January 2021: This Month’s Top Stories

Promising 2020 Q3 reports from SBM and increased recoverable reserve estimates from Hess come amidst reports of weakening global demand for industry vessels, lowering breakeven costs for development offshore and a non-commercial development well offshore Suriname.

This Quarter in Guyana’s Energy Sector:

Relations between Guyana and Qatar continue to develop. Following a 5-year lull, Guyana’s new president, Dr. Mohammed Ifraan Ali, scheduled talks with the Emir of Qatar, Sheikh Tamim bin Hamad Al Thani. Talks were designed to expand both economic and diplomatic ties between both countries, discussing key areas of collaboration beyond the energy sector, across agriculture, housing and others.

Hess announced recoverable reserves from Guyana’s ExxonMobil-operated Stabroek Block in their Q3 Report. Reserves reports have been updated to approximately 9 billion barrels of oil equivalent. Hess also announced oil discoveries at the Yellowtail-2 and Redtail-1 wells in September, bringing the total number of discoveries on the Block to 18.

SBM Offshore (builder and operator of the Liza Destiny FPSO currently producing offshore Guyana) has announced their Fast4Ward and emmissionZERO initiatives for two vessels planned for the Stabroek block. The Liza Unity FPSO, planned for ExxonMobil’s second development offshore, is SBM’s first vessel built under the Fast4Ward scheme, which reduces cycle time and energy delivery, as well as improving quality and safety. The Prosperity FPSO, built for a third development (Pyara) offshore Guyana is the second vessel to utilise Fast4Ward technology.

Rystad has released a report detailing the impact of Covid-19 on the floating vessels in the oil and gas industry. Utilization began to plummet in 2016, reaching 44%. Thereafter, utilization hovered between 44 and 55%, with 2020 utilization levels falling at around 50%. Despite this, 25 newbuild floaters are planned for delivery towards the end of 2023.

Another Rystad report revealed the average breakeven point of projects to be falling, dropping to approximately $50 per barrel, down 35% since 2014. Oil is clearly much cheaper to produce today than it was six years ago, and the main drivers of this are the new offshore deepwater developments.

Over in Suriname, US oil firm Apache is planning another discovery well, with two rig deal awards planned for 2021. Apache partnered with Total, and in July made a discovery at the Kwaskwasi-1 well in Block 58.

SBM Third Quarter Updates show promising results from the Liza vessel group operating (and planned for operation) offshore Guyana, with year-to-date performance exceeding expectations in the face of the pandemic.

The Tanager-1 exploration project – the deepest well ever drilled in the Guyana-Suriname basin – has been written off as non-commercial, and is to be plugged and abandoned in the coming quarter. Radio Guyana Limited, with a 25% interest in the Kaieteur Block, reported reaching a total depth of 7,633 meters, at which only 16 meters of net oil play were discovered. The cost of the exploration well at Tanager exceeds U$100M, and serves a sharp reminder of the risks involved in exploration and production.

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