With the very real prospect of up to ten FPSOs producing in the Guyana Basin within the next ten years shorebase capacity is ramping up too.
The current projected demand does not include the possible discoveries in concessions outside of the Stabroek Block(ExxonMobil, Hess and CNOOC). For example CGX Energy is currently spudding the promising Kawa-1 well on the Corentyne block. Exxon along with partners (TotalEnergies, JHI Associates (BVI) Inc. and Mid-Atlantic Oil & Gas Inc) will also embark on a 12-well exploration and appraisal campaign on the Canje Block in Q1 2022 even as it is currently drilling at Sapote. Just across the maritime border, which is straddled by what is now being called the new Golden Lane, Total Energies is expected to make a final investment decision in Q4 2021 to develop Suriname’s Block 58 with its 50/50 partner Apache. And ExxonMobil and Petronas recently made their first discovery on the Suriname side in Block 52.
So the prospective demand for onshore infrastructure to support exploration and production activities is expanding rapidly, and important investment decisions will need to be made in the next few months to ensure Guyana and Suriname, only rightfully, become the primary provider of services.
To date the only two shorebases in Guyana are Guyana Shorebase Inc (GYSBI) at Houston and the smaller G-Port run by the Fernandes Group of Companies that is located on the Georgetown waterfront. The latter is a joint venture with Edison Chouest Offshore with wharf and warehouse facilities and third party mud and cement plants. GYSBI, based at Houston, is a joint venture made up of Muneshwers Ltd., Pacific Rim Constructors, TotalTec Oilfield Services and LED Offshore. Exxon is the only client for GYSBI, and its primary suppliers are mostly located there. GYSBI is making sure their expansion plans keep up with Exxon’s own rapid pace of development offshore. A US$120M IDB Invest loan is said to be very close to finalisation which will fund an additional two berths and warehouse space sufficient to support five FPSOs. So that would provide capacity up to the Yellowtail FPSO plus one more - perhaps around 2025/6. After that GYSBI may be out of space to expand at its location, hemmed in as it is by residential communities and the main East Bank highway. This might explain the reasoning behind the recent Request for Information (RFI) by ExxonMobil for a laydown yard and wharf with a minimum of five acres that it has specified should be on the West Bank of the Demerara River. It is not clear why the specificity other than perhaps an acknowledgment that the East Bank is too congested and that the benefits of the oil and gas sector could be spread further rather than the Georgetown mini-boom it currently is. That said there are complexities to a shorebase on the West Side given that the Demerara Harbour Bridge is not a viable route for the safe and timely transfer of heavy and valuable equipment and that the roads along the West Bank are relatively narrow single lane and heavily traversed. Presumably launches crossing the river would avoid all of that but that might not always be possible including when it comes to the movement of workers and some material on a 24/7 basis. A new highspan bridge will not be ready until 2024 at the earliest.
One possible candidate currently being planned for the West Demerara is Tristar Inc’s 70-acre $150M Versailles location, directly opposite GYSBI. The principal, Krishna Persaud, is a legitimately successful real estate developer in the Fort Lauderdale/Miami area and from many accounts has the credibility and access to financing to make his plans a reality. Construction is at the rudimentary stage with some clearing of the land but approval has been given (somewhat controversially) by the EPA and other authorities so there is now no regulatory obstacle.
The other venture is the $600M NRG Holdings Inc Port of Vreed en Hoop which is more ambitious. This would be on the ocean side and some observers suggest it would require tremendous dredging to keep drafts deep enough for supply vessels. The principals for this are three well known local entrepreneurs, gold miner Andron Alphonso, of ZRN Investment Inc; Nazar ‘Shell’ Mohammed, of HADI’S World Incorporated; and Nicholas Deygoo-Boyer of National Hardware Guyana Ltd.
One would imagine the government is firmly behind the project in part because it also envisages a much needed container port. In this regard it is reminiscent of a proposal put to the government by China Harbour Engineering Corporation in 2017 as part of a holistic infrastructure project for the country. The EPA has also signed off on this but whether this port gets built remains to be seen. Some in the industry have suggested for such a costly project to be initiated an anchor tenant would be needed and that could only come if and when another IOC makes a significant discovery.
One project which has gone quiet is the ISIKA Shore Base Inc on the East Bank Essequibo (Johanna Cornelia & Blake). This involves businessman Stanley Ming who had teamed up with African-based Interoil to explore the construction of a shorebase with 325 acres and 500 metres of waterfront. Plenty of land but there have been reservations over the suitability of the location given (again) the need for dredging and the lack of proper access roads.
Meanwhile CGX Energy has announced it will start construction of its wharf platform for its Berbice Deep Water Port (Cost: $70M through 2023) in September with operations to begin mid-2022. The advantage of this location is that it is not only closer than the present shorebases to the area of offshore development but is much closer to the Suriname basin so could service both. On this note inter-governmental talks have started to ultimately allow for the free movement of oil and gas equipment and supplies between the two countries.
The other recent announcement is that UAE’s DP World is joining with Suriname’s FIRM Engineering to develop a shorebase at Suzannasdaal, Suriname. The JV includes HJ de Vries Project Development N.V.
Is there room for all these shorebases? A lot depends on subsequent discoveries and the speed of development but one could argue the upside is far greater than any downside risks of building a white elephant. The other question is how much influence the government has, or wishes to have, in how and where these bases are built. Geographically spreading the benefits of an industry which is, in the space of only a few years, by far the largest contributor to GDP, makes sense. It also has to be balanced with the logistical and economic considerations of the parties involved.