Oil & Gas

Saipem secures USD 700mn in new contracts

Saipem has been awarded contracts for the second phase of the ExxonMobil led Liza development offshore Guyana. These contracts, assigned by Esso Exploration and Production Guyana Limited (EEPGL), an affiliate of ExxonMobil, as the project operator, are in addition to those awarded to Saipem in 2017 for Liza Phase 1.

Following engineering and subject to requisite government approvals, project sanction from the joint venture and an authorization to proceed with the next phase, Saipem will then perform detailed engineering, procurement, construction, and installation of the risers, flowlines, and associated structures and jumpers. Saipem will also transport and install umbilicals, manifolds, and associated foundations for the production, and water and gas injection systems.

Development of the Stabroek Block is being pursued by a joint venture which includes Esso Exploration and Production Guyana Limited as operator and 45 percent interest holder, in conjunction with Hess Guyana Exploration Limited (30 percent interest) and CNOOC Nexen Petroleum Guyana Limited (25 percent interest).

Liza field is located approximately 200 Km off the shores of Guyana in the Stabroek Block at a water depth up to 1,850 metres. The second phase of the development has a larger number of wells and related subsea equipment than its predecessor and will produce an estimated 220,000 BOPD.

“For Saipem this award is significant and strategic, and consistently supports our aim to consolidate our leading position in the offshore Subsea Flowlines Umbilicals and Risers (SURF) market. It also consolidates our relations with an important client such as ExxonMobil and allows us to contribute safely to the development of Guyana’s significant hydrocarbon resources. Finally, this project is expected to involve the recently acquired vessel Constellation which, together with the FDS2, will ensure an offshore execution campaign to achieve first oil by 2022,” Stefano Cao, Saipem CEO, commented.

 

Background

ExxonMobil initiated oil and gas exploration activities in Guyana in 2008, collecting and evaluating substantial 3-D seismic data that led to the company safely drilling its first exploration well in 2015, Liza-1.

ExxonMobil is now firmly established in Guyana and committed to model corporate citizenship. The Government of Guyana issued the production license for Liza Phase 1 in June 2017 and first oil is expected no later than 2020.

Drilling continues to yield positive results. Longtail, is the latest and eighth oil discovery in the Stabroek Block since Liza in May 2015, when ExxonMobil announced that first significant discovery. Exploration continues. The Stabroek Block is 6.6 million acres (26,800 square kilometres) and located approximately 120 miles (193 kilometres) offshore Guyana. The Liza, Payara, Liza deep, Snoek, Turbot, Ranger, Pacora and Longtail discoveries are located in the Stabroek Block.

ExxonMobil’s affiliate, Esso Exploration and Production Guyana Limited (EEPGL) operates offices in Georgetown. The current staff of the Guyana Affiliate office is 47, 66% being Guyanese. That is expected to increase by the year 2020 with an increase in Guyanese staff. Consistent with its commitment to corporate citizenship EEPGL has established a Centre for Local Business Development to upgrade skills of small and medium sized businesses, and increase their readiness to provide competent local content ahead of first oil.

The Canje Block is located offshore Guyana east of the Stabroek Block, 3-D seismic data was collected in 2016. EEPGL is the operator and holds 35 percent interest, JHI holds 40 percent interest and Mid-Atlantic holds 25 percent interest.

The Kaieteur Block is located offshore Guyana to the north and adjacent to the Stabroek and Canje blocks, approximately 250 kilometres offshore in ultra-deep water, 3-D seismic survey was completed in 2017. EEPGL is the operator and holds 50 percent interest, Ratio Energy Limited holds 25 percent interest and Ratio Guyana Limited holds 25 percent interest.

 

 

Project overview

Exploration wells drilled in the Stabroek Block

  • Liza-1 well discovery was announced in May 2015
  • Liza-2 well was drilled and tested in July 2016
  • Liza-3 well was drilled in October 2016, confirming a world-class resource discovery in excess of 1 billion oil-equivalent barrels
  • Liza-4 well was drilled in March 2017 and encountered more than 197 feet of high-quality, oil-bearing sandstone reservoirs, which will underpin a potential Liza Phase 2 development
  • Appraisal drilling at Liza 3 identified an additional high-quality deeper reservoir directly below the Liza field, which is estimated to contain resources between 100 and 150 million oil-equivalent barrels
  • Skipjack-1 was drilled in September 2016; this did not encounter commercial quantities of hydrocarbons
  • Payara-1 well discovery was announced in January 2017; Payara is ExxonMobil’s second oil discovery on the Stabroek Block and was drilled in a new reservoir – encountering more than 95 feet of high quality, oil bearing sandstone reservoirs. The well was safely drilled to 18,080 feet (5,512 meters) in 6,660 feet (2,030 meters) of water
  • Payara-2 well discovery was announced in July 2017; Payara-2 encountered 59 feet (18 meters) of high-quality, oil-bearing sandstone reservoirs. The well was safely drilled to 19,068 feet (5,812 meters) in approximately 7,000 feet (2,135 meters) of water
  • The Payara discovery is estimated at approximately 500 million oil-equivalent barrels
  • Snoek-1 well discovery was announced in March 2017; Snoek is ExxonMobil’s third oil discovery on the Stabroek Block and was drilled in a new reservoir – encountering 82 feet (25 meters) of high-quality, oil-bearing sandstone reservoir. The well was safely drilled to 16,978 feet (5,175 meters) in 5,128 feet (1,563 meters) of water
  • Turbot-1 well discovery was announced in October 2017; Turbot is ExxonMobil’s fifth oil discovery on the Stabroek Block and was drilled in a new reservoir – encountering approximately 75 feet (23 meters) of high-quality, oil-bearing sandstone reservoir. The well was safely drilled to 18,445 feet (5,622 meters) in 5,912 feet (1,802 meters) of water
  • Ranger-1 well discovery was announced in January 2018; Ranger is ExxonMobil’s sixth oil discovery on the Stabroek Block and was drilled in a new reservoir- encountering approximately 230 feet (70 meters) of high-quality, oil-bearing carbonate reservoir. The well was safely drilled to 21,161 feet (6,450 meters) depth in 8,973 feet (2,735 meters) of water
  • Pacora-1 well discovery was announced in February 2018; Pacora is ExxonMobil’s seventh oil discovery on the Stabroek Block and was drilled in a new reservoir- encountering approximately 65 feet (20 meters) of high-quality, oil-bearing sandstone reservoir. The well was safely drilled to 18,363 feet (5,597 meters) depth in 6,781 feet (2,067 meters) of water
  • Sorubim-1 was drilled in April 2018; this did not encounter commercial quantities of hydrocarbons
  • Longtail-1 well is ExxonMobil’s eighth and latest discovery to date on the Stabroek Block, the discovery was announced in June 2018; Longtail was drilled in a new reservoir – encountering approximately 256 feet (78 meters) of high-quality, oil-bearing sandstone reservoir. The well was safely drilled to 18,057 feet (5,504 meters) depth in 6,365 feet (1,940 meters) of water
  • The gross recoverable resources for the Stabroek Block are now estimated to total more than 4 billion recoverable oil-equivalent barrels, based on all discoveries in the Stabroek Block
  • The Noble Bob Douglas has arrived into Guyana’s waters and began drilling the Liza Phase 1 development wells
  • The Stena Carron drill ship will continue to explore and evaluate other areas of the block

