ExxonMobil-led Guyana Hammerhead oil project will have up to 30 wells: government

Guyana's Environmental Protection Agency has begun a review of an ExxonMobil-led consortium's intended seventh oil project known as Hammerhead, where up to 30 wells are to be drilled at the site located at the country's offshore Stabroek Block, the government's official news agency said July 16.

The project would come online in 2029 at a size of 120,000 b/d to 180,000 b/d of oil -- smaller than most of the three other oil fields now under development which have capacities of 250,000 b/d each, Guyana's Department of Public Information said in a statement.

Roughly 14 to 30 production and injection wells would be drilled for the project, the DPI said.

Hammerhead, whose partners include Stabroek partners Hess and China's CNOOC, would also be equipped to flow a projected 60,000 Mcf/d to 120,000 Mcf/d of natural gas, the agency said.

"Several options for the management of the associated gas are being evaluated," the DPI said, adding the FPSO will process, dehydrate, and compress the associated gas produced from the reservoir.

Oil exports available to global markets

"The vessel will be capable of storing approximately 1.4 million to 2 million barrels of oil," the DPI said. "Third-party oil tankers will be scheduled to offload the oil from the FPSO, making the oil available for export to the international market."

Production facilities to be installed on Hammerhead include subsea equipment affixed to the seafloor, as well as an FPSO on the ocean surface.

ExxonMobil filed preliminary papers with Guyana's government on a proposal for Hammerhead in late June, but details were sketchy. At the time, it was reported that Hammerhead's smaller size was designed to fit the resource.

When Hammerhead reaches peak output, Stabroek will have oil production of more than 1.56 million b/d.

Currently, three FPSOs at Stabroek -- Liza Phases 1 and 2 and Payara -- are producing more than 600,000 b/d of oil. A fourth development, Yellowtail, is set to come online in 2025; a fifth, Uaru, should produce first oil in 2026; and a sixth, Whiptail, is slated to start up in 2027.

The three developments still under construction each have 250,000 b/d-capacity FPSOs.

Hammerhead sited amid other oil FPSOs

Hammerhead, like the other developments, is sited in the south-central portion of the Stabroek Block, roughly 100 miles from the capital of Georgetown.

The Guyana Basin has emerged as an important offshore basin based on recoverable resources, with 18.7 billion barrels of oil equivalent discovered since 2015, according to a report by S&P Global Commodity Insights analysts Fernanda Machado, Mariana Anjos and Jerry Jarvis released in May.

"In just nine years, it has established itself as the fifth largest [basin] in Latin America, while continuing to grow," the analysts said.

Production is expected to peak in 2037 at 2.3 million boe/d, with oil accounting for 90%, they said.

"High-quality, low-emissions and cost-effective barrels have already reached European markets," the analysts said. "Currently, all gas production is associated with oil and reinjected, but the marketed gas is expected to increase."

The first gas monetization in Guyana is a gas-to-power project which is already underway, and is expected to have a "significant" impact on Guyana's power generation mix, the report said, adding the region also has the potential to become an LNG exporter by the second half of the 2030s, with deployment of two floating LNG vessels.

The rapid increase in production requires infrastructure to be built, which entails significant investment. More than $120 billion in present value should be spent in the Guyana Basin, with five main companies -- ExxonMobil, Hess, China's CNOOC (the three Stabroek partners), and also APA and TotalEnergies -- estimated to account for 94% of all investments.