The giant U.S. oil company, ExxonMobil, has made its third significant discovery in its drilling explorations offshore Guyana.
ExxonMobil’s partner, Hess Corporation made this announcement in its third-quarter earnings on Wednesday, noting that the Liza 3 exploratory well’s net present value could be US$6.2 billion based on calculations from the Bank of Montreal (BMO) Capital Markets.
Liza 3, the fourth well spud by the super major, is in the Stabroek block, about 193 kilometres offshore Guyana.
In late June, Exxon’s drilling results at Liza 2 revealed more than 58 metres of oil-bearing sandstone reservoirs in Upper Cretaceous formations. The well was drilled to 5475 metres at 1692 metres water depth. Drilling results confirmed recoverable resources to be between 800 million and 1.4 billion barrels of oil equivalent. Data from the Liza 2 well test is being assessed.
In May 2015, Exxon confirmed its significant oil discovery at its Liza 1 exploration well, where more than 295 feet of high-quality oil-bearing sandstone reservoirs was encountered.
The Liza wells are being drilled with the Stena Carron harsh environment drillship.
On September 8, ExxonMobil announced that its third exploratory well, Skipjack (the third well drilled and not Liza 3 as reported in the local media) was unsuccessful since it did not yield commercial quantities of hydrocarbons.
ExxonMobil spud Liza 3 after Skipjack turned up unfavourable. Skipjack was a separate prospect 25 miles northwest of the Liza wells.
The Liza 3 well, like Liza 2, will be focused on testing the flank of the Liza structure to determine the aerial extent of the reservoir.
In July 2016, ExxonMobil submitted a development plan for Liza to Guyana’s Environmental Protection Agency to begin the environmental review process.
That plan calls for a pair of rigs to drill development wells from two drill centres, each with a corresponding water injection site to the east.
Business site Bloomberg in June this year reported that ExxonMobil’s oil discovery off the coast of Guyana may hold as much as 1.4 billion barrels, twice the size of the previous estimate, making it potentially worth about US$70 billion based on current prices.
Bloomberg observed that this announcement comes as the oil industry emerges from the worst market slump in decades. Since dipping to a 12-year low in January, Brent crude oil, the international benchmark for crude oil, has risen nearly 80 per cent to about US$50 a barrel.
However, the discovery may not add to global oil supplies for years as deepwater finds can take half a decade or more to bring into production.
ExxonMobil Country Manager Jeff Simmons had announced that the US super major was likely to start production in 2020 with up to 100,000 barrels per day.
He noted though that the estimated 100,000 barrels per day would not remain constant for the proposed 20-year period that the company would be drilling, since there would be continuous drilling and actual production of oil, causing the output to fluctuate.
According to a BMO report on Oil and Gas 360, ExxonMobil plans to use two drillships to simultaneously drill development wells beginning in 2019.
Exxon holds a 45 per cent interest in the project, with Hess holding 30 per cent, and the remaining 25 per cent belonging to China State-owned offshore oil producer CNOOC.
ExxonMobil is expected to make an announcement on this new find sometime this week.