Dec 02, 2022 News
Kaieteur News – After signing a 10-year frame agreement with ExxonMobil affiliate Esso Exploration and Production Guyana Limited (EEPGL) for the supply of line-pipe products last year, French company Vallourec has secured three major contracts to provide the items for the oil company’s upcoming Yellowtail and Urau projects, as well as the Gas to Energy venture set to bring natural gas from the seabed to land.
In a press release, the French company said it had won a major Line-Pipe order from ExxonMobil Guyana. “Vallourec has secured a third major order in the framework of the Long-Term Agreement (LTA) signed last year with ExxonMobil Guyana. Under the contract, Vallourec will deliver line-pipe for ExxonMobil Guyana’s deep-water Uaru project,” the company said.
It noted that the Uaru project is located in the Stabroek Block, a 26,800 km2 strategic basin located off Guyana’s continental shelf, where several important discoveries have been made since 2015. The Group said it will deliver 35,000 metric tons of line-pipe, including 2,000 metric tons of X80, an innovative and unique material developed and qualified by Vallourec’s R&D teams. “The X80 combines high strength with resistance to service conditions, making it a key enabler for future deeper-water developments.”
Vallourec highlighted that “following the Yellowtail and Gas-to-Energy orders, signed under the same LTA, the Uaru order further strengthens Vallourec’s strategic supplier relationship with ExxonMobil Guyana, underpinned by a significant backlog of line-pipe orders of approximately 90,000 metric tons (or 520 km of line pipe) booked since December 2021. Vallourec will serve ExxonMobil Guyana from its state-of-the-art Jeceaba (Minas Gerais) factory which combines large production capacities and premium capabilities.
Philippe Guillemot, Chairman and Chief Executive Officer of Vallourec, related that, “This significant new contract represents the third under the 10-year frame agreement signed last year with ExxonMobil Guyana. Our new grade X80 has been qualified by ExxonMobil and will be field-proven with this order, demonstrating Vallourec’s ability to deliver solutions to the industry that are both technology and efficiency enablers.” It was noted however that the recently signed contract is subject to ExxonMobil Guyana securing necessary approvals from the Government of Guyana for the project. Vallourec’s Chairman said the contract is a new milestone in the company’s long history with ExxonMobil, and “I would like to thank ExxonMobil once again for its confidence and our own teams for this great work.”
Vallourec says it’s a world leader in premium tubular solutions for the energy markets and for demanding industrial applications such as oil & gas wells in harsh environments, new generation power plants, challenging architectural projects, and high-performance mechanical equipment. “Vallourec’s pioneering spirit and cutting-edge R&D open new technological frontiers. With close to 17,000 dedicated and passionate employees in more than 20 countries, Vallourec works hand-in-hand with its customers to offer more than just tubes. Vallourec delivers innovative, safe, competitive, and smart tubular solutions, to make every project possible,” the company said.
Exxon’s Yellowtail and Urau projects are the fourth and fifth oil ventures being undertaken in the prolific offshore Stabroek Block, while the Gas to Energy project is geared to provide electricity at significantly cheaper rates, the government has touted. ExxonMobil’s Environmental Impact Assessment (EIA) for the Yellowtail, development costs are poised to exceed US$9B or GY$1.8 trillion.
It said that costs are expected to be higher since there would be a greater number of development wells and associated drilling costs when compared to previous projects. The project documents said that Yellowtail will consist of the drilling of approximately 41 to 67 development wells (including production, water injection, and gas re-injection wells); installation and operation of Subsea, Umbilicals, Risers, and Flowlines equipment; installation and the operation of a Floating Production, Storage, and Offloading (FPSO) vessel in the eastern half of the Stabroek Block; and— ultimately—project decommissioning. The FPSO will be designed to produce up to 250,000. The initial production is expected to begin by the end of 2025–early 2026, with operations continuing for at least 20 years.
The Urau discovery involves two parts. In January 2020, ExxonMobil announced that Uaru-1 was their 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. ExxonMobil said last April that Urau-2 added to the previously announced gross discovered recoverable resource estimate for the block, which is currently estimated to be approximately 9 billion oil-equivalent barrels. Drilling at Uaru-2 encountered approximately 120 feet (36.7 meters) of high- quality -oil bearing reservoir and 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. The project cost is yet to be identified.
The Gas to Energy project remains a topic of contention despite government’s drive to have the rising US$1.3B project on stream. Stakeholders have called for the provision of an updated feasibility study for the project, more environmental considerations and proof that the project will be financially viable. Vice President and government point person on energy Bharrat Jagdeo “estimates” that the Wales, West Demerara project will generate electricity and distribute same at US$0.15 cents per kilowatt hour (KWH), but stakeholders insist on the VP proving these numbers. The entire Wales Development Zone will entail a gas processing plant (GPP) and a natural gas liquids (NGL) facility. Natural Resources Minister, Vickram Bharrat, M.P., in response to a notice paper yesterday said nonetheless that the Gas to Energy project is on track for its 2024 deadline.
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