Govt. wants adherence to environmental rules with accelerated production – CEO John Hess tells its shareholders

Sep 09, 2022 News

Hess Corporation’s CEO, John Hess

Kaieteur News
By Kiana Wilburg
Though the Guyana Government has indicated its desire for the expeditious development and production of the Stabroek Block’s hydrocarbons, those in charge of the operations must also do so with the strictest adherence to the nation’s environmental rules.
Sharing this perspective with investors on Thursday was Chief Executive Officer (CEO) of Hess Corporation, John Hess during his participation at Barclays CEO Energy-Power Conference in New York, USA.
Hess was keen to note that the government has been very pro-business; adding that the only way to develop the economy and improve the standard of living for the people of Guyana is to accelerate the development of their resource. “So they are very pro development of oil and obviously keeping environmental stewardship at the front of how they think about authorizing and overseeing these developments so there is a very good working relationship with government,” Hess said.
Hess said it is clear that the government wants its environmental rules to be adhered to and respected, adding that he believes the partners have delivered on this request.
Earlier this month, Hess had said that it will be closely monitoring its budgetary spending for the remainder of 2022 into 2023 to ensure scheduled investments in Guyana remain unaffected.
The company said the returns in Guyana are so sweet that it pays to keep pumping more money into the Stabroek Block given the industry leading deal (2016 Stabroek Block Production Sharing Agreement) it is tied to. Hess during its second quarter earnings call said all companies are dealing with the risk of a recession risk given that there is an economic slowdown now. It also said it predicts a tighter oil market in the coming months since demand is outstripping the rate of supply as markets in China open up.
Having said that, Hess said its Board will definitely stress test its budget for next year. It said definitely there will be a recession scenario in that, while adding that it will be prepared should there be a recession to stay ahead of it to keep the balance sheet strong. Hess was keen to note as well that it will do everything in its power to keep investments on track for its high-return opportunity in Guyana, and “we’ll also take steps as we normally do as we get to the end of the year to make sure we have some price protection….”
In terms of sanctioned oil developments on the Stabroek Block, Kaieteur News understands that production at the Liza Phase One development reached its new production capacity of more than 140, 000 gross barrels of oil per day in the second quarter following production optimization work on the Liza Destiny FPSO.
As for the Liza Phase Two development, which achieved first oil in February, it reached its gross production capacity of approximately 220, 000 barrels of oil per day earlier this month. The third development on the Stabroek Block at the Payara Field, with a gross production capacity of approximately 220, 000 barrels of oil per day, is on track for start-up in late 2023.
In early April, Hess and its partners announced the sanction of the US$10B Yellowtail Project which will be the largest development to date on the Stabroek Block. The project will develop an estimated recoverable resource base of approximately 925 million barrels of oil and have a gross production capacity of approximately 250, 000 barrels of oil per day, with first oil expected in 2025.
In terms of exploration and appraisal in Guyana, Hess said the partners continue to invest in an active programme, with approximately 12 wells planned for the Stabroek Block in 2022.
Hess and its partners continue to see multi-billion barrels of future exploration potential remaining.

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