ExxonMobil secures Yellowtail approvals

14th April 2022

Photo by Maria Lupan 

US oil giant ExxonMobil has secured government and regulatory approval to develop Yellowtail field offshore Guyana. 

The announcement means that the Yellowtail Project becomes Exxon’s fourth and largest oil and gas field, adding to the Liza One, Two and Payara fields. 

Exxon, which operated through affiliate Esso Exploration and Production Guyana Limited (EEPGL), announced that the estimated US$10bn investment decision was aimed at producing 250,000 barrels per day from 2025. 

According to reports, Yellowtail production from the One Guyana floating production storage and offloading (FPSO) vessel will develop an estimated resource of more than 900mn barrels of oil. The project will include six drill centres and up to 26 production and 25 injection wells for a total of up to 67 development wells. 

“Yellowtail’s development further demonstrates the successful partnership between ExxonMobil and Guyana and helps provide the world with another reliable source of energy to meet future demands and ensure a secure energy transition,” the company said in a statement. 

Exxon added that since 2015 it has had nearly two dozen successful oil wells which so far allows the company to access more than 10bn barrels of oil in the Guyana Basin. 

INews Guyana reported that more than 3,500 Guyanese workers are supporting ExxonMobil’s activities in Guyana, an increase of more than 50% since 2019. ExxonMobil and direct contractors have spent more than US$600mn with more than 880 local suppliers since 2015. 

“We are working to maximize benefits for the people of Guyana and increase global supplies through safe and responsible development on an accelerated schedule,” said Liam Mallon, President of ExxonMobil Upstream Company. 

The approvals come as debate continues about the adequacy of insurance and environmental protections that the company have in place in the event of an adverse event such as a spillage.

In announcing its environmental authorisation for Yellowtail, Guyana’s Environmental Protection Agency (EPA) explained that among the notable conditions, the permit requires the operator to procure a capping stack to be maintained, tested, and stored in Guyana. The EPA explained that a capping stack is a large well closure device that connects to the top of the blowout preventer (BOP) and is capable of sealing off a well. 

In addition, the EPA revealed that the authorisation also requires EEPGL to maintain access to at least one overseas subscription service, to allow mobilisation of a capping stack to the project location. The EPA said that this will fortify safety and emergency response efforts since wells would be swiftly capped in the event of a well blow-out. 

The Private Sector Commission (PSC) has thrown its support behind the approval, saying that it is satisfied that the environmental authorisation requires the ExxonMobil-led consortium to have emergency equipment in Guyana to respond to a blow-out event. 

“The Commission appreciates the fact that the Financial Assurance provision holds EEPGL liable for all costs associated with clean up, restoration and compensation for any pollution damage which may occur as consequence of the Yellowtail Development Project,” the PSC said in a statement. 

The PSC is also happy that flaring has been formally incorporated into the Yellowtail permit. However, the private sector body urged EEPGL to have spare equipment on standby should there be a malfunction, to avoid gaseous pollution. 

“We would also like to see an effective Contingency Plan put in place to address any mechanical failure that may occur in the future that will limit flaring to the approved limits as specified in the permit,” the PSC said. 

ExxonMobil affiliate Esso Exploration and Production Guyana Limited operates the project and holds 45% interest in the Stabroek Block. Hess Guyana Exploration Ltd. holds 30% interest and CNOOC Petroleum Guyana Limited holds 25% interest. 

ExxonMobil said that it is already preparing to apply for approval for a fifth oil field and could be ready to submit final documents by the last quarter of 2022.

This is a lead article from Caribbean Insight, The Caribbean Council’s flagship fortnightly publication. From The Bahamas to French Guiana, each edition consists of country-by-country analysis of the leading news stories of consequence, distilling business and political developments across the Caribbean into a single must-read publication. Please follow the links on the right-hand side of this page to subscribe, or access a free trial.