Resource estimate at Guyana's Stabroek block raised to 9 billion boe: Hess

Houston — Estimated resources at the ExxonMobil-led offshore Stabroek block in Guyana have been raised to roughly 9 billion boe, up from more than 8 billion boe earlier this year, thanks to recent discoveries at the prolific South American asset, 30% block partner Hess said Oct. 28.

Moreover, the Stabroek partners, which also include China's CNOOC, now see the potential of up to 10 floating production, storage and offloading facilities to develop the block's discovered recoverable resources, Hess CEO John Hess said in webcast remarks during the company's third-quarter conference call.

The rising resource base demonstrates the vast potential of the deepwater block, which began its first phase of production from the Liza field in December 2019, John Hess said.

"In 2018, I think [the block's resource estimate] was 4 billion boe and that's when we talked about five ships and 750,000 b/d," an output volume which the partners still forecast for 2026, he said. But "we wanted people to have an update on potential number of ships we could be running."

This year, the partners made three Stabroek discoveries: Uaru, in January; and Redtail and Yellowtail-2, both announced in September. The trio brought total finds on the block to 18.

Two more Stabroek developments are under construction: Liza Phase 2, with first production slated for early 2022, and Payara, which was greenlighted in September and is targeted to start up in 2024. Each of those developments will have an FPSO with capacity of 220,000 b/d.

The producing Liza Phase 1 FPSO has capacity of 120,000 b/d. During Q3, ExxonMobil continued work to complete commissioning of the natural gas injection system that will enable the FPSO to reach its full capacity in Q4.

'WORLD-CLASS' BREAKEVEN OIL PRICES

The three developments have breakeven Brent oil prices between $25/b and $35/b, "which are world-class by any measure," John Hess said.

In recent weeks, the Liza Phase 1 FPSO has averaged about 105,000 b/d, Hess President and Chief Operating Officer Greg Hill said. But mechanical issues, which included problems with cooling fan blades on a big gas compressor, and also a failure in the lube oil system, have delayed the full field ramp up, he said.

New fan blades have been installed, and the other issues are currently being addressed, Hill said. "The plan is to...begin to ramp up to the full nameplate [capacity] in December," he said.

In Q3, Hess' net production from Liza averaged 19,000 b/d.

S&P Global Platts' Analytics forecasts Guyana oil production, which averaged about 1,000 b/d last year as Liza Phase 1 came online, will rise to about 263,000 b/d in 2023 and 548,000 b/d in 2025.

The next exploratory well at Stabroek will be Hassa-1, about 30 miles east of the Liza field. The well should be spudded around year-end and results are expected in Q1 2021. Also, the partners are currently drilling the Tanager-1 well on the Kaieteur block, about 46 miles northwest of Liza.

Hess' total oil and gas production averaged 321,000 boe/d during Q3, excluding Libya, up nearly 11% from 290,000 boe/d of output in the same period of 2019. Full-year 2020 production is expected to average around 325,000 boe/d.

Its US Gulf of Mexico company production in Q3 totaled 49,000 boe/d, down 17% from 59,000 boe/d on the year owing to hurricane-related downtime and higher planned maintenance.

US GULF FIELDS CONGER, LLANO SHUT IN

Production from the Conger and Llano fields is expected to remain shut in for about 40 and 75 days, respectively, in Q4 from hurricane recovery work. Also, the Penn State 6-well will remain shut in until a workover can be completed in December, Hill said.

Storm impacts in the Gulf will reduce Hess' Q4 production in that region to about 40,000 boe/d. However, "we anticipate all hurricane recovery work to be completed before the end of the year," Hill said.

As a result, the company's full-year Gulf output should be 55,000 boe/d-60,000 boe/d.

In addition, Hess' production from the Bakken Shale field in North Dakota averaged 198,000 boe/d (55% oil) in Q3, up 21% from 163,000 boe/d in Q3 2019. Its net oil production from the play was up 13% to 108,000 b/d from 96,000 b/d over the same period, chiefly from a greater number of wells online and improved well performance.

The company continues to run a single rig in the Bakken, down from six rigs earlier in the year as low oil prices from the coronavirus pandemic forced Hess and most other industry operators to slash activity and drop rigs.

"Our plan is to remain at one [Bakken] rig until oil prices approach $50/b WTI," John Hess said.