VANOUVER (miningweekly.com) American multinational oil and gas corporation has made a construction decision for the first phase of development for the Liza field, one of the largest oil discoveries of the past decade, located offshore Guyana.

The Irving, Texas-based company said on Friday that the Liza Phase 1 development includes a subsea production system and a floating production, storage and offloading (FPSO) vessel designed to produce up to 120 000 bbl/d of oil.

Production is expected to start by 2020, less than five years after discovery of the field. Phase 1 is expected to cost just more than $4.4-billion, which includes a lease capitalisation cost of about $1.2-billion for the FPSO facility, and will develop about 450-million barrels of oil.

Were excited about the tremendous potential of the Liza field and accelerating first production through a phased development in this lower-cost environment. We will work closely with the government, our co-venturers and the Guyanese people in developing this world-class resource that will have long-term and meaningful benefits for the country and its citizens, ExxonMobil Development Company president Liam Mallon said in a statement.

The short time it took ExxonMobil to go from Liza's discovery to declaring final investment decision (FID) signals the competitiveness of the project, both within the company's portfolio and globally, industry analyst Wood Mackenzie's senior analyst for upstream Latin America, Pablo Medina said in a note sent to Creamer Medias Mining Weekly Online.

Medina said that the Liza-Payara wells has a breakeven of $46/bbl (Brent; using a 15% discount rate), which puts it in a very attractive position compared to other leading investment opportunities such as tight oil or deepwater Brazil.

Very few deepwater projects have been pushed through FID during the oil price downturn. Only the very best projects have been sanctioned and this speaks volumes of Liza's potential, the analyst said.

We currently forecast the full development of Liza-Payara will produce over 330 000 bbl/d of oil at peak, with reserves of over 1.5-billion barrels of oil equivalent. The successful exploration campaign has also led to the discovery of almost three-trillion cubic feet of associated gas. The full development solution will need to address the challenge of gas monetisation, given the field's remoteness from the coast and the lack of a gas market in Guyana, he explained.

Going forward, Guyana will have the task of managing the complexities of developing its first oil and gas field. Within ten years, we expect the Liza-Payara development to produce 330 000 bbl/d allowing Guyana to join the ranks of other Latin American producers, where legacy production has been in steady decline, Medina pointed out.

The Liza Phase 1 development can provide significant benefits to Guyana, including jobs during installation and operations, workforce training, local supplier development and government revenues to fund infrastructure, social programs and services.

The development has received regulatory approval from the government of Guyana.

The Liza field is about 190 km offshore in water depths of 1 500 m to 1 900 m. Four drill centres are envisioned with a total of 17 wells, including eight production wells, six water injection wells and three gas injection wells.

The Liza field is part of the Stabroek Block, which measures 26 800 km2. Esso Exploration and Production Guyana is operator and holds a 45% interest in the block.

Hess Guyana Exploration holds a 30% interest and CNOOC Nexen Petroleum Guyana holds 25%.

Esso Exploration and Production Guyana is continuing exploration activities and operates three blocks offshore Guyana Stabroek, Canje and Kaieteur. Drilling of the Payara-2 well on the Stabroek block is expected to start in late June and will also test a deeper prospect underlying the Payara oil discovery.

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ExxonMobil sanctions $4.4bn Liza development, offshore Guyana - Creamer Media's Mining Weekly