Exxon Looks To Expand Wells In Guyana

The content originally appeared on: News Americas Now

News Americas, NEW YORK, NY, Weds. May 22, 2024: ExxonMobil’s drilling program in Guyana for this year and beyond includes plans to further appraise two well sites to assess the commercial potential for gas in the Haimara gas field off the shores of Guyana.

In 2019 and 2023, ExxonMobil drilled at the Haimara-1 and Haimara-2 wells with varying degrees of success. The company is now preparing for additional appraisal drilling at the Haimara-3 and Haimara-4 gas wells. According to the company’s insurance contract, the two wells will be part of ExxonMobil’s exploratory program.

Other planned drilling activities include oil wells Lau Lau-2, Trumpetfish-1, Bluefin-1, Hatchetfish-1, and Redmouth-1. In the Stabroek Block, approximately 17 trillion cubic feet of gas have already been discovered, with the Pluma and Haimara wells confirmed as gas fields.

The announcement comes as Exxon CEO Darren Woods recently told CNBC that the dispute with Chevron over Hess Corporation’s assets in Guyana could drag into next year. Exxon is claiming a right of first refusal on Hess’ assets in Guyana under an agreement that governs a consortium developing the country’s oil resources. Chevron has rejected Exxon’s claims that the agreement applies to its pending all-stock deal to acquire Hess, valued at $53 billion.

The Guyana Government, however, says it aims to develop this gas through the Gas-to-Energy project, which includes the construction of a 300 MW power plant and a Natural Gas Liquid (NGL) plant. The pipeline and transmission infrastructure are expected to be completed this year, with the power plant and NGL facility becoming operational next year. This could potentially reduce electricity rates by 50 percent.

Last year, the government released its draft Gas Monetisation Strategy for public feedback. Earlier this year, President Dr. Irfaan Ali announced that the administration is incorporating the feedback into the final strategy. Vice President Bharrat Jagdeo has described the monetisation of Guyana’s gas reserves as the next wave of economic opportunity for the country.

Meanwhile, according to Professor and Former Ambassador Dr. Kenrick Hunte, the Production Sharing Agreement (PSA) between Guyana and ExxonMobil, along with its Co-Venturers Hess and CNOOC, stipulates a 2% royalty on all petroleum produced and sold. However, ExxonMobil has been paying only 0.5%. Hunte noted in a letter to Kaieteur News on March 3, 2024, that the company has been paying Guyana out of its profits, thus reducing the country’s already limited revenue from royalties.

Dr. Hunte also highlighted that ExxonMobil has been deducting 75% of the monthly earnings from the Stabroek Block to recover its investments, in accordance with the Petroleum Agreement. Guyana receives 50% of the remaining 25%, equivalent to 12.5% of total revenues. ExxonMobil then provides Guyana with a share of its earnings, valued at 2%.