ExxonMobil-led group sanctions Yellowtail oil development offshore Guyana

A group of three global producers led by ExxonMobil has sanctioned the Yellowtail oil development offshore Guyana, the fourth and largest project to date on the Stabroek Block along the coast of the small, South American resource-rich country.

The project, which includes partners Hess Corp. and China's CNOOC, is expected to produce 250,000 b/d starting in 2025, ExxonMobil and Hess said in a statement.

Yellowtail will use the One Guyana FPSO production vessel to develop an estimated resource of roughly 925 million barrels of oil, they said. Six drill centers are projected with up to 26 production wells.

Guyana oil could help fill gaps in supply in the coming years if US upstream producers continue to stick to capital discipline as a corporate strategy, which shows no sign of disappearing even at current high crude prices at or over $100/b.

Yellowtail breakeven $29/b

The four developments have oil breakeven prices ranging from $25/b to $35/b Brent, according to Hess, with Yellowtail specifically at $29/b.

In all, the partners have made 23 major discoveries on Stabroek since their initial find at Liza in May 2015. Hess Corp. recently characterized the Stabroek consortium's discoveries as having "exceptional reservoir quality and low development costs."

Wells at the Stabroek finds also can be drilled in "less than half the drilling time and costs versus typical offshore deepwater exploration," the company said in a set of corporate presentation slides released April 4.

"Initial developments are at an attractive point in the offshore services cost cycle," the slide deck also said. In addition, "Liza Phase 1 gross development costs [have been] reduced from $4.4 billion to $3.5 billion."

So far, two Stabroek developments are producing. Liza Phase 1 came online in December 2019 and reached its its FPSO Liza Destiny's peak production of 120,000 b/d exactly a year later, while work is underway to expand that to 140,000 b/d.

Liza Phase 2 came online in February and continues to ramp up to its FPSO Liza Unity's peak production capacity of 220,000 b/d, which is expected to be achieved in third-quarter 2022.

Liza-2 cargo arrives in US

In addition, the first cargo of the Liza Phase 2 stream has come to the US, according to domestic customs data, said Anthony Starkey, senior adviser, trade flow and modelling for S&P Global.

Arrival date was March 29 aboard the vessel Sonangol Rangel. The cargo, carrying around 990,000 barrels, was discharged at the Louisiana Offshore Oil Port, Starkey said.

"Potentially the tanker was carrying volumes pumped as part of testing operations," he said.

The third Stabroek development, Payara, will also have production capacity for its FPSO Prosperity of 220,000 b/d when it comes online in 2024.

The partners continue to envision at least six FPSOs with a production capacity of more than 1 million gross b/d of oil to be online on Stabroek Block as of 2027. They also see the potential for up to 10 FPSOs to develop gross discovered recoverable resources of more than 10 billion barrels of oil equivalent.

Stabroek is sited in water depths of around 5,500-11,000 feet, while the discoveries are located at total depths of 17,000-23,000 feet.

ExxonMobil operates Stabroek, which encompasses 6.6 million acres, with a 45% stake in Stabroek, while Hess holds 30% interest and CNOOC, 25%.