• Natural Gas News

    Gas from Guyana-Suriname basin: how soon? [Gas in Transition]


Guyana sees development of its offshore gas resources as a long-term prospect rather than as something for the short or medium term. [Gas in Transition, Volume 3, Issue 8]

by: Jennifer DeLay

Posted in:

Natural Gas & LNG News, Americas, Insights, Premium, Gas In Transition Articles, Vol 3, Issue 8

Gas from Guyana-Suriname basin: how soon? [Gas in Transition]

The Guyana-Suriname basin is known to contain large amounts of natural and associated gas as well as crude oil. Gas accounts for about 25% of the 11bn barrels of oil equivalent (boe) in recoverable reserves discovered at Stabroek, a massive block offshore Guyana operated by ExxonMobil. It has also been found in sizable quantities at Block 58, a licence area offshore Suriname where TotalEnergies is serving as operator, and it accounts for a portion of the discoveries made in the northern section of the Corentyne block offshore Guyana, operated by Canada’s CGX Energy.

Thus far, though, plans for developing these gas reserves have been slow to emerge.

Among the three operators listed above, ExxonMobil has made the most progress – probably because it was the first to discover and extract oil from Guyana’s offshore zone. Since the US major made its first commercial finds in 2015 and launched production in late 2019, it has teamed up with Guyana’s government to pipe some of its associated gas to shore for local consumption within the framework of the Gas-to-Energy (GTE) project. It has also made clear, though, that it intends to make oil a higher priority for development than gas for the time being. As such, it intends to keep injecting most of its associated gas back into its oilfields to boost reservoir pressure even after the GTE system begins operating late next year.

CGX Energy, by contrast, has yet to make any firm plans for gas development at Corentyne. This is not surprising, as the Canadian company did not make its first find until the spring of 2022 and has yet to reach an official conclusion about the commerciality of its asset.

Meanwhile, TotalEnergies is taking a rather cautious approach to gas development at Block 58. The French giant is known to have made some very substantial gas finds within its licence area, but it is much more keen to extract oil and as such is waiting to make a final investment decision (FID) until it determines whether its crude discoveries are large enough to be pooled together into a large-scale development project.

APA’s FLNG plan

TotalEnergies’ caution has not provoked any public complaints or criticism from APA Corp., the French major’s US-based partner in the Block 58 gas project. However, the latter company recently indicated that it had put a certain amount of thought into gas development options.

Earlier this month, Bloomberg reported that APA was in talks with Guyanese authorities about the possibility of a joint liquefied natural gas (LNG) project. Citing statements from Leo Mariani, an analyst for US-based Roth MKM, the news agency quoted APA’s vice president Gary Clark as saying that his company was pursuing further discussions with Guyana on proposals for the installation of a floating LNG (FLNG) plant, as well as an LNG export terminal, in the offshore zone.

The Bloomberg report did not offer many details on the FLNG plan, and Clark did not say when APA expected to conclude its discussions with Guyanese officials. He did hint, though, that his company’s talks with Guyanese officials were not likely to affect the timetable for development of Block 58’s gas resources. Instead, he indicated that APA was going along with TotalEnergies’ plans, including its decision to focus on oil first.

According to Bloomberg, Clark explained that in the medium term, the partners were planning to re-inject their gas production into oil reservoirs in order to maximise their crude production and maintain reservoir pressure. Then in the long run, he said, they may seek to produce and export LNG via an offshore gas liquefaction plant and terminal.

Clark did express strong confidence in the oil and gas discoveries made thus far at Block 58, but he also emphasised that APA was interested in working with Guyana on LNG exports. That is, he described the proposed FLNG unit as a facility that would be handling gas from both Suriname and Guyana, rather than just Suriname.

Long-term prospects

In theory, the APA executive may be talking about a joint facility because he is keen to streamline matters and avoid duplication of efforts within a relatively small area. After all, Block 58 borders Stabroek and the Guyana-Suriname maritime border on its western edge, and all of the discoveries made there so far lie along the same trendline as the “Golden Lane,” the main string of oil and gas finds at the Guyanese block.

But in practice, Clark’s interest in cooperation with Suriname’s neighbour may be rooted in concern that Block 58 does not contain enough gas on its own to support an offshore development project. If so, his statements may be driven by the conviction that Guyana needs to participate for this endeavour to succeed.

Of course, it is not yet possible to say whether this is the case. TotalEnergies and APA have yet to reveal how much gas (or oil) might be contained within Block 58 – and even if they had done so, they would probably have to revise their numbers later to reflect the results of appraisals.

Whatever the case, cooperation with Guyana is not likely to speed up the process of gas development offshore Suriname. Officials in Georgetown are certainly keen to see Guyana make the most of its gas resources, but they are also aware that development is likely to be a long-term prospect rather than a short- or medium-term outcome.

Vice President Bharrat Jagdeo, for instance, recently noted that Guyanese authorities would have to take certain steps before making any commitment to extract gas. On the one hand, he said during a press conference in Georgetown, the government would have to formulate and adopt a National Gas Strategy to complement new legislation governing the oil sector – namely, the recently approved Petroleum Activities Bill 2023, which still has to be signed by President Irfaan Ali before it takes effect.

“We are moving ahead on the gas strategy because that was a promise,” Jagdeo remarked. He explained that Georgetown had pledged earlier to adopt a new oil law to replace the Petroleum (Exploration & Production) Law passed in 1986 and to launch competitive auctions for offshore blocks before making gas a higher priority.

Additionally, he stated that the Guyanese government wanted to assess market interest in the country’s gas before making any commitments on this front. “We may explore the market regarding our gas resources and see what interest there is,” he told reporters.

The assessment process is likely to involve a significant amount of effort. According to Jagdeo, Guyanese authorities must make the effort to explore demand for the country’s gas before deciding what to do, and they cannot count on help from ExxonMobil any time soon. Since the US giant is concentrating on oil – particularly in light of its plan for launching three more development projects within the next three years – and showing less interest in gas, Georgetown must do its own legwork, he said.

In short, the vice president’s statements seem to indicate that Guyana sees development of its offshore gas resources as a long-term prospect rather than as something for the short or medium term. This is in line with existing expectations for Suriname, as Clark noted when he mentioned the possibility of a joint LNG project, and in practical terms it means that no FLNG terminal is likely to be installed in the Guyana-Suriname basin before the end of the decade.