18 November 2017, News wires – Offshore Guyana-Suriname might have one of the largest untapped oil and gas reserves in South America, as roughly a dozen companies hope to repeat Exxon Mobil Corp.’s recent drilling success there.
“There has been a recent rush to get into Guyana,” Shuqiang Feng, director of upstream for Stratas Advisors, said. “ExxonMobil has shown the resources there are real. Developers are definitely exploring more aggressively in the region than they were a few months ago and hope to start drilling soon.”
According to recently released data from Wood Mackenzie, the production peak in the offshore Guyana-Suriname region could be up to 350,000 barrels per day by 2025. ExxonMobil might tap 1.5 billion commercial reserve barrels at its Liza and Payara fields alone.
While ExxonMobil had previously found oil in the region, it announced its watershed moment in October when it reported an oil discovery of the Turobot-1 well.
The main quality of the reservoir is the reserve rock, which should set the stage for a high rate of production there, Julie Wilson, research director of global exploration for Wood Mackenzie, said. This is because the reserve rock’s permeability and porosity are high, which has good natural drive, Wilson said.
“The quality of [ExxonMobil’s] discovery is one of the components that should make it a success. All of this means that the oil and gas will flow at highly productive rates and we expect that the wells will yield tens of millions of barrels each,” Wilson said. “Deepwater oil production is obviously very expensive, but in this case, the operator should be able to produce 20-40 million barrels from a single well over the course of its lifetime in the region thanks to the high-quality reservoir. This rate, of course, is exponentially higher than what a shale well can offer.”
In addition to ExxonMobil, other companies have begun to more aggressively explore the region, Feng said. They include Anadarko, Apache, Chevron, CNOOC, CGX, Kosmos, Noble Energy, Petronas, Repsol, Statoil, Total, and Tullow. After Tullow and partners Statoil and Noble Energy drilled the Araku well in deep-water Suriname in October, it did not encounter reservoir quality rocks, but provided data to the partners that “de-risks deeper prospects,” Wilson noted.
“You have a lot of majors that moved in or required blocks there. But you also have the exploration-driven independents, like Kosmos, Tullow, Noble Energy, which are also present,” Wilson said. “That is very encouraging. There is a great mix of companies involved and they have the deep pockets to see it through.”
Oil discoveries could also help to invigorate natural gas development in the basin. However, commercialization will pose challenges, since the local governments in the region lack the infrastructure and resources to process the gas there, Wilson said.
“In Guyana and Suriname, gas is problematic because there is no market for it. Initially, gas can be reinjected into the reservoir, but if there are large quantities, eventually a use will need to be found,” Wilson said.
The lack of a local demand for power or industrial uses is the biggest impediment to gas development, Wilson said.
“A pipeline to the nearest market, Trinidad and Tobago, would be prohibitively expensive,” Wilson said. “Developing local power-consuming industries, such as chemicals or fertilizer, can take a long time – but it can be done.”
But as several players rush to explore the Guyana-Suriname region, the exact potential of the reserves has yet to be revealed. While unlikely, it is possible that other companies with ongoing exploration projects will find that the high-quality oil ExxonMobil found is mainly limited to that pocket, Feng said.
ExxonMobil’s discovery in Guyana was, after all its fifth, among four less-important discoveries, for example. Earlier this year, Apache’s Kolibrie wildcat well on Block 53 was declared non-commercial, following 3D seismic exploration.