Exxon To Pause Some Guyana Oil Output to Finish Gas-Power Project

Exxon will pause for several weeks oil production at two platforms offshore Guyana in the third quarter of 2024 to connect them to a new pipeline expected to bring the associated natural gas onshore to a gas-fired power plant.

Exxon, whose consortium produces more than 600,000 barrels per day (bpd) of oil from Guyana’s prolific Stabroek block, is working with the government of Guyana on a gas-to-energy project expected to use the associated gas in a new combined-cycle power plant onshore. The proposed project would bring associated gas from ExxonMobil Guyana-operated projects offshore (Liza Phase 1 and 2) via pipeline to onshore gas processing facilities. The pipeline would transport up to around 50 million standard cubic feet per day of natural gas to the facilities.

The project has the potential to significantly reduce the cost of electricity in Guyana, Exxon says.

The U.S. supermajor is building the pipeline to the shore and expects it would be completed by the end of this year, as promised to the government of Guyana, Exxon Guyana country manager Alistair Routledge told Reuters.

The government of Guyana, however, has seen delays in its part of the work on the power plant, and full operation will not begin until the fourth quarter of 2025, Winston Brassington, a government consultant involved in the project, said in February.

The total project is estimated at $1.9 billion, of which Exxon is currently building the $1-billion pipeline portion.

But to connect the pipeline to the offshore production platforms, the company would need to pause crude oil production for some time. The connection of the pipeline and related maintenance works are likely to take “weeks, not months,” Exxon’s Routledge told Reuters.

A four-week halt, for example, would mean up to 12 million barrels of oil output and around $1 billion in oil revenue (at current Guyana oil prices) deferred, according to Reuters’ estimates.

By Charles Kennedy for Oilprice.com