ExxonMobil said on January 5 that it had struck oil at its Ranger-1 exploration well in the Stabroek Block offshore Guyana.
The find is the US super-major’s sixth offshore discovery in Guyana since 2015. The Liza, Payara, Snoek, Liza Deep and Turbot discoveries previously announced by the company have estimated recoverable reserves in excess of 3.2 billion boe.
ExxonMobil said drilling work on the Ranger-1 well began on November 5, 2017 and encountered approximately 230 feet (70 metres) of high-quality, oil-bearing carbonate reservoir. The well was safely drilled to a depth of 6,450 metres in water depth of 2,735 metres.
Commenting on the find, Steve Greenlee, president of ExxonMobil Exploration, said: "This discovery proves a new play concept for the 6.6 million acre [26,700 square km] Stabroek block, and adds further value to our growing Guyana portfolio."
Greenlee’s upbeat assessment was shared by Jan Mangal, petroleum adviser to Guyana’s government. "This is excellent news, not only because it is another significant addition, but more so because it is a successful well in a carbonate reservoir," he told NewsBase Intelligence (NBI). He noted that carbonate reservoirs pose the risk of higher losses during drilling but benefit from higher permeability during the production phase.
Ranger-1 was drilled by the Stena Carron drillship and, following the well’s completion, the vessel will move to the Pacora prospect. It is located around 6 km from the Payara find in the Stabroek block.
ExxonMobil noted that further exploration drilling was programmed for the block this year, which will potentially include appraisal drilling at the Ranger find.
ExxonMobil’s subsidiary Esso Exploration and Production Guyana is the operator of the Stabroek block with a 45% interest. Hess owns 30%, with CNOOC Nexen owning the remaining 25% interest.
ExxonMobil has made rapid progress offshore Guyana in the past two years. This was most apparent in June 2017 when the company and its partners announced that a final investment decision (FID) had been made to move forward with the Liza field development project. The total cost of the first phase is estimated at US$4.4 billion.
Around US$3.2 billion will be earmarked for drilling and subsea infrastructure which will be focused on developing approximately 450 million barrels of oil, with first oil anticipated by 2020.
First phase development will be driven by a leased FPSO, which is anticipated to cost US$1.2 billion and yield 120,000 bpd of crude at full capacity. Full phase development of the myriad targets in the block could yield peak output in excess of 300,000 bpd in the next decade.
The FPSO used in the first phase of the project will process crude via four subsea drill centres consisting of 17 wells, including eight producers, six water injectors and three gas injectors. Phase 2 of the project could see another FPSO move into position.
The Liza project is estimated to have a breakeven of US$46 per barrel. This makes it and the other discoveries offshore Guayana an attractive proposition when compared with other investment plays, such as tight oil or deepwater Brazil.
Mangal noted that despite the optimism created by the rash of new discoveries there still remain numerous challenges to the emergence of a functioning petroleum industry in Guyana.
"We are starting to see some positive signs in terms of governance, such as the publication of production-sharing agreements [PSAs], but this process needs to be institutionalised," he said.
He said the government needs to hire the best oil and gas experts and advisory firms in the industry to "look out for Guyana’s interests in negotiations with oil companies and to help establish institutional capacity."
Mangal also stressed it was important to ensure that a monopoly did not develop and encouraged other majors from Europe and elsewhere to invest in the country.
Looking ahead, the advisor said acreage and leases must be awarded "via transparent competitive bidding, and not through one-on-one opaque negotiations."
He added that "a streamlined and efficient structure within government" was necessary to manage what will be a transformative industry for the Guyanese economy.