June 16 (UPI) -- U.S. energy companies Exxon Mobil and Hess Corp. said they've made a final investment decision for offshore Guyana in one of the largest oil finds in years.
The companies in separate statements announced a decision to move forward with the first phase of the development of the Liza field off the coast of Guyana.
The companies put the reserve estimate for the broader area offshore Guyana at between 2 billion and 2.5 billion barrels of oil equivalent. Hess Corp. said in a statement the development cost of $3.2 billion was considered relatively low for a field that could yield 450 million barrels of oil after first oil is on stream by 2020.
Ole Hanson, the head of commodity strategy at SaxoBank, told UPI over email that projects under that timeline are good bets.
"At that stage we are likely to see the impact of the recent years investment drought be felt and prices are likely to be somewhat higher than the depressed levels currently seen," he said.
Crude oil prices last year dropped below $30 per barrel because markets were tilted heavily toward the supply side, sidelining many investment projects and drying up much of the capital for exploration and production. A move implemented in January by the Organization of Petroleum Exporting Countries to ease the supply-side strains through coordinated production declines helped add about $15 per barrel to oil prices in the current market.
"We're excited about the tremendous potential of the Liza field and accelerating first production through a phased development in this lower cost environment," Liam Mallon, the president of ExxonMobil Development Co., said in a statement.
Hess said earlier this year that Liza has "attractive" economics with oil prices as low as $40 per barrel. Brent crude oil was trading at about $47.40 early Friday.
The first phase of development will utilize a floating production, storage and offloading vessel with the capacity to process as much as 120,000 barrels of oil per day from four drilling centers.
Leasing the FPSO will take up about $1.2 billion of the development cost for the Liza oil field.
Attention to Guyana follows support from the International Monetary Fund of national plans to develop a legal framework for managing its oil wealth. The IMF said growth for Guyana was steady, but uneven, with a gain in real gross domestic product of 3.5 percent expected this year, driven in part by expansions in the broader extractive industries.