Exxon Mobil Corp. (NYSE: XOM) announced Wednesday that it has reached a significant milestone, producing 500 million barrels of oil from the Stabroek block off the coast of Guyana. This achievement comes just five years after the company began production in the area.
Exxon leads a consortium that includes Hess Corp. (NYSE: HES) and China’s Cnooc (OTCPK: CEOHF). The group aims to increase oil production to at least 1.3 million barrels per day by the end of 2027, a goal they hope to reach as six offshore projects come online. Currently, three projects—Liza Phase 1, Liza Phase 2, and Payara—are already producing over 650,000 barrels per day.
According to data from the Guyana government, the consortium’s operations generated $6.33 billion in revenue last year. Exxon received $2.9 billion, Hess earned $1.88 billion, and Cnooc made $1.52 billion from the Stabroek block. Exxon holds a 45% stake in the block, while Hess owns 30% and Cnooc holds 25%.
Exxon is also preparing to begin natural gas production from its Guyana operations. SBM Offshore (OTCPK: SBFFF), based in the Netherlands, has completed a $1.23 billion sale of its fifth floating production, storage, and offloading (FPSO) unit to Exxon. The FPSO, named Jaguar, has a production capacity of 250,000 barrels per day and is equipped to handle 540 million cubic feet of associated gas and 300,000 barrels of water injection per day.
In addition, Exxon is advancing its Gas to Energy project, in collaboration with the Government of Guyana. The project, expected to start by the end of 2024, aims to reduce electricity costs in Guyana. It will transport natural gas from offshore projects like Liza Phase 1 and 2 through a pipeline to onshore processing facilities. The pipeline will carry up to 50 million standard cubic feet of natural gas per day.
The oil discoveries off the coast of Guyana, alongside other recent deepwater projects in the Gulf of Mexico and Namibia, have transformed the economy of this small South American nation. Guyana’s GDP per capita, which was among the lowest in the region, surged by 42.3% on average over the last three years. In 2023, GDP per capita reached $20,360, up from $6,477 in 2019. As a result, Guyana is now classified as an upper-middle-income country.
Meanwhile, the U.S. shale oil industry may be nearing its peak, as the amount of oil recovered per foot drilled in the Permian Basin has decreased by 15% from 2020 to 2023. However, this comes at a time when offshore oil exploration is booming, with new deepwater discoveries sparking renewed interest in the sector.
Deepwater projects, which offer lower costs, higher resource potential, and longer production lifespans, are becoming increasingly attractive to energy companies. Rystad Energy, a global energy consultancy, predicts that the market for underwater oil production equipment will grow by 10% annually between 2024 and 2027, with investments rising from $32 billion to $42 billion over the period.
One-third of this investment will be directed towards super-deepwater projects, including floating production, storage, and offloading (FPSO) systems. These systems are used at Exxon’s Stabroek block, where the commissioning of FPSOs like Liza Destiny, Liza Unity, and Prosperity has boosted production to 650,000 barrels per day. Output from the block is expected to exceed 1 million barrels per day by the latter half of this decade, as new FPSOs come online at the Yellowtail, Tilapia, and Redtail oil fields.
Globally, deepwater production is the fastest-growing segment in oil and gas exploration. Since 1990, output has surged from 300,000 barrels of oil equivalent per day (boe/d) to 10.4 million boe/d in 2022. According to Wood Mackenzie, deepwater production will grow by 60% by 2030, accounting for 8% of total upstream production. Ultra-deepwater production, defined as depths greater than 5,000 feet, is expected to make up half of all deepwater output by 2030.
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