Partners Exxon Mobil, Hess Corp. and CNOOC Nexen Petroleum are making progress toward development of the hydrocarbon bounty discovered offshore Guyana.
“This month a second exploration vessel, the Noble Tom Madden, arrived to accelerate exploration and appraisal activities on the block starting with the Pluma prospect located 17 miles south of Turbot where we expect to spud in early November,” Hess Corp. CEO John Hess said on the company’s third-quarter earnings call Oct. 31.
The well will target Upper Cretaceous reservoirs, the company said.
So far, the Exxon Mobil-led exploration effort has led to nine discoveries. The latest was announced in August after Exxon Mobil affiliate Esso Exploration and Production Guyana Ltd.’s Hammerhead-1 struck oil, opening a new play type and adding to the prospectivity of the Stabroek Block.
The discoveries, which are expected to lead to a gross production of more than 750,000 barrels of oil per day by 2025, have been among the exploration bright spots for the industry which saw oil and gas companies’ exploration budgets drastically slashed during the market downturn. The success offshore Guyana has also spurred interest from other companies looking to hit oil in the region.
Greg Hill, COO for Hess, said a successful flow test was recently completed at Hammerhead and additional appraisal activities are planned. Plans are for the Stena Carron rig that drilled the well to go to the Canary Islands in Spain for recertification before returning to the block in late December to spud a well on the Upper Cretaceous Amara prospect, which is about 24 miles southeast of the Turbot discovery.
Meanwhile, development of Liza Phase 1—sanctioned in June 2017—is moving ahead. First oil is expected by early 2020 with a nameplate capacity of 120,000 bbl/d of oil, Hill said.
The larger Phase 2 development, with a capacity of 220,000 bbl/d, is also on track for startup by mid-2022, he said, adding “Phase 3 is currently in FEED with first oil expected in 2023.”
Hess called the company’s position offshore Guyana “truly world class in every respect and transformational for our company.” Discovered recoverable resources for the Stabroek Block, in which Hess has a 30% stake, are estimated at more than 4 billion barrels of oil equivalent.
Guyana is one of Hess’ two main growth engines. The other is the Bakken where net production grew to118,000 boe/d during the third quarter, up from 103,000 boe/d a year earlier.
“We forecast Bakken net production will increase to approximately 125,000 net barrels of oil equivalent per day and we expect to drill approximately 35 wells and bring 31 wells online bringing the total for full year 2018 to 120 wells drilled and 100 new wells brought online,” Hill said.
Hess also continues to test limited entry plug-and-perf completions and higher proppant loadings.
“Initial results are encouraging,” Hess said. The company added a sixth rig in the Bakken in September, and expects to generate annual capital production growth of between 15% to 20% through 2021, he said.
For the quarter, the New York-headquartered company reported net income rose to $52 million, compared with a net loss of $624 million a year earlier. The company also grew oil and gas production to a net average 279,000 boe/d, excluding Libya. The amount exceeded guidance and came as E&P capital and exploratory expenditures fell slightly to $542 million, down from $558 million a year earlier.
“We delivered another strong quarter of execution. With higher production and guidance and lower unit costs and guidance while keeping capital on exploratory expenditures flat with guidance for the year and generating a profit for the quarter,” Hess said. “We continue to execute our strategy to deliver capital efficient growth in our resources and production investing in the highest return projects to move down the cost curve and be profitable in a lower price environment with increasing cash generation and returns to shareholders.”
Velda Addison can be reached at firstname.lastname@example.org