After glitches during production startup saw flaring of over 2 billion cubic feet of natural gas, ExxonMobil has assured that it will from this week begin transitioning to using the gas for well injection purposes, Head of the Environment Protection Agency Dr Vincent Adams says.
“Now that they [ExxonMobil] have learned and redesigned equipment, we do have a high degree of confidence that we won’t have this prolonged flaring,” Adams told the Sunday Stabroek last week when contacted for an update.
“We have this commitment from the company; transitioning from total flaring to zero should be accomplished by this week,” he added. Flaring is not environmentally friendly and the gas could be put to other uses.
While he did not go into detail, Department of Energy (DE) Director Dr Mark Bynoe had earlier this month informed that delays in the ramping up of production to the expected 120,000 barrels per day had been set back by compressor problems.
“In the case of the Liza Destiny, we have seen operational slippages due to the inability to complete the commissioning phase of operations and ramp up to steady state production, as some the operations have encountered some challenges with the gas compressor,” he had told an online press conference.
Adams explained that during production start-up it was found that there were problems with the gas compressor and some valves. He said that it was because the company could not use the natural gas for reinjection processes during production that it had to resort to flaring the excess gas.
“These were manufactured onshore so when they brought it offshore they had to test it with the existing conditions there. Under the onsite conditions, it was found during testing that the seal of the compressor was not compatible. So they had to go back to get that right, get the valves et cetera, and that is what they were doing over the past several months to get the right material and equipment,” he explained.
He said that while his agency was concerned about the volume of flaring, he was glad that the company had put safety first.
“It is a good thing they took the time and effort to ensure the equipment was working. It showed they did not put production over health and safety and the environment. Even though at the extent of flaring… I was concerned, I understand that it was to ensure the equipment functioned properly and to mitigate any risk of an incident,” he said.
Explaining that matters of the oil and gas sector are addressed with a multi-agency approach, Adams said “So Exxon has not only had to deal with us but have reported to the DE. So it is a multi-agency approach where you have the DE, the EPA and the GGMC (mines commission), having discussions with them and expressing our positions and expectations and they have to convince all of us that the path forward is acceptable,” he said.
“So we all agreed this flaring was necessary, just to avoid any safety incident or occurrences,” he added
The extraction of crude oil also results in raw natural gas associated with the oil being brought to the surface and flaring of the associated gas is commonly used to dispose of it in the absence of infrastructure to make use of it.
According to online oil and gas encyclopedia Petrowiki, “Associated gas is generally regarded as an undesirable byproduct, which is either reinjected, flared, or vented.”
When testing was carried out on Exxon’s Liza well in the Stabroek Block offshore Guyana, it was determined that it is an associated-gas well that comprises both crude oil and natural gas.
When it signed a new Production Sharing Agreement (PSA) with the company back in 2016, the government had said that except for necessary testing, there will be no flaring of natural gas found offshore and that was in keeping with its commitment to developing a “green state”.
“We also determined that under no circumstances… there will be flaring of the gas,” Minister of Natural Resources, Raphael Trotman, had said when the contract with ExxonMobil’s subsidiary, EEPGL and its partners was announced in 2017.
“It is common industry practice that there is flaring and we determined that given the green commitment and approach made by His Excellency [President David Granger], that Exxon will not flare the natural gas that would accompany the find,” he added.
He had singled out Commissioner of the Guyana Geology and Mines Commission Newell Dennison for taking the lead in ensuring that the environment is protected from the greenhouse gases emitted through flaring and thanked him publicly.
But three months later, alerts from coast guards and pilots passing over the offshore area about huge flames saw the company saying that it was flaring as part of conducting tests and the practice has continued unabated.
‘Extension’
The Petroleum Contract Agreement with ExxonMobil at Article 12 also speaks to associated and non-associated gas and flaring. “If Contractor’s Notice includes a proposal to flare the excess Associated Gas in the Development Plan, then the Minister shall have the option to propose an extension of the response period provided in Article 6.6 for the offtake election to Contractor, until such time as the Minister can provide Contractor with a binding alternative proposal for development and use of the excess Associated Gas,” it states.
“If the Parties agree that the excess Associated Gas of an Oil Field has no commercial value, then such Gas shall be disposed of by the Contractor in the most economic manner consistent with good international petroleum industry practice, provided that there is no impediment to normal production of Crude Oil. All costs and expenses incurred by the Contractor in the production, use and/or disposal of the Associated Gas of an Oil Field as stipulated in Article 12.1 and those incurred in carrying out any feasibility study on the utilization of the excess Associated Gas shall be charged to the Development Cost of the Oil Field and shall be Recoverable Contract Costs. All costs incurred by the Government for the infrastructure and handling of excess Associated Gas which are not included in an approved Development Plan shall be at the sole risk and expense of the Government and will not affect the amount of Cost Oil and Profit Oil due to Contractor. The construction of facilities for the utilization and production of excess Associated Gas, if any, shall be carried out while a Petroleum Production License continues in force,” it adds.
About one month after production startup last December, the EPA had expressed concern about the volume of gas being flared offshore as the figures had passed the one billion cubic feet mark after the four-week period.
Adams referred to the contract with the company and said that it was accepted that it was during the production period and that it could also be seen as an emergency so the EPA extended the period of flaring so that the company could resolve the compressor and valve issues.
“We had made some predictions on duration of flaring following the issue we were having with the new sets of equipment. We were planning on, when we had the issue with the equipment, projected 90 days from that date that it be resolved. So that would have been about mid-December and you count 90 days in. The issues were not resolved, in terms of getting the injection equipment such as compressors to work properly so we extended it to 120 days and that time would soon be up but they have said that they will soon be starting to transition to the injection of the gas,” he said.
Further, he added, “That should take maybe one week or two the most to have full gas injection to no flaring. Understand too that they cannot inject all of the gas suddenly, so it has to be a process. They have started over the past few days and we are hoping that by next week they go to injection of all of the gas. We prefer to be on the conservative side and that the equipment work before they use,” he added.
With President David Granger as the Minister of Petroleum, the directive for the flaring extension would have had to come him through the Department of Energy.
And as the company looks to mid-June to meet its 120,000 barrels per day of crude production mark and press on with future projects in the 6.6 million acres (26,800 square kilometers) Stabroek Block, the EPA is putting them on warning that all flaring onwards should only be minimal or for future startups.
“We are dealing here with an issue of how flaring affects climate change and you want to minimize that as far as possible. It is why the permit does not allow for flaring unless under startup or emergency circumstance. In this case we didn’t anticipate that we would be flaring for this amount of time,” he said.
“So this is just for lessons learned. They understand the conditions for production offshore now and they learned. They know what to do in terms of the valves and the seals etcetera with this the Liza-1 project. And so now they have learned, we do not expect this to happen again,” he added.
