A key drilling objective for Hess in 2021 in Guyana’s offshore Stabroek Block is probing deeper geologic intervals where its partnership has now made four well penetrations, the company’s top executives said April 28.
Uaru-2, the most recent Guyana well completed by the consortium led by ExxonMobil and including China’s CNOOC, identified new reservoirs in the deeper Santonian interval below the original Uaru-1 find, made in January 2020.
Uaru-2 was announced as a discovery April 27, technically the partnership’s 19th in Guyana although they did not specifically call it the 19th since Hess President and Chief Operating Officer Greg Hill said it was “not as significant as the other 18. The Uaru-2 well successfully appraised [Uaru-1] and also made an incremental discovery in deeper intervals,” Hill said during a company earnings conference call.
Uaru-2 found about 120 feet of high-quality, oil-bearing sandstone reservoir. It was drilled 6.8 miles from the discovery well, implying a “potentially large areal extent” of the reservoir, Hill said.
The ExxonMobil-led group’s first discovery was the Liza field in May 2015. Liza Phase 1 began production in December 2019; Liza Phase 2 is in development, targeted for startup in early 2022; Payara, the third development, is slated for first oil in 2024.
The partners are also performing front-end engineering and design on Yellowtail, the fourth development, which has a projected 2025 start date.
Three other Santonian penetrations
Besides Uaru-2, three other discoveries – Liza Deep, Tripletail and Yellowtail – have had deeper penetrations into the Santonian. That deeper interval is found not only at Stabroek Block, but also extends east into neighboring Suriname. Apache, which has made four Suriname discoveries, has penetrated the Santonian in all its wells.
While most of the company’s discovered 9 billion boe of gross recoverable resources at Stabroek are in the prolific Campanian around 15,000 feet deep, Hess’ Santonian penetrations have occurred around 18,000 feet.
Hess CEO John Hess has called the Santonian a “fairly massive sand section.” Hill said it underlies the entire Liza complex.
“We’ve had four penetrations [in it], and coupled with Apache’s results we see that as very positive,” Hill said. “But we’ve got a lot more drilling to do to understand it.”
One way is by deepening the “tails” on Campanian exploration wells, but also through some stand-alone Santonian penetrations, he said, adding at “least one” well will have the Santonian interval as its main objective.
“Certainly, the Santonian has the potential to be a very large addition to the recoverable resources in Guyana,” Hill added. “And that is another key objective this year, to get some more penetrations in [the Santonian] so we can begin to piece the puzzle together” on that interval.
Stabroek’s program for the rest of 2021 will focus on both Liza-type Campanian reservoirs and on the deeper Santonian zones.
In addition, appraisal wells will target the southeast edge of the block. The Longtail, Mako and Turbot fields in that area will be appraised this year, helping to define the partners’ fifth and sixth Stabroek developments, said Hill.
Two exploration wells in H1’21
Exploration is also on the roster. Drilling has begun at Guyana’s Koebi exploration prospect, with a follow-on exploratory well, Whiptail, to be spudded in May. In all, 12 wells are to be drilled this year offshore the South American country, Hill said.
In Q1, Hess’ production totaled 315,000 boe/d, excluding Libya, compared to 344,000 boe/d in Q1 2020 or 332,000 boe/d when adjusted for sale of the company’s stake in the Gulf of Mexico’s Shenzi field.
At its Bakken Shale operation in North Dakota, Hess’ production fell to 158,000 boe/d in Q1 against 190,000 boe/d in the same quarter in 2020 resulting from lower drilling levels, harsh winter weather and lower NGL and natural gas volumes under percentage of proceeds contracts due to higher commodity prices.
NGL and gas volumes received under percentage of proceeds contracts were 19,000 boe/d in Q1 2020 and 20,000 boe/d in Q4 2020, but were reduced to 11,000 boe/d in the Q1 2021 from higher realized NGL prices that reduced volumes received as consideration for gas processing fees. But the higher NGL prices raised net income by about $75 million compared to Q1 2020.
The NGL factor accounted for about 8,000 boe/d of Hess’ lower Bakken volumes in the first quarter, compared to guidance of 170,000 boe/d. The remaining shortfall came from brutally cold temperatures in February which caused power outages and average wind chill temperatures of minus 34 degrees Fahrenheit for two weeks.
The freeze led to higher unproductive rig time, “significantly” higher workover backlogs and lower non-operated production, Hill said.
Hess drilled 11 Bakken wells and brought four new wells online in the first quarter; in Q2 it expects to drill about 15 wells and bring roughly 10 new wells online. A second rig recently added in North Dakota should help the company raise production over the year, Hill said, to average 155,000 boe/d in Q2, and a 2021 exit rate (Q4) of 170,000 boe/d-175,000 boe/d.
Full-year 2021 Bakken production is expected to average 155,000 boe/d-160,000 boe/d.
Source Global