 

Liza Phase 1 project

Development description

  • Liza Phase 1 development is approximately 190 kilometres offshore in water depths of 1500 – 1900 meters
  • The development plan includes completion of a floating production, storage and offloading (FPSO) vessel designed to produce up to 120,000 barrels of oil per day
  • The FPSO facility will develop approximately 450 million barrels of oil from the Liza Field
  • Four drill centres are envisioned with 17 wells total: eight production wells; six water injection wells; three gas injection wells

 

Recent activities

  • Esso Exploration and Production Guyana Limited (EEPGL) applied for a production license and the initial development plan for the Liza field in December 2016
  • The development plan includes development drilling, operation of the FPSO, and subsea, umbilical, riser and flowline systems
  • EEPGL awarded contracts to SBM offshore for an FPSO vessel. Under the contract, SBM offshore will perform front end engineering and design (FEED) for the FPSO, and, subject to a final investment decision in 2017, will construct, install and operate the vessel
  • EEPGL awarded contracts to TechnipFMC for the engineering, manufacture and delivery of the subsea production system (SPS) equipment for the proposed Liza deep water project
  • EEPGL awarded contracts to Saipem for the engineering, procurement, construction and installation (EPCI) of the subsea umbilicals, risers and flowlines for the Liza deep water project
  • In June 2017, the Guyana Environmental Protection Agency issued an environmental permit and the Ministry of Natural Resources issued a production license for the Liza field
  • In June 2017, ExxonMobil announced a final investment decision to proceed with development of the first phase of oil production at the Liza field offshore Guyana
  • In June 2017, EEPGL awarded contracts for shore base services for the Liza Phase 1 development to Guyana Shore Base Inc. (GYSBI), a majority Guyanese-owned corporation located in the Muneshwers Houston Port
  • In August, EEPGL awarded contracts for drilling services to Noble Corp. The Noble Bob Douglas drillship was contracted for a three-year period and is expected to start drilling Liza Phase 1 development wells in first half of 2018
  • ExxonMobil completed baseline 4D Seismic over the Liza Field in 2017

 

Liza Phase 2

  • EEPGL has started the process for a potential Liza phase 2 development. As part of the regulatory process, EEPGL applied to the Environmental Protection Agency (EPA) for environmental authorization and are progressing planning on a potential production concept for Liza phase 2.

The potential concept involves a second floating, production, storage and offloading vessel (FPSO) and related subsea equipment, umbilical, risers and flowlines. The proposed development concept is similar to that of Liza phase 1. Approximately 35-40 wells may be drilled at two subsea drill centres, consisting of a combination of producers and injectors to support production of oil, injection of water and reinjection of associated gas. The FPSO will have an estimated production capacity of approximately 190,000 to 220,000 barrels of oil per day.

 

New offshore E&C contract in Congo

Furthermore, through its subsidiary Boscongo SA, Saipem has been awarded a new offshore E&C contract in the Republic of Congo for an MMO (Maintenance, Modifications & Operations) project in relation to the Centrale Electrique du Congo, which covers over half of the country’s electricity supply.

The scope of work includes the engineering, procurement, construction and commissioning, as well as the start-up and performance tests for the project, the purpose of which is to expand the capacity of the open cycle power plant located 15 km to the south east of Pointe Noire, in proximity to Saipem’s yard which will provide necessary support to the project activities. Output will be brought from the present 300 MW to 450 MW.

The overall value of the contracts is approximately 700 million USD.

 

About Saipem

Saipem is a world leader in drilling services, as well as in the engineering, procurement, construction and installation of pipelines and complex projects, onshore and offshore, in the oil & gas market. The company has distinctive competences in operations in harsh environments, remote areas and deep water. Saipem provides a full range of services with ‘EPC’ and ‘EPCI’ contracts (on a ‘turn-key’ basis) and has distinctive capabilities and unique assets with a high technological content.

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