First oil lifting of Liza Phase 2 planned for end-March, full production in Q3: Hess

The first oil lifting from the Guyana's Liza Phase 2, located at the ExxonMobil-operated offshore Stabroek Block, will take place at the end of March, with full production projected for the Q3 2022, a top executive of 30% Stabroek partner Hess Corp. said Jan. 26.

Three Guyana liftings are projected for Q1 2022, Hess CFO John Rielly said during an earnings call. "In the second quarter, we expect a total of five liftings" from Guyana, Rielly said. "After the Liza Unity [FPSO] reaches full production ... we expect to have eight liftings per quarter in Guyana from these two FPSOs. For the full year 2022, we expect 24 liftings in Guyana."

The Liza Unity, which will produce Stabroek's second Guyana development, is expected online in the next several weeks. Final hookup and commissioning of the 220,000 b/d Unity FPSO are underway, Hess officials said.

The Unity is nearly double the capacity of Liza Phase 1 FPSO Destiny, which has 120,000 b/d. The Destiny began production in December 2019 and reached full capacity in late 2020.

Q1 2022 net production to Hess from Guyana should average 25,000-30,000 b/d of oil, reflecting planned downtime on the Liza Destiny for production optimization that will enable 140,000 b/d of oil output. Q4 2021 production was 31,000 b/d.

Once production begins from Liza Phase 2, Hess' net production there should gradually ramp up. In Q4 2022, its share of production from Guyana should increase to 85,000-90,000 b/d, Rielly said, which implies total gross Stabroek production in Guyana of 283,000-00,000 b/d.

Barreleye spudded at end-2021

On the drilling front, the Stabroek partners are off to a good start in 2022, Hess COO Greg Hill said. The Stabroek consortium has 12 wells planned to drill this year, including at least four exploratory wells in the first half of the year following two block discoveries in early January.

One of the four wells, Barreleye was spudded at the end of December by the consortium which includes China's CNOOC. Barreleye is sited 20 miles southeast of Liza, Stabroek's first producing field.

Of this year's 12 wells, about two-thirds will be exploratory and a third appraisal wells, Hill said.

Another well to be spudded in H1 2022 is Tarpon-1, sited about 63 miles northwest of Liza in a relatively undrilled part of Stabroek.

Two other wells to be spudded in March are the Patwa-1, about three miles northwest of the recent Cataback-1 discovery made in October 2021. Cataback is near another discovery, Turbot, made in October 2017.

In addition, Lukanani-1 is a prospect planned for southeast Stabroek, about two miles west of the Pluma discovery, which was made in December 2018.

Q1 2022 appraisal wells include Tilapia-2, a February 2019 discovery also in the Turbot area. Tilapia-2 will be located about 24 miles southeast of Liza-1 and should be spudded in March. Other work includes drill stem tests at Tilapia-1 and Pinktail-1, a 2021 discovery.

Payara 66% complete

Payara, the third Stabroek development, is about 66% complete, Hill said. The hull for Payara's FPSO vessel Prosperity, also with 220,000 b/d capacity, is complete, and topside construction is ongoing in Singapore for planned production startup in 2024.

The field development plan and environmental impact assessment for the fourth potential Stabroek development, Yellowtail, have been submitted for government and regulatory review, Hill added. That project is pegged to come online in 2025.

In neighboring Suriname, Hess' second exploration well on Block 42 is now in the planning stage. A prospect, Zanderij-1, is being eyed for drilling around mid-year 2022 to test the Santonian interval and deep play potential, Hill said.

"We see the acreage as a potential play extension from the Stabroek Block," with similar play types and trap styles, he added.

2022 output to grow 12%-15%

Hess, the first large upstream company to report Q4 earnings, unveiled projections of a 12%-15% increase in its 2022 production year on year thanks to ramp-ups not only from Liza Phase 2 in Guyana but also the Bakken Shale of North Dakota.

That production, excluding Libya, is predicted to be 330,000-340,000 boe/d, Hess said. Bakken net production for 2022 is forecast to be 165,000-170,000 boe/d, a 6%-9% increase over 2021.

On Jan. 25, Hess announced its 2022 capital and exploratory budget of $2.6 billion, with 80% allocated to Guyana's offshore and the US' Bakken Shale in North Dakota.

Geographically, about $1.45 billion will go toward Guyana, with the lion's share of that amount ($400 million) allotted to Payara and $210 million for Yellowtail. The Bakken is targeted to consume $790 million.

Another $270 million is devoted to production activities in the North Malay Basin and $90 million for US Gulf of Mexico, including the exploratory Huron well and a tieback well to be drilled at the Shell-operated Llano field.