ExxonMobil wants to submit fourth FDP for approval by December – Hess says

Jan 28, 2021 News

– Development cost likely between US$6-9 billion

By Kemol King

Chief Operating Officer of Hess Corporation, Gregory Hill. (Photo: Hart Energy)

Kaieteur News – ExxonMobil has set its sights on a fourth oil development in the Stabroek block, and intends to ask for the government’s approval, later this year. Hess Corporation’s Chief Operations Officer (COO), Gregory Hill, revealed during the company’s 2020 Q4 earnings calls yesterday, that the Stabroek block co-venturers – ExxonMobil, Hess and CNOOC – anticipate the completion and submission of a field development plan (FDP) for Guyana’s approval, by the fourth quarter of 2021.
The COO told Barclays Capital analyst, Jeanine Wai, that the Yellowtail area has a large, high quality reservoir and that is the reason why it was moved up the queue for development.
In response to a question from Simmons Energy analyst, Ryan Todd, Hill said that Hess expects the Yellowtail breakeven to be “somewhere between at US$25 and US$32 breakeven.” For those unaware, the breakeven price is the price at which the oil must be sold to cover the cost to produce it. Every additional dollar on the barrel would be the profit. The breakeven prices estimated for Guyana’s oil developments are among the best in the industry. Chief Financial Officer at Hess Corporation, 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, Chief Executive Officer (CEO), John Hess, told Scotiabank analyst, Paul Cheng, that “you could assume development costs will be very similar somewhere between Phase 2 and Payara.”
Liza Phase Two has an estimated development cost of US$6 billion, while the Payara estimate stands at US$9 billion.
“These are very good reservoirs, very high deliverability, very high quality crude oil,” Hess said. “That’s why that breakeven is in between the two, it really comes down to just how much infrastructure you’ll need…”
ExxonMobil announced the Yellowtail-1 find in April of 2019. The Noble Tom Madden drillship had encountered approximately 292 feet (89 meters) of high-quality oil bearing sandstone reservoir and was drilled to a depth of 18,445 feet (5,622 meters) in 6,046 feet (1,843 meters) of water. The well, Exxon had said, is located approximately six miles (10 kilometers) northwest of the Tilapia discovery.
Subsequent appraisal drilling led to a Westwood Global Energy assessment of more than 300 million barrels of oil equivalent resources in the well.
Hess had said as early as last September, during his participation in a fireside chat at the J.P. Morgan U.S. All Stars Conference, that the partners were looking at Yellowtail for the fourth development.
The Floating, Production, Storage and Offloading (FPSO) vessel will likely 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 at Liza Phase Two and Payara.
Liza Phase Two is set to join Phase One in 2022, with Payara scheduled for first oil in 2024. The Stabroek block partners intend to have 750,000 barrels of oil being produced every day by 2026, and see potential for 10 FPSOs to develop the nine-billion-barrel reserve.