Feb 09, 2021 News
Kaieteur News – The Liza Unity Floating Production, Storage and Offloading (FPSO) vessel, which will support ExxonMobil’s second production development offshore Guyana, is expected to sail from Keppel Shipyard in Singapore for Guyana by mid-2021, according to President and Chief Operating Officer at Hess Corporation, Greg Hill.
During the company’s 2020 Q4 earnings call on January 27, Hill said, “The Liza Phase Two development remains on track for first oil in early 2022. The overall project, including the FPSO, drilling and subsea infrastructure is approximately 85 percent complete. We anticipate that the Liza Unity FPSO, which will have a capacity of 220,000 gross barrels of oil per day, to sale from the Keppel Shipyard in Singapore to Guyana by mid-year.”
The development of this project is estimated to cost a total of US$6 billion. It will target 600 million barrels of oil.Notably, Hill told analysts that the installation programme to be implemented at the site could result in completion “a little bit earlier” than expected, “if everything goes right.”
The Liza Phase One project had achieved first oil earlier than expected, as it had been anticipated to start in 2020 but actually did so in December 2019.
The Liza Unity will add to production already occurring in the Liza field, in which production began with the Liza Destiny over a year ago. This will move ExxonMobil’s production in the Stabroek block to 340,000 barrels per day, and more, if the operator succeeds in increasing the nameplate capacity of the currently producing Liza Destiny.
“In terms of preserving the long-term value of our assets,” Chief Executive Officer, John Hess, said, “Guyana, with its low cost to supply and industry-leading financial returns, remains our top priority.”
This is due to the fact that, as revealed by Executive Vice President and Chief Financial Officer at Hess, John Rielly, during last October’s earnings call, Liza Phase Two is “arguably” the best project in the exploration and production industry because of the low breakeven price.
The breakeven price, in economics, is the price at which the production and sale of a commodity would not return a profit or a loss. Oil companies utilise this, among other indicators, to determine whether an operation would be economically feasible.
The Liza Phase Two breakeven is estimated at US$25 per barrel.
“Guyana will still be generating free cash flow even at very low prices once Phase Two comes on,” Rielly said during January’s earnings call.
Liza Phase Two is so valuable that Hess sold out its interest in a producing field in the Gulf of Mexico called Shenzi, freeing up cash to plug into the 2022 project. Rielly said Hess completed the sale last November for net proceeds of US$482 million.
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