In April 2024, ExxonMobil announced its sixth multi-billion dollar investment in the deepwater Stabroek block in Guyana, which will increase its oil production capacity to about 1.3 million bbl/d by 2027. First production in the offshore Stabroek block started in 2019, just five years after its 2014 discovery by ExxonMobil and its partners, Hess and CNOOC. This find is now expected to become ExxonMobil’s largest revenue contributor by the end of the decade. It has transformed Guyana from an overlooked South American nation into one of the world’s fastest growing economies, with 38% GDP growth in 2023 after a 63% increase in 2022.
Such developments from the oil and gas industry offer lessons for mining companies to consider in their attempts to meet key mineral demands from the energy transition, particularly copper. From 2018 – 2050, the world will need to mine 115% more copper than has been mined in all of human history up to 2018. Business-as-usual approaches for producing critical minerals will be inadequate and threaten to derail the timelines for energy transition if miners are unable to emulate the recent success of oil and gas companies.
Transforming exploration: Deepwater oil and gas
Let us return to the success of Guyana’s exploration, which has its roots in earlier deepwater discoveries off the coast of Ghana in West Africa in 2007 and 2009. The West African find in Ghana, and other countries like Angola, confirmed a deepwater play based on a mature source rock with an associated migration pathway system. ExxonMobil and Hess developed the technology to distinguish between oil and water bearing sands, and continually tweaked it to reduce the risk associated with drilling appraisal and development wells and new prospects. Applying this expertise, from 2014 to 2020, they announced 18 discoveries totalling 8 billion bbl of oil in the Stabroek block off the coast of Guyana.
Porphyry deposits are the most important source of copper, which is critical for the energy transition, and contain other important elements – such as molybdenum, rare earth, and platinum group elements. Despite their importance, the rate of discovery of porphyry copper deposits has steadily decreased as large, shallow, and high-grade deposits have been found and exploited. Exploring for deeper ore bodies, even up to 2 km deep, requires the ability to identify the weak footprints of porphyry deposits – which means the application of new and unconventional geochemical and geophysical exploration methods. The ability to identify deep porphyry copper ore bodies will be a gamechanger for mining and the energy transition at large. Some early stage companies, like Veracio and VerAI, are looking to bring geoscience AI, 3D drill core visualisation, and other technologies to mining. However, such developments are in very early stages, with significant challenges still to be addressed for identifying deep porphyry deposits.
From exploration success to production in five years
The oil and gas industry obsesses about speed to first production, and it applies it to everything from supportive policy to enabling technology. Guyana fast-tracked the development of the massive finds, with its fifth development currently under way, and policy makers there are keen to get resources to market as quickly as possible. They have licensed new floating, production, storage, and offloading vessels (FPSOs), encouraging investment and auctioning new blocks. While FPSOs are not new, they are extremely advantageous in deepwater and remote regions where seabed pipelines are not viable, and also cost-effective and flexible compared to building permanent infrastructure.
The situation could not be more different in the mining industry, where S&P Global has calculated the average lead time from discovery to commercial production to be 15.7 years. The permitting process for new mines are subject to federal and provincial requirements, where each province has its own permitting regime for mining, construction, operation, closure, and reclamation. In Canada, the province of Ontario is one of the few provinces that has recently proposed amendments to its mining laws to fast-track the development of critical minerals projects. Mining industry policy makers need to share learnings and approaches to speed up decision making without impacting the quality of those decisions.
Targeting smaller, uneconomic ore bodies
Hydraulic fracturing, or fracking, was developed in the 1990s to extract natural gas from previously inaccessible shale deposits, and as a result, shale gas went from 2% of US natural gas production in 1998 to nearly 80% of American natural gas production by 2022. The use of horizontal drilling, ‘slick-water’ fracturing, and 3D seismic to locate the shale layers to drill into with precision, changed the game, with innovation continuing to the present day resulting in a 100x improvement in gas productivity per drilling rig in the Marcellus Shale. Automation, scale and continued technology advancements have matured shale fracturing into a significant contributor of oil and gas.
The mining sector has the opportunity to repurpose this technology for in situ mineral extraction, potentially making smaller ore bodies more economic to access as it would require minimal surface infrastructure. However, technology development and commercialisation often takes a long time, as evidenced by Mitchell Energy’s 17-year path to hydraulic fracturing commercialisation, with over US$250 million investment. It took years of learning and experimentation, and it was built upon decades of advances that brought together in a single system, fracturing technology, 3D seismic, downhole monitoring, and improved drilling.
Challenges and call to action
While mining would benefit from learning from the successes in the oil and gas industry, there are learnings from its ongoing challenges as well. The scale of protests against oil and gas companies has never been higher, and environmental concerns are driving major societal concerns and legislative action. Critics point to the use of chemicals injected for fracturing that threaten groundwater supplies and drinking water, and emissions from diesel trucks and generators on well pads erode air quality and recent research shows a correlation between the industry’s activities and an array of health problems.
Additionally, over half of the energy transition metal resource base is located on or near the lands of Indigenous and peasant peoples. Global energy concerns and needs cannot justify further marginalisation of local environmental concerns and community desires for economic growth. Mining projects will need to mitigate the effects of industrialisation, with care to not encroach on landscapes with high levels of ecological and cultural integrity and traditional forms of land tenure and ownership.
As miners look to meet the unprecedented demand for energy transition metals, they must address these challenges. Fortunately, the transformation necessary to electrify and decarbonise large sections of society is not impossible or out of reach.
Author: Satish Rao – a managing director at Clareo, a global strategy firm focused on the natural resources, energy, and food industries.
