Peak Oil? What Peak Oil? Huge Discovery For Hess, Exxon; $70 Billion At Current Prices-- July 1, 2016

Updates

June 19, 2017: update on Liza. ExxonMobil going forward on this megaproject.

Later, 7:45 p.m. Central Time: this ExxonMobil - Guyana story is getting a lot of press. This may be quite a story:

ExxonMobil and its partner Hess Corp. have announced that the major discovery off the coast of Guyana, is a discovery that is much larger than previously expected.

The Liza field could turn out to be the largest oil discovery reported in two years and the companies say that it could cost $18 billion to develop.

Exxon describes it as a “world-class discovery with a recoverable resource of between 800 million and 1.4 billion oil-equivalent barrels.” That could amount to as much as half of the entire volume of oil discovered across the entire industry in 2015.

Original Post

Yesterday this post:

XOM, Guyana. An "elephant find"? ExxonMobil says the company plans to release the results of the Liza-2 well "by mid-year." According to an analyst, if the headlines prove accurate, Liza-1 and Liza-2 could confirm meaning reserves and production uplift for ExxonMobil and its partners well above the initial industry reserve estimates of 700 million bbls of oil.  Data points:

• Liza-1, Stabroek Block, 120 miles offshore Guyana 
• the seam is 295 feet thick
• oil-bearing sandstone
• 17,825 feet in almost 6,000 feet of water
• spud March 5, 2015
• Esso and Production Guyana (45%); Hess Guyana (30%), CNOOC Nexen Guyana (25%)

Note the initial industry reserve estimates: 700 million bbls of oil.

Now, yesterday, Bloomberg reports that the discovery may be twice as large as thought:

Exxon Mobil Corp.’s oil discovery off the coast of Guyana may hold as much as 1.4 billion barrels, twice the size of the previous estimate, making it worth as much as $69.5 billion based on current prices.

The Liza field 120 miles (193 kilometers) from the coast of Guyana is a “world-class discovery” that probably will yield the equivalent of 800 million to 1.4 billion barrels of crude.

Hess Corp., a partner in the field, will see a a 39 percent boost in current proved reserves at the upper end of the estimate.

The Liza discovery may not add to global oil supplies for years as deepwater finds can take half a decade or more to bring into production.

It’s an enormous discovery for Hess. At the high end of the estimate, the New York-based company’s stake equates to 420 million barrels, a 39 percent addition to proved reserves. 

Note: this is not an investment site. Do not make any investment, financial, travel, job, or relationship decisions based on what you read at this site or what you think you may have read at this post. I honestly do not know if I bought shares in Hess this past year. It seems I did based on activity in the Bakken and the ethane story, but I really don't recall. I do not have a history of investing in Hess, but I may have made an exception this past year. Because I don't plan to buy or sell any equities any time soon, I won't check. I have a rule (which I frequently break) to not check my on-line portfolios if I don't plan to do any buying or selling. 

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Peak Fossil Fuel? What Peak Fossil Fuel?

From the EIA today:

Three fossil fuels—petroleum, natural gas, and coal—have provided more than 80% of total U.S. energy consumption for more than 100 years. In 2015, fossil fuels made up 81.5% of total U.S. energy consumption, the lowest fossil fuel share in the past century.

In EIA's Annual Energy Outlook 2016 Reference case projections, which reflect current laws and policies, that percentage declines to 76.6% by 2040. Policy changes or technology breakthroughs that go beyond the trend improvements included in the Reference case could significantly change that projection. --- EIA