Exxon, Hess make big oil discovery off Guyana coast

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HOUSTON – U.S. oil companies Exxon Mobil and Hess have confirmed the largest oil discovery in two years off the coast of Guyana, in a field that could cost as much as $18 billion to develop.

The deep-water Liza field, more than 100 miles from the small South American country, could hold as much as 1.4 billion barrels of oil equivalent, making it one of a handful of billion-barrel discoveries in the last half-decade. Exxon first found oil in the Liza field in 2015, when it drilled its first well there,  but a second well found the potential for twice as much crude, the company said Thursday.

It’s a big score for an industry that has made sharp cutbacks in oil exploration and last year found less energy than any year since 1952.

“It is getting harder and harder to make large oil finds,” said Leta Smith, a director at consultancy IHS. “One of the things that has been troublesome over the past several years is each year we see fewer discovered volumes, since 2012. A lot of the big finds have been gas, rather than oil.”

The industry has only made five discoveries with more than 500 million barrels or larger in the past four years. In 2014, a discovery in Iraq had 1.6 billion barrels.

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Exxon’s field could have half of what energy companies discovered in 2015. And because of its position on the map, it could figure into the development of an oil basin discovered a few years ago on the earth’s equator.

Exxon and Hess drilled its second well in the Liza field nearly 18,000 feet deep, under more than a mile of water. They found 190 feet of sandstone soaked in oil. The companies could break even on developing the field at less than $40 a barrel oil, Wells Fargo analysts estimate.