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At current production rates, Liza 1 and 2 fields could be depleted before their 20-year lifespan
Source: Liza Two FDP
Kaieteur News – Both the Liza One and Liza Two projects in the Stabroek Block are currently operating at rates exceeding the design rates outlined in the Field Development Plan (FDP), raising concerns about premature depletion of resources in the development projects.
Each project has a lifespan of 20 years, but as U.S. oil giant ExxonMobil pushes its floating production storage and offloading vessels (FPSOs) to pump oil faster than they were designed to.
Kaieteur News has obtained a copy of the FDP for the Liza One and Liza Two projects, which reveals startling details about the development. The FDP is a technical document that provides detailed information about the project, including design details, equipment and chemicals to be used during operations, and a production profile to guide resource extraction.
According to the Liza One FDP, the project’s total developed resources are estimated at 452 million barrels of oil (MBO) with a production period of 20 years. According to the Ministry of Natural Resources website, the project started production in 2019 and should be able to produce 98,000 barrels per day (kbpd) by 2024 (see attached table), but ExxonMobil has increased production to 160,000 kbpd.
Likewise, the Liza Two project started producing oil in February 2022 and is expected to produce 211 kbpd this year, but the US oil giant produces more than 250 kbpd per day. According to FDP, the expected production of the Liza Two field is 570 MBO.
So far, it is unclear how much oil each project has produced in total since start-up.
However, it is clear that with Liza One producing 60,000 barrels per day above design and Liza Two producing 40,000 barrels per day above design, the useful lives of both projects may be exhausted before 20 years.
Source: Liza One FDP
As the country still has no parent company to provide unlimited oil spill cleanup and compensation guarantees, the increase in daily production has raised not only concerns about safety and the environment, but also questions about the country’s ability to gain more benefits from its oil wealth.
Under the 2016 oil contracts signed by Guyana with ExxonMobil, Hess and CNOOC, 75% of the companies’ monthly revenues are used to repay their investments, with the remaining 25% shared with Guyana as profits, and the country also receiving an additional 2% in royalties every quarter.
The country’s Vice President Bharrat Jagdeo, who oversees the oil and gas sector, told reporters at a previous press conference that in a few years, Guyana will reap more profits after it repays ExxonMobil and its partners for their investments. But with more oil produced every day to help pay for those expenses, it is unclear how the country will reap more revenue when resources are likely to be depleted in 20 years. This is particularly worrying because the government keeps approving more projects, which are often priced higher than previously approved developments.
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