Hess, ExxonMobil Strike More Oil Offshore Guyana

CEO John Hess said the Whiptail discovery could form the basis for a future oil development in the southeast area of the Stabroek Block.

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The new Whiptail discovery is located east of Liza.

Hess and ExxonMobil announced a significant oil discovery on the Stabroek Block offshore Guyana at Whiptail. The Whiptail-1 well encountered 75 m of net pay in high-quality, oil-bearing sandstone reservoirs. Drilling is also ongoing at Whiptail-2, which is located 3 miles northeast of Whiptail-1 and has encountered 51 m of net pay. Drilling will continue at both wells to test deeper targets, and the results will be evaluated for future development.

The Whiptail discovery is located approximately 4 miles southeast of the Uaru-1 discovery, which was announced in January 2020, and approximately 3 miles west of the Yellowtail field. Whiptail-1 is being drilled in 1795 m of water and Whiptail-2 is being drilled at 1895 m water depth.

John Hess said in Hess Corporation’s Q2 2021 earnings call on 28 July, “Whiptail is a significant new oil discovery that will add to the discovered recoverable resource estimate of approximately 9 billion barrels of oil equivalent and could underpin a future oil development in the southeast area of the Stabroek Block.

“The key for our company is to have a low cost of supply,” said Hess, who explained that his company is investing only in high-return, low-cost opportunities—“the best rocks for the best returns”—and that Guyana, with its low cost of supply and industry-leading financial returns, is key to the company’s long-term strategy. He said Wood Mackenzie had ranked the company’s Guyana developments the highest-margin and lowest-carbon-intensity oil and gas assets globally.

“Guyana is positioned to become a significant cash engine in the coming years as multiple phases of low-cost oil developments come on line,” he continued. With a line of sight of at least six FPSOs on the block by 2027 and up to 10 FPSOs to develop the discovered resources in Guyana, Hess expects the industry-leading cash flow growth rate to continue through the end of the decade and to drive the independent’s portfolio breakeven Brent oil price below $40/bbl by mid-decade. Hess also believes Guyana has multibillion barrels of future exploration potential remaining.

An Ongoing Story

The Stabroek story began more than a decade ago, when ExxonMobil began collecting and evaluating 3D seismic data offshore Guyana. Its Liza discovery, announced in May 2015, was the first significant oil find offshore Guyana.

ExxonMobil, which holds 45% interest in the 6.6-million-acre block and is its operator, calls it one of the world’s most important new oil and gas blocks in the past decade. Hess and CNOOC hold 30% and 25%, respectively.

The Payara discovery was announced in January 2017 and the final investment decision was made last year. The field is expected to achieve first oil in 2024 with a gross capacity of 220,000 BOPD. Engineering work for a fourth development at Yellowtail is under way with preliminary plans for gross capacity in the range of 220,000–250,000 BOPD and anticipated startup in 2025, pending government approvals and project sanctioning.

In June, Hess announced a discovery at the Longtail-3 well, which encountered approximately 70 m of net pay including newly identified, high-quality hydrocarbon-bearing reservoirs below the original Longtail-1 discovery intervals. Additionally, the successful Mako-2 well, which together with the Uaru-2 well, encountered approximately 11 m of high-quality oil-bearing sandstone reservoir, will potentially underpin a fifth oil development in the area east of the Liza complex. The Liza-2 development is on track to achieve first oil in early 2022.