Hess Corporation, one of the co-venturers on Guyana’s highly-successful Stabroek Block, said Yellowtail, the fourth development project offshore Guyana, is one of the “best projects on the planet.”
Hess’ Chief Operating Officer (COO) Greg Hill highlighted this during the company’s 2021 third-quarter earnings call.
“The break-evens for Yellowtail, we project even with some cost increases, will be in that firmly in the $25 to $32 barrel range. So, one of the best projects on the planet even with some potential cost increases, great project,” Hill said in response to a question from JP Morgan analyst, Arun Jayaram.
Hess’ Chief Executive Officer (CEO) John Hess, reminded that Yellowtail’s floating production storage and offloading vessel (FPSO) can produce 250,000 barrels of oil per day on a gross basis.
“It will be our largest oil development to date in Guyana,” the CEO added. He said that while its cost will be higher, “the resource we are developing is significantly higher and this development has simply outstanding financial returns, some of the best in the industry as Greg mentioned.”
“A break-even cost between $25 and $32 per barrel, Brent. So, it’s outstanding economics. Yes, the costs are higher, but the resource we’re recovering are much higher and these are some of the best economics in the industry,” Hess’s CEO explained.
Going forward, the CEO revealed that Hess has budgeted a capital of US$1B for 2022 in Guyana. He recalled that the company came into 2021 with the guide of $780M for development in Guyana, but that the company is going to come in under that with approximately US$750M.
“With Liza Phase two and the continued development on Payara and will begin spending on Yellowtail, we think it’s approximately $1 billion will be the Guyana capital for the developments next year, so approximately again, another $250 million there,” Hess said.
The Yellowtail developmental project will be situated 126 miles offshore Guyana where ExxonMobil made its 13th discovery in the Stabroek block. Its initial production phase is scheduled to commence in 2025, with an optimum production capacity of 250,000 barrels per day, and would continue for 20 years. The FPSO is designed to have a storage capacity of two million barrels of oil.
The proposed development, according to joint public hearings into the project between Esso Exploration and Production Guyana Limited (EEPGL) and the Environmental Protection Agency (EPA), could provide some 1,300 jobs across its four phases.
ExxonMobil has already received approval for three development projects in the Stabroek block, where it has made discoveries totalling 10 billion oil-equivalent barrels.
Of those projects, production began on December 1, 2019, with the Liza Destiny floating production, storage, and offloading vessel at the Liza Phase one site. Production is scheduled to begin at the Liza Phase two operation in early 2022, with the Liza Unity having already arrived in the block. The Prosperity FPSO is currently being outfitted in Singapore for the Payara project, scheduled for first oil in 2024.