Exxon and its partners, the American mid-cap Hess and Chinese-stated owned Nexen, appear to have placed the Liza discovery in Guyana on a fast-track development plan.  In a recent third quarter conference call with investors, Hess gave some further details of the plans for Liza and seemed to confirmed the story carried in the Upstream newspaper that they were already speaking with potential FPSO suppliers for an early production plan.  While Hess emphasised that the partners were still only in preliminary study phase it is clear that they are very excited about the potential for Liza and many other “look alike” prospects in the massive Stabroek block.  Hess told investors that they saw significant upside potential in Guyana and that the partners would be pursuing both Liza appraisal wells and new exploration wells on the block.  A new seismic programme to help identify targets is currently underway in the block, covering 17,000 square kilometres and was reported by Hess to be about 50% complete at the end of October. 

Meanwhile Exxon is gearing up to start its drilling programme in January 2016, though there is not yet any news on the selection of a drill ship. There has been some commentary in the industry about the fact that there are no less than five Transocean drill ships currently stacked in the Gulf of Paria, Trinidad that could be available for the drilling campaign.  A number of Trinidad-based service companies are reportedly already contracted to support the drilling campaign and the Trinidad shore-base is gearing up for the January kick-off. 

 One new data point that came out of the Hess conference call was that the gross cost of the first Liza well was just USD 80 million, much lower than most deep-water wells in the region and the Gulf of Mexico. One industry expert told Energy Now that the wells for Hess’s Stampede development in the Gulf of Mexico were rumoured to cost US$200 million, mainly because they had to go very deep – in the range of 30,000 feet.   The Liza well by contrast was drilled to 17,800 feet, taking just 75 days, which largely explains the lower costs.   Nevertheless, Exxon and their partners are clearly looking at the current deflated price environment for rigs and services as an excellent opportunity to develop the Stabroek prospects.  The same industry expert explained that the spot market for deep-water rigs coming off contracts is now drastically lower, so that all-in rates might be in the US$500-600,000 per day region as opposed to the US$ 1.0 million a day experienced before the oil price crash. 

Within Guyana, the Minister of Governance, Raphael Trotman, has been leading the charge to strengthen governance systems to ensure that the country is ready to manage its new oil industry.  Trotman has reportedly enlisted the support of the UNDP and other international organisations to explore the strengthening of its institutional and legislative capacity and is considering joining the global Extractive Industries Transparency Initiative (EITI).  

Sherwin Long, the head of the Trinidad & Tobago EITI secretariat recently attended a workshop in Guyana, along with other Trinidadian oil industry experts, to help the Guyanese get ready for the oil industry.  Long reports that the Guyanese government is “aware of the need to not only share important data with the public but send signals to investors that Guyana is open to the right type of investor and the EITI will help in this regard. Trinidad and Tobago sees itself as a regional EITI champion and Guyana can learn from our experiences and avoid some of the legal or institutional challenges and barriers we faced in implementing the EITI.” Long believes that “in the next decade, Guyana has an opportunity to transform its economy and hopefully the EITI will play a key role in this transformation."

Minister Raphael Trotman will be attending the T&T Energy Conference on 18 – 19 January 2016.