Payara Development More Expensive Than Liza Phase 2

(Energy Analytics Institute, 1.Oct.2020) — The recently sanctioned Payara development located offshore Guyana in the Stabroek Block will demand a hefty $9bn development cost due to requiring more drill centers and wells than the Liza Phase 2 development, which implies lower per well productivity.

ExxonMobil, operator of the Stabroek Block, and partners Hess and CNOOC, plan to develop the 220,000 barrel-per-day Payara development, and target an estimated resource base of 600 million barrels of oil equivalent (MMboe), which is line with the Liza Phase 2 development. As a result, Payara economics equate to a “~$41K per flowing capital efficiency, relative to Liza Phase 2 at ~$27k per flowing ($6bn development price tag for similar resource base and FPSO capacity),” Tudor Pickering Holt & Co. (TPH) announced 1 October 2020 in a note to clients.

The difference in construction cost is due to differences in spending on necessary infrastructure with Payara requiring 10 drill centers and 41 wells (20 production and 21 injection) compared to Liza Phase 2 requiring 6 drill centers and 30 wells (15 production and 15 injection). The difference implies “lower expected productivity wells at Payara,” TPH said.

Guyana’s offshore Stabroek Block spans 6.6 million acre and the three-company consortium led by Exxon has found over 8 billion barrels of equivalent oil since 2015 with 18 finds at 20 wells drilled, including the Redtail-1 and Yellowtail-2, recently announced.

Payara signing ceremony. Source: Guyana’s Ministry of Natural Resources.

RELATED STORY: License Differences In Guyana’s Liza 1 And Payara Developments

Guyana’s first offshore development, Liza Phase 1, initiated production in December ahead of target and is expected to approach full capacity of 120,000 b/d soon. The second development, Liza Phase 2, with a capacity of 220,000 b/d, is slated to achieve first oil in early 2022, while the third development, Payara, is slated to reach its 220,000 b/d target in 2024, according to Exxon.

A total of five developments are envisioned offshore Guyana in the Stabroek Block with production from five floating, production, storage and offloading (FPSO) vessels expected to reach 750,000 b/d in 2026.

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