Guyana allows Exxon Mobil to start drilling

Exxon Mobil Corp. and its partners have approved a $4.4 billion project to develop one of the largest recent oil finds off Guyana, the companies said Friday.

It’s one of only a handful of major deep-water projects to move forward while oil prices languish below $50 a barrel. Wood Mackenzie, an energy research firm, believes the Liza field contains enough oil to break even at $46 a barrel in Brent, the international benchmark.

Exxon Mobil, Hess and a major Chinese oil company, CNOOC Nexen, believe the Liza field and surrounding regions, 118 miles off the South American country’s coast, holds some 2 billion to 2.5 billion barrels of oil equivalent.

The project, which will include assembling a $1.2 billion floating production storage and offloading facility and drilling 17 wells, could start pumping 120,000 barrels a day in 2020, the companies said. WoodMac said in 10 years Guyana’s Liza-Payara development could pump some 330,000 barrels a day.

Exxon Mobil will obtain a royalty of 2 percent on gross earnings and 50 percent of profits, while the government of Guyana has estimated it could receive up to $5 billion a year in revenue.

The U.S. Geological Survey had long estimated that offshore Guyana was rich in gas and oil, and the country of 750,000 people hopes to receive enough of a windfall to provide free education and supply households with free cooking gas and cheap gasoline. The government also has said it would invest in its military and build a 350-mile jungle road from the capital, Georgetown, to northeastern Brazil.