Introduction
Last Sunday’s column wrapped-up my extended presentation of the Guyana Petroleum Road Map, which started a year ago, on January 27, 2019. Going forward, I intend, generally, to return to this column’s original focus on broader development themes and challenges facing Guyana. Consequently, I shall engage Guyana’s evolving petroleum sector from this wider perspective; focusing more on concrete financial and economic outcomes, rather than on speculative analysis.
As I was presenting the Road Map, I exercised great self-restraint in resisting engagement in the then raging national debates/discussions centered on the discoveries and advent of Guyana’s petroleum industry. Broadly speaking, those national debates/discussions were essentially speculative. They provided an admixture of: 1) drawing “lessons to be learnt” from global experiences; 2) commentary derived from civil society’s global agenda to restrain big oil’s worst behaviours, similarly based on global experiences; together with 3) what I have labelled before in this series as “a heavy dosage of noise and nonsense”. This was the admixture being offered to commemorate the momentous advent of Guyana’s petroleum sector!
Having admitted to the above, I propose, nevertheless, over the coming weeks leading up to national elections to devote those columns to a reflection on aspects of the public debate. For today’s column I treat with aspects of the debate related to the reporting of Guyana’s petroleum discoveries.
Discoveries -The facts
First, except perhaps for a limited number of “deep insiders” from among 1) local and foreign private investors seeking petroleum exploration permissions in Guyana and 2) Guyana “officialdom” responsible for regulating the petroleum sector, the announcement by Exxon and its partners of its first (Liza 1) petroleum find in May 2015 came as a surprise. Second, since then, there has been a total of 16 such discoveries; namely: Liza 1, Payara, Snoek, Liza Deep, Turbot, Ranger, Pacora, Longtail, Hammerhead, Pluma, Tilapia, Haimara, Yellowtail, Tripletail, Mako, Uaru. Third, with only two dry holes reported dug, the revealed rate of discovery is approximately 90 per cent. Fourth, all confirmed discoveries have been reported in the offshore Stabroek Block, an area of 6.6 million acres or 26,800 square kilometers.
Fifth, Exxon and its partners currently report their discoveries total 8 plus billion barrels of oil equivalent (boe), or 8+blnboe. To date, while other groups were forecasting up to late last year that, they would be on the verge of confirmed commercial deposits by 2020, none seems ready to do so right now. The Eco Atlantic-Tullow group based on two Competent Persons Reports have speculated multi-billion-barrel deposits. However, the group has encountered major setbacks in the Kanuku and Orinduik blocks because their finds have not been commercial, due to a combination of reservoir size and poor crude quality.
Two further observations are warranted at this point. One is the need to emphasize the speed with which the above experiences have unfolded. From no confirmed petroleum resources less than 5 years ago to 16 discoveries today totaling 8+blnboe, therefore, on average, 3.2 discoveries have been made each year or 1.6+blnboe! The other observation is that Guyana’s crude oil quality has been reported as light sweet, but since First Oil last December, the international media are citing Guyana’s crude as having an API of 32.1 with 0.51 Sulphur rating, reporting the data as sourced from Exxon’s assay library.
The Debate
While, as indicated above, all but the “deep insiders” were surprised by Exxon’s announcement of its May 2015 discovery, non-casual observers of Guyana’s political economy, like myself, knew that a diligent search of private and public data/information/research/analysis on petroleum exploration and related subjects would reveal the key markers pointing to Exxon’s success. And, surely it did follow that prognosis. I reveal those markers in the conclusion, as I turn next to indicate how the “noise and nonsense” element of the national debate treated the discoveries.
In social media and gatherings, talk shows on radio and television, the “press” of all descriptions, there was initial skepticism, if not outright denial of the announcement. Some outlets went as far as to claim it was “fake news” and/or “big oil” propaganda. But as the discovery facts emerged the “noise and nonsense” elements switched from claiming denial/fake news to the tactic of a relentless all-out assault on the advent of Guyana’s petroleum wealth. Lacking data on actual outcomes with which to counter this tactic, every bad global experience involving “big oil” (and there are many) was held up as a mirror of Guyana’s inexorable march towards its own future, rather than a lesson to be learned of what to avoid. In other words, a political bubble was clearly in the making regarding Guyana’s petroleum finds
Typical of political bubbles the Guyana debates/discussions took place in closed (to outsiders) loops. This generated echo chambers, in which similar views were often repeated and during this process became more and more amplified. And to mix metaphors “the emptier the vessel (loop) the louder the noise”. A veritable field day was created for media hustlers and hucksters, as well as soi-disant experts and analysts to reinforce beliefs rather than enlighten.
Such processes have served to reinforce the position of the “noise and nonsense” elements in public debates/discussions, as their sole aim is to reinforce and not to enlighten. In this ambience, confirmation bias runs amok, and this quickly morphed into a more cynical and grander political design, which was to ensure Exxon’s success with petroleum discoveries did not translate into political success for the Government.
However, in promoting this political design, the objective consequence has been to weaken further the position of Government vis `a vis “big oil”. This is a classic example of false consciousness. The broad masses of Guyanese adopt a narrative of their circumstances whose intent is to undermine and thereby weaken the standing of the very forces they rely on and have indeed empowered to protect theirs as well as the national interest. Paradoxically Guyana becomes an example of how political bubbles can pervert expectations of benefitting from petroleum windfalls.
Conclusion
Referring to the markers mentioned above. The data search I conducted revealed four main factors pointing to Exxon’s successful discoveries. These are: 1) the growing acceptance of the Atlantic mirror image geological principle; 2) the United States Geological Survey’s two Fact Sheets on the Guyana Suriname Basin; 3) the financial state of Exxon Guyana’s parent company; and 4) its offshore technological capability.
Next week I’ll assess the debate on Government Take.