Oil giant ExxonMobil on Friday made a final investment decision (FID) to proceed with the first phase of development for the Liza field, one of the largest oil discoveries of the past decade, located offshore Guyana.
The company also on Friday announced positive results from the Liza-4 well, which encountered more than 197 feet (60 meters) of high-quality, oil-bearing sandstone reservoirs, which will underpin a potential Liza Phase 2 development.
According to the company, gross recoverable resources for the Stabroek block are now estimated at 2 billion to 2.5 billion oil-equivalent barrels, which includes Liza and other successful exploration wells on Liza Deep, Payara and Snoek.
The Liza Phase 1 development includes a subsea production system and a floating production, storage and offloading (FPSO) vessel designed to produce up to 120,000 barrels of oil per day.
Exxon awarded a contract for the supply of an FPSO unit for the giant Liza discovery to SBM Offshore last December.
Production is expected to begin by 2020, less than five years after discovery of the field, Exxon said on Friday. Phase 1 is expected to cost just over $4.4 billion, which includes a lease capitalization cost of approximately $1.2 billion for the FPSO unit, and will develop approximately 450 million barrels of oil.
“We’re excited about the tremendous potential of the Liza field and accelerating first production through a phased development in this lower cost environment,” said Liam Mallon, president, ExxonMobil Development Company.
Following reviews of the technical and environmental aspects of the giant Liza oil discovery, the development received regulatory approval from the government of Guyana. The government will receive a royalty of 2 percent on gross earnings and benefit from 50 percent of the profits from the sale of petroleum once production starts.
The Liza field is approximately 190 kilometers offshore in water depths of 1,500 to 1,900 meters. Four drill centers are envisioned with a total of 17 wells, including eight production wells, six water injection wells and three gas injection wells.
The Liza field is part of the Stabroek Block, which measures 6.6 million acres, or 26,800 square kilometers. Esso Exploration and Production Guyana Limited is operator and holds a 45 percent interest in the block.
Hess Guyana Exploration Ltd. holds a 30 percent interest and CNOOC Nexen Petroleum Guyana Limited holds 25 percent.
Esso Exploration and Production Guyana Limited is continuing exploration activities and operates three blocks offshore Guyana – Stabroek, Canje and Kaieteur. Drilling of the Payara-2 well on the Stabroek block is expected to start in late June and will also test a deeper prospect underlying the Payara oil discovery.
Hess confirms Liza FID
American energy company Hess Corporation also said on Friday it had sanctioned the first phase of development of the Liza field.
“Development of the world class Liza resource with a low cost, phased approach accelerates first production and positions us to deliver significant value to our shareholders,” Hess Corp. CEO, John Hess, said.
Hess’ net share of development costs is forecast to be approximately $955 million, of which $110 million is already included in Hess’ 2017 capital and exploratory budget. Of the remaining net development costs, approximately $250 million is expected in 2018 and approximately $330 million in 2019, with the balance expected between 2020 and 2021.