Unresolved plan issues, political crisis delay approval for Exxon’s third well project in Guyana

Mark Bynoe
Mark Bynoe

The Department of Energy (DE) yesterday said that the delay in the approval process for Exxon’s third well project is due both to unresolved issues surrounding its development plan and Guyana’s current political crisis.

“I think that it is well known that assessing and approving of Field Development Plans (FDPs) do require the signature of the minister. I could not expose my minister at this time to a process that is incomplete,” DE Director Dr. Mark Bynoe told an online press conference.

“What I have said and what I am doing is that we are providing EEPGL [Esso Exploration and Production Guyana Limited] with line and sight in terms of what are some of the issues that are emerging. Those issues will need to be addressed before one can discuss an approval on what we do concerning the FDP process. So, in large measure, we have provided them a list of matters that have to be addressed before we can consider further the issue of the Payara potential or possible approval. So that is not just a case of politics,” he added.

ExxonMobil last week said that its forecast production of 750,000 barrels per day (BPD) by 2025 would be delayed by about six months to a year.  The company attributed the delay to approvals for the Payara development plan, which it said has been delayed  because of the political atmosphere, coupled with COVID-19 restrictions for crew change that has ultimately slowed down drilling.  

“Unfortunately, the ongoing election process and uncertainty around the next administration has slowed government approvals of the Payara development plan. In addition, the challenge of rotating crews due to the impact of COVID-19 has temporarily slowed our drilling campaign. As a result, we expect a delay in our future developments of roughly six to 12 months, pushing our production objective of more than 750,000 barrels per day into 2026,” ExxonMobil’s Chief Executive Officer Darren Woods told an earnings call last Friday.

While he referred to “issues,” Bynoe would not divulge what they were and when pressed he said he would not detail them as the DE is discussing them with the operator with the hope of resolving them soon. “The review of the Payara FDP is fairly advanced with some preliminary issues raised with the Operator. The DE continues to engage with the Operator in a collaborative manner before finalization of the comments to be shared with the Operator,” Bynoe said.

“These preliminary issues are just that, preliminary, and it is not fair for me in the public arena because they are now being handed to the operator to address… I am not going to get into specifics,” he added.

Earlier this year, he had met with ExxonMobil and other officials in Houston to discuss the Payara project and it was there that some of the “issues” that need to be addressed were discussed and the company promised to address them soonest.

ExxonMobil’s CEO last week said the COVID-19 pandemic has had little impact on its operations here as he also underscored that Guyana remains an integral part of the company’s long-term growth plans and that projections remain as planned up to 2022.

“Our Liza Phase 1 operations have been largely unaffected by the pandemic. Production ramp-up is progressing and should reach full capacity in the second quarter. We’ve also managed the impact on Liza Phase II, keeping this project on schedule for 2022 start-up,” Woods said.

Overall, Woods said, COVID-19 has impacted the company’s plans but he added that with its sound planning for times such as these, its current financial capacity remains strong. 

Effects

Meanwhile, Bynoe yesterday indicated that all operators have been affected by the effects of COVID-19 and particularly in the management of their respective work forces. “A major change for all operators… whether it be CGX, Repsol or EEPGL… is the issue of having to change out the workforce, given that we all know they are supposed to be working 28 days on and 28 days off. We all know the airports have been closed out, so their workers are coming from different parts of the world. The last estimate was crews from 45 countries for EEPGL alone. It does cause an impact on a work plan. I am saying this not to fudge the issue. The impact on aviation is not only in Guyana… it is globally we are seeing this impact and that has affected all operators,” Bynoe said.

Bynoe also explained that with a quarantine period in place in most economies, the public can expect slippages in the work plans for most of the operators.

With current production at around 80,000 BPD per day and the estimated 120,000 BPD target not expected to be achieved until mid-June, Bynoe attributed this to an issue experienced with the gas compressor on the Liza Destiny FPSO. “In the case of the Liza Destiny, we have seen operational slippages due to the inability to complete the commissioning phase of operations and ramp up to steady state production, as some of the operations have encountered some challenges with the gas compressor,” he said.

Over eight million barrels of oil have been extracted from the well. Guyana has received one million barrels thus far.

Currently there are 2 Active Rigs, focused mainly on drilling water injection wells for the Liza Destiny and  two Hot-stack Rigs that are on standby because of the current COVID situation, “as they require crew change and there has been some restriction on drilling operations as we all look to reduce our exposure due to the global pandemic and the state of the industry,” he said.

Crew changeover has also affected the Liza Phase 2.

“The DE continues to work closely with the Covid-19 Task Force, MARAD and the Ministry of Citizenship, amongst others, to facilitate a smooth flow of operations without contravening the country’s laws and regulations,” Bynoe assured.