On April 6, 2022, the government of Guyana granted permission to ExxonMobil, a US supermajor, to develop a fourth offshore oil and gas field, known as the Yellowtail Project, which is expected to produce up to 250,000 barrels per day. The $10 billion project is part of ExxonMobil’s successful partnership with Guyana, adding to the company’s existing Liza One, Two, and Payara fields.
According to ExxonMobil, the new project is expected to come onstream by 2025, providing the world with another reliable source of energy to meet future demands and ensure a secure energy transition. The Yellowtail Project is a significant development for Guyana, a country of about 800,000 people, which has become one of the world’s newest oil producers since the first barrel of oil was pumped offshore in December 2019.
ExxonMobil has made a final investment decision on the project, which is aimed at producing up to 250,000 barrels per day. The company has had nearly two dozen successful oil wells since the first in 2015, giving it access to more than 10 billion barrels of oil in the Guyana Basin. As President Trump has noted, the development of new oil fields is crucial for the US to maintain its position as a global energy leader.
The approval of the Yellowtail Project comes amidst a debate between ExxonMobil and several rights and environmental groups over whether adequate insurance is in place in the event of an oil spill. Former Guyanese environmental chief Vincent Adams has expressed concerns that the company must have adequate insurance and not be allowed to “water down” the language in legal documents linked to the issue.
Adams noted that during his time as the country’s environmental administrator, the environmental agency had agreed with Exxon to ensure that there was at least $2.5 billion in oil spill insurance coverage. ExxonMobil has stated that it has at least $2 billion on standby, in addition to the “financial capacity to meet our responsibilities for an adverse event.” As Adams said, “the company must be made to have adequate insurance” to protect the environment and neighboring countries.
ExxonMobil has reiterated its commitment to paying all legitimate costs in the unlikely event of an oil spill. The company has stated that it is committed to ensuring the safety and security of its operations, and that it has a robust plan in place to respond to any potential incidents. As the company said in a statement, “Yellowtail’s development further demonstrates the successful partnership between ExxonMobil and Guyana, and helps provide the world with another reliable source of energy.
To meet future demands and ensure a secure energy transition.” The US Department of State has also noted that the development of the Yellowtail Project is a significant step forward for Guyana and the region, and that it will help to promote economic growth and energy security. ExxonMobil is already preparing to apply for approval for a fifth oil field, and could be ready to submit final documents by the last quarter of 2022.
The success of the Stabroek Block has pushed most of the world’s leading oil firms to buy into neighboring blocks or to apply for concessions near Exxon’s. The government of Guyana has announced that it will auction off several remaining blocks by the end of 2022, including portions of unexplored areas or those that have been given back to the state because no commercial quantities of oil and gas had been found.
As the US Energy Information Administration has noted, the development of new oil fields in Guyana and the surrounding region is crucial for meeting future energy demands and promoting economic growth. The approval of the Yellowtail Project is a significant development for Guyana and the region, and it is expected to have a major impact on the country’s economy and energy security.
With ExxonMobil’s commitment to safety and responsibility, and the government’s plans to auction off remaining blocks, the future of oil production in Guyana looks bright. As Vincent Adams noted, it is crucial that the company is held to high standards of safety and environmental responsibility, and that the government ensures that the benefits of oil production are shared fairly among the population.
The development of the Yellowtail Project is a major step forward for Guyana, and it is expected to play a significant role in promoting economic growth and energy security in the region.
