Representatives from Exxon Mobil and Guyana’s government told Energy Intelligence in Georgetown this week that this year will be key in defining a development path for the country’s substantial natural gas resources.
The eastern end of the famed Exxon-operated Stabroek Block has a higher gas content than the oil-weighted developments like Liza and Payara farther west.
And while exploration and appraisal work is continuing in those oil-focused areas, Exxon says exploration in this gassier east end is a big priority this year, Exxon’s Guyana president, Alistair Routledge, said in an interview at the company’s bustling office in the Guyanese capital.
The goal is “making sure we fully understand that resource, that we have the right scale, that we understand the fluids, the reservoirs in order to progress concepts,” he explained.
“Between the exploration and appraisal activity, and then the concept work we’re doing, we’ll have a better feel for the timeline to develop the gas around the end of this year.” Routledge added.
Parsing options for future gas infrastructure and development schemes is a major priority for the government as well — especially as it fine-tunes the national gas strategy now under development, Guyana Vice President Bharrat Jadgeo told reporters at his weekly news conference on Thursday.
Jagdeo believes that Guyana’s offshore gas resources can support reinjection to buttress offshore oil production while also underpinning new domestic industry and potentially exports.
But time is of the essence in the eyes of President Irfaan Ali’s administration, given the global push to move away from fossil fuels en route to net zero.
“The first priority now is to have that discussion with Exxon on the development” of its Stabroek gas resources, Jagdeo said, including the timeline for supplies and expected volumes.
“We need them to share our view that these resources must be developed, and developed urgently, because of this timeline,” he said.
Steps Forward
Guyana’s limited local gas demand and reinjection needs offshore have kept gas-focused developments on the back burner. But that is starting to change.
The first major step already under way is the Gas-to-Energy project that will connect 50 million cubic feet per day of gas from two existing floating production, storage and offshore (FPSO) units to a new power plant in Georgetown.
Exxon is currently building out the project’s pipeline infrastructure to shore — work it expects to complete by year’s end — while the government awaits approval of a $660 million loan from the US Import-Export bank to fund the power plant.
Guyana’s government says the 300 megawatt project will improve the reliability of Guyana’s grid, currently suffering under frequent blackouts, and cut power costs by half, to the tune of $100 million per year.
But there is a growing sense of urgency that more can be done.
Soliciting Ideas
Routledge acknowledged that LNG is the “obvious” development option “given there’s no local market today” for gas.
But he said Exxon is still working with the government to find opportunities to create demand in-country, particularly in industrial applications such as fertilizer and bauxite.
“Clearly there are opportunities if you could build that downstream business. We’re working with the government … on, OK, how do those [projects] move forward, what’s the timeline, can we match that?” he said.
Guyana’s government earlier this week issued a request for proposals for open-access upstream gas infrastructure as a way to streamline what Jagdeo said was a flood of inquiries from those interested in potential projects.
If the government were to select a partner via this process, Exxon would have to decide whether to participate as an equity partner or a supplier to a third-party’s venture, he explained.
Routledge called the solicitation of proposals a “healthy” process that will allow the government to hear from “all interested parties.”
“Somehow, we’ll have to stitch that together between the offshore development, what gas comes onshore and how is that developed, who’s involved,” he added.
Devil in Details
Guyana’s full gas potential remains an outstanding question — but one that is crucial to evaluating the economics of any future development, be it domestically-focused or intended for export.
Local reports quoted Guyana Finance Minister Ashni Singh last year as pegging the country’s gas resources at some 17 trillion cubic feet — or roughly a quarter of the 11 billion oil-equivalent barrels discovered by Exxon and partners Hess and CNOOC on Stabroek.
However, that figure needs to be firmed up via additional exploration and assessment of economic viability. That’s where Exxon comes in.
According to Routledge, the gas-prone resource on Stabroek is “smaller” than the oil and gas resources to be captured across Exxon’s first six FPSOs, but it’s “still quite significant.”
“Order of magnitude, it’s the same scale, it’s just maybe half the size overall,” he said, adding that the gas-prone resources are also more complex given the different resource types.
“The resource, it’s all light liquids. It’s volatile oils with the gas. It is quite diverse across the area, the multiple reservoirs,” Routledge said.
As for commerciality, the Exxon country boss says his firm is concurrently developing engineering concepts to help crack the code on economic viability.
“We’ve already done significant study work with the fabricators and FPSO developers to look at enhancing the gas capacities on FPSOs” Routledge said,. Subsea developments and offshore structures like a semi-submersible or tension-led platform are also on the table.
“We don’t want to become trapped in a mindset as to what’s the best solution,” he said. (Energy Intelligence)
