Analysts are beginning to worry that Exxon Mobil’s large Guyana discovery could be hamstrung by a lack of pipelines and infrastructure.
Exxon announced on Thursday its second oil discovery on Guyana’s Stabroek Block. The Payara-1 well hit about 100 feet of oil-bearing sandstone in two Upper Cretaceous reservoirs, similar to those of the Liza discovery, 10 miles to the southeast. Exxon also released test well results at Liza, identifying a deeper reservoir underneath the initial discovery. Exxon thinks it will add at least 100 million barrels of oil and gas to its recoverable reserves.
The test well reconfirms the “high potential” of deep water Guyana, said analysts at the energy research firm Wood Mackenzie, especially after Exxon drilled a dry hole at its Skipjack prospect there.
But the region has few pipelines servicing those blocks, and that “lack of infrastructure is a growing concern, especially for gas,” WoodMac said.
“With no offshore infrastructure or nearby gas market, the partners will face high costs to dispose whatever gas that cannot be reinjected or flared,” the analysts wrote in a report released on Friday.
WoodMac thinks Exxon will need two production and storage ships at Payara, which could pump as much as 150,000 barrels of oil and gas per day. The firm valued Payara production at as much as $1.6 billion.
“Guyana,” the firm said, “is rapidly joining the ranks of serious oil and gas players.”