Guyana seeks intel on environmental impacts of ExxonMobil’s seventh oil project

After ExxonMobil Guyana Limited (EMGL), a subsidiary of the U.S.-headquartered energy giant ExxonMobil, applied for environmental authorization to undertake the development of its seventh oil project in the Stabroek block, off the coast of Guyana, the country’s Environmental Protection Agency (EPA) has reviewed the application, concluding that it needs further insights into the potential environmental impacts of the project and the measures that will be taken to mitigate them before it makes up its mind whether to give the go-ahead for this development.

Plans to develop Hammerhead as the seventh deepwater oil project, outlined by Alistair Routledge, ExxonMobil’s Country Manager for Guyana, have taken the global news headlines by storm. The project will add between 120,000 and 180,000 barrels per day (bpd) by 2029, raising the country’s overall production capacity bar to nearly 1.5 million bpd, if the U.S. player’s environmental authorization application gets the green light from the Guyanese government.

In addition, the oil development will keep the energy giant’s current pace of putting a new Guyanese project into operation every 18 months. The Hammerhead discovery was revealed in August 2018, as ExxonMobil’s ninth oil discovery in the Stabroek block. The Hammerhead-1 well was drilled in a new reservoir, encountering approximately 197 feet or 60 meters of high-quality, oil-bearing sandstone reservoir. The well was drilled to 13,862 feet or 4,225 meters depth in 3,773 feet or 1,150 meters of water.

The proposed Hammerhead project will be implemented in multiple stages, encompassing well drillings and completions, mobilization and installation of subsea equipment, umbilicals, risers and flowlines (SURF), installation of a floating production, storage, and offloading (FPSO) vessel, production operations, and decommissioning. The project will be undertaken largely in the marine offshore environment and will require land-based activities for support operations at marine shore bases.

Since the intended developmental activities could affect the environment, leading to potential impacts on marine water quality, air quality, marine fauna, and socio-economic resources, among others, the EPA has determined that this project may significantly affect the environment and so, will require an environmental impact assessment (EIA) before any decision can be made as to its approval or rejection.

The Guyanese agency explains its reasoning by pointing out that the potential impacts on the physical, biological, and socioeconomic environment may be significant and long-term, given the type, scale, and duration of the proposed activity. As the project is relatively close to other development projects, this is perceived to raise the potential for cumulative impacts while the associated risks attached to unplanned events of petroleum production activities may be significant.

As a result, the EPA has invited the public to send written submissions over the next 28 days, setting out questions and matters they want answered or considered in the EIA. ExxonMobil previously obtained approval from the government of Guyana for six development projects in the Stabroek block – Liza Phase 1, Liza Phase 2, Payara, Yellowtail, Uaru, and Whiptail.

While the development plan for Hammerhead envisions an FPSO and SURF production system similar to the ones picked for the previous six projects, this will be a standalone development. The FPSO for the Hammerhead project will be located approximately 15 km southwest of the current location of the FPSO Liza Destiny. This project is poised to contribute to Guyana’s economic growth.

The development plan for Hammerhead, located in the south-central portion of the Stabroek block, approximately 160 km from Georgetown, entails drilling activities via drillships to produce oil using approximately 14-30 production and injection wells. The first oil is expected in 2029.

ExxonMobil’s progress in developing Guyana’s prolific oil resources is visible through the final investment decisions (FIDs), made together with its partners Hess and CNOOC, on six projects in the Stabroek block. Arbitration proceedings are currently underway over Hess’ proposed merger with Chevron.

After its first oil discovery in Guyana’s Stabroek block in 2015, the American energy behemoth has since found over 30 major discoveries, entailing recoverable resources of more than 11 billion barrels of oil equivalent.

While six FPSOs with a gross production capacity of more than 1.2 million barrels of oil per day are anticipated to be online on the block by the end of 2027, the firm has hinted at the potential for up to ten such units.