Generate partnerships in Guyana and Suriname now. This was the advice of Michael Gow, Subsea 7 country manager for Guyana/Suriname as he addressed last week’s Energy Conference.
In his presentation during the Offshore exploration in the Caribbean virtual session, Gow explained that so far the returns being seen by oil companies who had already began exploration in the deep waters of the South American states had already began to exceed expectation.
Based on reports done by international publication Oil Now as well as Rystad Energy and the Hess Corporation, the returns from the Lisa Fairway which spans the waters of Guyana and Suriname are among the most productive in the world.
“What it says is that South America, this basin has moved ahead of the United States and it now places the country ahead of the US and just behind Russia in terms of volumes discovered in the past seven years.
“So if you just take only 2015 to 2022. So the first Lisa discovery was 2015, only seven years ago to today, and you compare that to the rest of the world, Russia is the only country that has found more oil and gas. And by the way, most of that was gas from Russia, in the United States about 50/50 gas and oil,” he told the conference.
“So this basin, if you look at it from a seven-year perspective, it’s the hottest basin in the world. And it’s right up there with Brazil, it’s behind Brazil. But it’s moving up to catch with Brazil,” said Gow who revealed that according to Exxon’s own assessment “the total basin potential is more that two times discovered resources.”
He noted what made Guyana and Suriname’s finds even more impressive was the massive amount of acreage still to be explored. The thing that kind of stands out about the basin it’s similar for Suriname as it is for the Guyana side is these are very large acreage blocks. The Starbroek alone is 6.6 million acres, which is the equivalent of 1150 Gulf of Mexico blocks. So it’s staggering,” he said.
“Talking about this year alone, we’ve had five discoveries close to a billion barrels of oil in 2022. So you can see where this is going. It’s crazy where it’s going.”
Gow said this meant there was capacity for several companies to get in on the basin as he noted Exxon has shared the load significantly since the set up of the their deepwater drilling rigs and he expected TotalEnergies, which is exploring in Suriname to follow suit.
“They’ve spread the wealth around, they’ve got Schlumberger, they got Baker, they got Halliburton, each one of those are geared up to be able to handle more than three drilling rigs apiece, so it’s not hard to see that we can go from seven rigs to more than 10 rigs in Guyana alone. Suriname is a bit further behind.
“But I expect as Total gets closer to sending their FID (Final Investment Decisions), they’re going to have to start drilling production wells. Right now they’re doing a lot of testing in the reservoirs. They’re looking for some additional oil and exploration throughout block 58.
“And I think that we’ll see that block, 58, pick up,” he said, adding that for the most part both countries had allowed the international companies to establish themselves without significant delays which could disrupt investment and exploration decisions.
Gow said while Guyana’s fields were far more advanced, he was impressed by the receptive approach of the Suriname oil company Staatsolie. He recognised the Suriname company had very viable deals which could allow entry into their industry.
“They’re very open, very easy to work with. I encourage folks that want to enter into this arena, definitely find a way to talk to them, they’re very approachable. They’re very forward-thinking. I could even see the Energy Chamber doing some kind of partnerships with them,” he said,
“I have yet to see anything that they don’t look at long term. And they do look at the best interest of the country.
“So I very much encourage people to work with them. I think they’re very proactive. I think they’re very pro-business, pro oil and gas. They have a PSA, production sharing agreement, that’s very reasonable and easy for the oil and gas companies to work with.”
Gow said Total had been in Suriname for over a year and the company had first expected oil production to begin by 2025.
“What they found though, as they got in there, they found that higher GORS, gas to oil ratios than they expected. They found they had to do a lot more work on these fields and better define them.
“And so they’ve kind of taken a newer approach. They’re spending a little more time, they’re gonna spend another extra year or two to figure out what they have in block 58,” said Gow.
He said so far Guyana’s management of the block has been prudent.
“Guyana, just with one FPSO (floating production storage and offloading), production of one FPSO, was able to increase their national budget by 44% this year, the second FPSO, that first was 120,000 barrels, a second is 220,000 barrels. And that just came on this year. It’ll be a full production probably (in) October November. So you can imagine their national budget can increase again,” he said.
Gow stated that production in Guyana had also been boosted by companies producing barrels at less than $35 a barrel.
“We’ve got less than $35 barrel production. Exxon claims they can make a 10% return at $35 a barrel, that really puts them in a shock resistant position.
“So that’s a great position to have. I think it’s good for Guyana, I think it’s good for the region. Exxon was able to get from discovery to production in around five years,” said Gow.
He identified transportation as the major weakness in the burgeoning industries in the South American states.
Trinidad and Tobago, he felt could provide one of the best solutions to this issue given our expertise in the industry.
“They’re talking about a gas pipeline that goes from Suriname that goes through Guyana to Trinidad. Personally, I would love to see that happen. I think, to me, that’s the first and best solution. I think there’s plenty of capacity in Trinidad. There’s plenty of gas in your southern neighbour.
“If there’s a way to get Venezuela on board with that I think that would be one of those wonderful solutions,” he said as he stressed the time to get on board with these developing industries is now.