Key Developments
1. Approval of Liza Phase 2 Development Plan

The Liza Phase 2 Field Development Plan (FDP) was approved by the Minister Responsible for Petroleum on Monday 29 April 2019. The approval is for the second phase of development on the Liza field.

The DE and GGMC Petroleum Division, together with its external consultant Bayphase, conducted an in-depth review of the Liza Phase 2 Field Development Plan (FDP) submitted by Exxon Exploration and Production Guyana Limited (EEPGL).

The Liza Phase 2 Development Plan:

• The Liza Phase 2 project will utilize a development concept similar to Liza Phase 1 – where it will be utilising subsea wells with oil produced into a Floating Production Storage and Offloading (FPSO) vessel.
• Liza Phase 2 will produce up to 220,000 barrels of oil per day, with a total of six drill centres planned as well as approximately 30 wells, including 15 production, nine water injection and six gas injection wells
• Phase 2 start-up is expected in mid-2022 and is projected to develop approximately 600 million barrels of oil.
• The floating production, storage and offloading (FPSO) vessel, named the Liza Unity, will process, store and offload oil to oil tankers for transport to market.

The approval is subject to a number of conditions and confirmatory studies. Some of the more important conditions relate to

1. The establishment of a Regional Capping Stack or other solution to ensure that a Capping Stack can be deployed within 5 days of a well control event with loss of containment.
2. Improving the targeted availability of the overall production system of the Liza Phase 2 FPSO to between 98% and 99%.
3. Identifying potential cost savings synergies between Liza Phase 1 and Lisa Phase 2.
4. The Stabroek partners entering into a Decommissioning Security Agreement.
5. Having EEPGL conduct Annual Third Party Auditing on their Drilling Operations that would be consistent with Good International Oil Field Practice (GIOFP) and its own Operations Integrity Management System (OIMS).
6. The EEPGL shall follow the required practice in the US Gulf of Mexico in calculating “Worst Case Discharge” and to validate the assumptions and calculations by obtaining an independent assessment to develop an estimate of the flow that would result from an open hole well control event with loss of containment. This independent assessment will then be used as the basis for the Oil Spill Response Plan and oil spill modelling.

2. Insurance

The Department has set the stage, as we have constantly been reiterating, by ruling out self-insurance and enforcing insurance compliant with Guyanese law. We have worked together with Governor of Bank, the Guyana insurance community, inclusive of the Insurance Association of Guyana (IAG), and the Environmental Protection Agency (EPA) to create an environment where all Operators, including the Stabroek Operator, will source compliant insurance and demonstrate insurance quantum’s and terms through third party risk assessors.

3. Farm-Ins

The Government of the Cooperative Republic of Guyana, via the Minister responsible for Petroleum, approved on April 30, 2019 the farm-in joint venture agreement between CGX Energy Inc. and Frontera Energy Corporation covering two shallow water offshore Petroleum Prospecting Licenses, i.e., the Corentyne and Demerara blocks. CGX is planning to drill one well in 2019 using a jack-up rig.

4. Institutional Strengthening (World Bank Project)

The DE continues to advance with the process of strengthening its capacity through, inter alia, the continued recruitment of expertise of both Guyanese and Advisors, securing funding and expertise to build out its structure, and developing a web presence. In this vein, with the recently signed World Bank Loan for USD 20 million the DE is aiming to recruit the following skills set between May – July 2019.
• Petroleum Development Advisor
• Crude Marketing Advisor
• Natural Gas Negotiations Advisor
• Oil and Gas Commercial Specialist
• Petroleum Commission Needs Assessment Advisor
• Accounting Specialist
• Legal Advisory Services, given that the diagnostic/gap analysis final draft report was submitted.
• DE Staffing – forward plans for Guyanese workforce (technical staff to shadow the hired experts, economists, econometrician, M&E, procurement staff, etc).

The Department is also working with the Inter-American Development Bank (IADB) to recruit some additional advisory services to ensure Production Sharing Agreement contract administration processes are created and embedded within the DE and a robust gas master plan is developed.

Cost Recovery Audit
Cost Recovery audit – The Joint Technical Evaluation process is nearing completion and we are aiming to commence this work by mid-June 2019.

Local Content Policy
The Local Content policy has been drafted and is going through a discussion phase. We aiming to complete this by the ending of June 2019.

Leave a Comment