Why I have always been strongly “bullish” on Guyana’s hydrocarbons potential

Guyana’s Oil and Gas Sector, Going Forward:

Introduction

Today’s column recaps the details, which inform my strongly bullish outlook on Guyana’s truly world class hydrocarbons potential. Although it does not fall within the ambit of this column, I take the opportunity to remind readers I do hold a strongly bullish outlook on Guyana’s broader energy potential, and not only oil and gas. As stated last week, two lines of reasoning inform my judgement; namely, the Atlantic Mirror Image theory and two published assessments by the United States Geological Service USGS of hydrocarbon resource potential of the Guyana-Suriname Basin. Details on these are recapped below.

Atlantic Mirror Image Theory

The literature reveals that in recent years more and more geoscientists have been positing the view that Guyana’s oil and gas discoveries reveal the consequence of the drifting apart of what was originally, a unified global super-continent, combining South America and Africa. This separation demonstrably occurred over, what in layman’s terms I refer to as geological time. It also resulted in the formation of the Guianas Equatorial Margin (encompassing offshore and onshore portions of Guyana, Suriname, French Guiana, as well as limited portions of Venezuela and Brazil). From my reading of the literature, it appears to suggest that, the petroleum geology of the Guianas area closely resembles that of West Africa. And, it includes two sedimentary basins, namely, the Guyana-Suriname Basin and the Foz do Amazonas Basin. As I had earlier reported the Guianas Equatorial Margin/Guianas Basin is separated by the Demerara Plateau, which is a structurally high, thick succession of Jurassic and Lower Cretaceous carbonate-rich sediments.

The circumstances described above yield the thesis and my layman’s reasoning that the petroleum system of the Guianas Basin is a “mirror-image” of West Africa’s petroleum system. In the latter, several large hydrocarbon accumulations have been found recently, including, the famed Jubilee discovery, offshore Ghana.

USGS Assessment

Turning to the second line of reasoning, I rely on two USGS Fact Sheets which present summaries of data gathered from two World Energy Assessments it conducted on Undiscovered Oil and Gas Resources for Central and South America as well as the Caribbean region (2000 and 2012). As I have always been at pains to point out, the USGS information is provided “fully risked”. The estimates are provided at levels of 95%, 50%, and 5% probability. Further, the mean probability is also reported (where fractiles are additive, assuming perfect positive correlation).

The estimates for natural gas are provided. These include natural gas liquids separately. “Undiscovered” gas resources, as provided in the Fact Sheets, are the sum of non-associated and associated gas. Both Survey results are summarised in Table 1

For the 2000 assessment estimates range from 2.8 billion barrels of oil equivalent, boe, (at 95% likelihood) to 32.6 billion boe (at 5% likelihood). The 50 % likelihood is 13.9 billion boe and the mean is 15.2 billion boe. For the 2012 assessment estimates range from 5.2 billion boe at 95% likelihood and 26.0 billion boe at 5%. The 50% likelihood is 12.5 billion boe and the mean is 13.6 billion boe. Discoveries thus far by ExxonMobil and partners reveal amounts larger (at 9+ billion boe) than the 95 percent likelihood estimate for both assessments.

Two further observations are warranted at this point. First, these estimates are provided for a virgin frontier region, and consequently need to be backed by detailed petroleum geology assessments, for verification. Second, the mean natural gas estimates are for 42.1 and 21.2 billion cubic feet, respectively. And, for natural gas liquids the mean probability is 2.3 and 0.6 million barrels, respectively. The five percent likelihood values double those for the mean probability.

It should be kept to the forefront that these survey assessments were conducted as a subset of the USGS’ World Assessments. Further, the natural gas estimates are reported in cubic feet and natural gas liquids in boe. The standard conversion ratio of natural gas to boe is 6,000 cubic feet of natural gas is equivalent to one boe.

Further Justification

At this juncture, I hasten to remind readers that my bullish prediction was first introduced into my Sunday Stabroek columns way back in October 2016. Later, I had further re-affirmed this prediction in my elaboration of the Guyana Petroleum Road Map, presented over the period February 2017 to February 2019. I had re-visited these issues in my contributions to the Buxton Proposal series of columns.

 

Conclusion

Of note, this issue has re-surfaced as “news” in local print and social media. It is becoming increasingly evident to analysts and researchers that there is a rapid “advent” of world class petroleum finds in the Guyana-Suriname Basin. Thus, in March 2020, the Exxon Chairman and Chief Executive Officer disclosed that despite the severe global setbacks the supermajor was facing (given the state of the world market for crude): “Guyana will be assured of high priority … at least for the next five years” (my emphasis). Based on such commentary the public policy group American Security Project, ASP has predicted that Exxon’s projection of 750,000 barrels of oil per day from Guyana “could be a considerable underestimation” (my emphasis). The ASP posited that, if all goes smoothly in permitting oil production: “output could rise to over one million barrels per day by 2030”.

A year later, March 2021, the Vice President for Upstream announced the Company had doubled its recoverable resources from 9 billion boe to 18 billion boe!