Hess Corp. CEO John Hess Eyes Imminent Payara Deal

(Energy Analytics Institute, 9.Sep.2020) — Hess Corporation CEO John B. Hess is optimistic the Guyanese government of new President Mohamed Irfaan Ali will give approval in coming weeks for the company’s Payara offshore development.

“In terms of our Payara development, our joint venture is in close communication with the government of Guyana for approval of our production license,” Hess said 9 September 2020 during Barclays Virtual CEO Energy-Power Conference. “We are optimistic that we will be able to resolve any outstanding issues the next several weeks so we can proceed with our investment.”

Hess said his company still saw the potential for at least five floating production storage and offloading (FPSO) units offshore Guyana in the Stabroek Block with capacity to produce more than 750,000 barrels of oil per day (b/d) by 2026.

Exxon, Hess’ partner in the Stabroek block, and the operator and leader of a three-company consortium there that also includes CNOOC, announced earlier this year that the Payara development could be stalled for six to 12 months due to issues getting approval from the new government, which finally took office on 3 August after five months of political stalemate amid fraud allegations, and potentially due to weather issues.

“All the signs we’re getting from the government right now are very positive about getting that approval before the end of September. And where we had talked before about Payara potentially having a six to 12-month delay, if we get that approval before the end of September, that delay will no longer hold. And we look at first oil coming out in 2023, as we had originally said,” Hess proclaimed during the virtual conference.

“There are three open-water campaigns on Payara. It’s got a very extensive subsea architecture to it, so you need three weather windows to get a lot of that work done,” Hess President & COO Gregory P. Hill said during the virtual discussion in response to a question. “If we get the approval in the coming weeks as we expect, we’ll be fully back on track.”

The first offshore development, Liza Phase 1, started production in December ahead of schedule and is expected to reach its full capacity of 120,000 b/d in coming weeks. The second development, Liza Phase 2, with a capacity of 220,000 b/d, is on track to achieve first oil in early 2022. Payara, if approved this month, could be on track with capacity of 220,000 b/d by 2023, according to the original time-frame explained by Hess and Exxon in corporation presentations prior to the Covid-19 pandemic and Guyana’s elections on 2 March.

The offshore Stabroek Block covers 6.6 million acre and the Exxon, Hess and CNOOC consortium have found over 8 billion barrels of equivalent oil since 2015 with 18 discoveries, including the Redtail-1 and Yellowtail-2, recently announced.

RELATED STORY: Hess Announces Oil Discovery at Redtail-1, Yellowtail-2 Offshore Guyana

__________

By Ian Silverman. © Energy Analytics Institute (EAI). All Rights Reserved.