Hess Corp. plans to invest US$1.8B in Payara development

CEO John Hess 

30 percent stakeholder in the Stabroek block, Hess Corporation plans to invest approximately US$1.8 billion in the Payara Development, excluding pre-sanction costs and Floating Production Storage and Offloading (FPSO) purchase cost.

The company announced recently that it has made a final investment decision to proceed with development of the Payara Field offshore Guyana after the development plan got the go-ahead from the Government of Guyana on Wednesday.

The Stabroek Block is 6.6 million acres. ExxonMobil affiliate Esso Exploration and Production Guyana Limited is the operator and holds 45 percent interest. Along with Hess’ 30 percent, CNOOC Petroleum Guyana Limited, a wholly-owned subsidiary of CNOOC Limited, holds 25 percent interest  in the Stabroek Block.

“We are excited to sanction our third oil development on the Stabroek Block,” CEO John Hess said.

“We thank the Government of Guyana for their support and look forward to realising the full potential of this world class resource,” he added.

Payara is the third Field Development Plan (FDP) in the Stabroek Block to gain approval. The first FDP that the Guyana Government approved was for Liza Phase One, while Liza Phase Two is expected to start up in 2022.

The Liza Phase 1 development, with a production capacity of 120,000 barrels of oil per day, achieved first oil in late 2019. Liza Phase 2 remains on track to achieve first oil by early 2022. It will produce up to 220,000 gross barrels of oil per day at peak rates using the Liza Unity FPSO, which is under construction in Singapore.

According to Hess, Payara will utilise the Prosperity FPSO, which will have the capacity to produce up to 220,000 barrels of oil per day and will target an estimated resource base of about 600 million barrels of oil equivalent.

Hess said ten drill centers are planned with a total of 41 wells, including 20 production wells and 21 injection wells. First oil is expected sometime in 2024.

Hess stated that its net share of development costs is forecast to be approximately US$250 million in 2021, US$450 million in 2022, US$500 million in 2023, US$300 million in 2024 and US$225 million in 2025.

Gross discovered recoverable resources for the Stabroek Block are estimated at more than 8 billion barrels of oil equivalent as of January 2020.

The 18 discoveries on the block to date have established the potential for at least five FPSOs producing more than 750,000 barrels of oil per day by 2026.

According to Hess, additional development opportunities in the Stabroek Block are being evaluated, including recent discoveries at Yellowtail, Redtail, Mako and Uaru.

Meanwhile, the US$9 billion Payara development is considered to be the largest single investment ever made in Guyana.

After a tedious review process on Wednesday, the Government of Guyana and ExxonMobil signed the license for the Payara project.

According to the Ministry of Natural Resources, the Payara project approval was a result of “several reviews and consultations by local and international experts”.

The Government has said that it remains committed to managing and harvesting Guyana’s oil and gas resources sustainably “in keeping with internationally recognised acceptable environmental standards and transparency for the benefit of all Guyanese”.

It has also promised that funds from the country’s oil resources will go towards developing modern infrastructures and ensuring that citizens benefit from improved social services.