike Cousins is quoted in a statement as saying: “The Uaru-2 discovery enhances our work to optimally sequence development opportunities in the Stabroek Block.” As he went on to say, “Progressing our industry-leading investments and well-executed exploration plans are vital in order to continue to develop Guyana’s offshore resources that unlock additional value for the people of Guyana and all stakeholders.” In January 2020, ExxonMobil announced that Uaru-1 was its 16th discovery in the Stabroek Block. The well encountered approximately 94 feet (29 meters) of high-quality oil-bearing sandstone reservoir, and was drilled in 6,342 feet (1,933 meters) of water.  In March 2021, ExxonMobil secured a sixth drillship, the Noble Sam Croft, for exploration and evaluation drilling activities offshore Guyana.

A fourth project, Yellowtail, has been identified within the block, with anticipated start-up in late 2025, pending the government’s approvals and project sanctioning. The project at reference will develop the Yellowtail and Redtail fields, which are located about 19 miles (30 kilometres) southeast of the Liza developments. ExxonMobil anticipates at least six operational projects by 2027, and sees potential for up to ten Floating Production Storage and Offloading (FPSO) vessels to develop its current recoverable resource balance. Data from Norwegian independent energy research and business intelligence firm, Rystad Energy, suggests that close to 300 million barrels of oil equivalent (BOE) has been discovered on average for each exploration well (wildcat and appraisal) drilled in the country over the past six years.
This aside, with around 16 exploration wells planned, including some in riskier frontier regions, 2021 holds a lot of promise, Rystad Energy said.
ExxonMobil will be spearheading the local exploration activities, having already set an ambitious divestment target of US$15 billion by expelling mature assets in Asia, Europe and Africa, so as to prioritise investments in “high-value” assets such as Stabroek.

At the Stabroek Block, the start-up of Liza Phase Two remains on target for 2022, as the Liza Unity FPSO prepares to set sail from Singapore to Guyana later this year. The Unity FPSO has a production capacity of 220,000 barrels of oil per day at peak rates.
The hull for the Prosperity FPSO vessel, the third project at the Payara Field, is complete, and “topside” construction activities have commenced in Singapore, with a start-up target of 2024. The US$9 billion development will target an estimated resource base of about 600 million oil-equivalent barrels.
“These new projects continue to drive investment in the Guyanese economy. More than 2,300 Guyanese are now supporting project activities on and offshore, which reflects a more than 20 percent increase since the end of 2019,” ExxonMobil says.
The company and its key contractors have spent approximately US$388 million (approximately G$84 billion) with more than 800 local companies since 2015.
Oil production is undoubtedly contributing significantly to local growth, but the World Bank has cautioned Guyana that there will be risks related to the management of wealth generated from the sector.

“Guyana will be challenged to transform its burgeoning oil wealth into human capital, physical capital, and financial assets for broad-based welfare increases,” the World Bank said in its recently published semi-annual report on the Latin American and Caribbean Region.
The country’s oil-and-gas sector is already pumping finances into its Natural Resources Fund (NRF), with some US$61,090,968 (approximately G$13B) being earned from the sale of the nation’s fifth oil lift. The country received its latest payment after the sale of 997,420 barrels of oil, which were lifted from ExxonMobil’s Liza Destiny on February 5, 2021.
The nation, new to the petroleum sector, sold its first one million barrels of crude on February 19, 2020, raking in nearly US$55 million. In its second million-barrel sale, the country received US$35 million, while from the sale of its third and fourth million-barrels of crude, it earned US$46 million and US$49.3 million respectively.
Based on a consolidation of all the lifts to date, the country has sold some 5,009,797 barrels of oil valuing US$246,542,662. Along with the earnings from the oil lifts, and over US$21 million in royalties and interest, Guyana has close to US$267,668,709 in its NRF at the U.S. Federal Reserve Bank.

According to recent reports, reduced production levels at ExxonMobil’s Liza Phase One operation have not affected Guyana’s sixth oil lift, as it was safely and successfully completed at planned quantity, and in keeping with the Crude Lifting Agreement and lifting schedule.
Production levels at the Liza Destiny FPSO vessel is, however, gradually returning to normal, as efforts are underway to further assess a faulty discharge silencer, which was removed recently.
The company had reduced production levels significantly, from 120,000 barrels of oil per day to 30,000 barrels after encountering problems related to the discharge silencer, which is a component of the recently re-installed flash-gas compressor. The compressor was damaged back in January, and had resulted in the company having to temporarily increase gas-flaring to above pilot levels in order to maintain safe operations. The faulty contraption was subsequently removed and sent to Germany for immediate repairs. The repaired and upgraded components of the flash-gas compression system have been safely re-installed, but a comprehensive three-phase testing programme was undertaken to ensure full safety.

It was during the final stage of the three-phase testing programme that the company encountered a problem with the discharge silencer. A discharge silencer is used to attenuate noise produced by the expansion of air, steam or gas at elevated pressure to atmospheric pressure.
In a recent update, ExxonMobil said the silencer has been removed, and is being further assessed, so as to determine the necessary scope of repairs and or/modifications.
“We estimate that repairs or replacement will take approximately three months. Additionally, plans initiated in 2020 are progressing to install a redesigned third-stage flash-gas compression system at the end of this year,” ExxonMobil’s Public and Government Affairs Adviser, Janelle Persaud said in a recent update.
Even amidst the ongoing efforts to repair the faulty equipment, the company has started to ramp up production, which has since moved from 30,000 barrels of oil per day to between 100,000 and 110,000 barrels per day, at a flare level of no more than 15 Million standard cubic feet of gas per day (MSCFD).