ExxonMobil’s flaring of over nine billion cubic feet of natural gas could have been avoided had a proposed gas-to-shore pipeline project been implemented but it was stalled because a plan to determine the best location was rejected by government officials as some wanted to handpick a site, former Petroleum Advisor Jan Mangal says.
He said that ExxonMobil had already established a team to discuss the project and the Inter-American Development Bank (IDB) had said that it would fund a feasibility study of this country’s coastline to determine the most suitable location for the landing of the pipes and setting up of a power station.
“Myself and the IDB were pushing for a comprehensive feasibility study of the whole coastline so as to pick the best location for the landing of the pipeline onshore. This would be the location for the gas plant and the power plant would be nearby. But the Ministry of (Public) Infrastructure, they were against a comprehensive feasibility study. It seemed they just wanted to pick a location, and they proposed Mahaicony and another site just across the Demerara River from Georgetown. I was very suspicious of the Mahaicony option because it made no sense to me and was a swamp,” Mangal told the Stabroek News in an interview last week.
“I was always worried about the resistance to do a feasibility study because the choice of locale needs to be based on technical and developmental factors and not driven by politicians. The IDB was going to pay for it, they (the government) pushed back and I don’t think it was ever done,” he added.
The May 17 Sunday Stabroek reported that after glitches during production startup last December saw the flaring of over 2 billion cubic feet of natural gas, ExxonMobil had assured the Environmental Protection Agency (EPA) that it will from this week begin transitioning to using the gas for well injection purposes.
Director of the EPA Dr. Vincent Adams had said that his agency would check the exact figures and on Tuesday told this newspaper that the amount of natural gas flared up to that day was a whopping figure – over nine billion cubic feet.
This figure in less than six months has been even more worrying to Mangal who last Wednesday said that back in 2018 he had insisted that there be no flaring and that gas be brought to shore for electricity, fertilizer and other uses.
“You have all of this natural gas and it is being flared for lack of a pipeline project. It was very important that the pipeline project be set up and we did have such a plan. Exxon had a team in Houston that I used to meet …Exxon was prepared to move forward but the slowness was on the government’s side,” he said.
Individual interest
“I suspect that there was individual interest on where to bring the pipeline to shore …I was worried at the slowness at which the people in government operated and maybe wanted to influence the project so they could benefit personally. There was no reason for this project to not have taken off,” he added.
He said that in his capacity as Petroleum Advisor to the President, he had met with Exxon’s team and plans were forging ahead as Exxon believed that bringing the gas to shore would not have been very complicated but they would need to know from policymakers here where the pipes would land to plot the bed and coordinates.
ExxonMobil would have already done an offshore survey of the sea bed so he believed it would not have been difficult after a location was determined.
“There was a team, yes and we were deciding on details of gas compositions, the route… Exxon had already done most of the offshore survey and government was the one to say what it wanted. Exxon needed to know where the pipeline was needed to land to complete the plan…a lot of work was being done,” he explained.
“My suggestion was where the pipeline was going to land, where we would need a small gas plant to treat the gas and then a large power plant to produce electricity, we should also consider the development of a large industrial zone and provide cheap electricity. It would attract industrial firms from Brazil and elsewhere, and that industrial zone should be near to a new deepwater port. Hence there were many factors to be considered in choosing the site to land the pipeline, and this was why we needed the comprehensive feasibility study. I initially suspected the west side of the Demerara River would be one of the options to consider, but never a swamp in Mahaicony. The people in government, I suspect, were angling to know where all of this development could go so that they could get all their hands on the land nearby. I think the delay is because of elements of government wanting to benefit from this. Now we hear about some big development planned for Mahaicony and I am not sure which government (official) has the lands there but I suspect it is tied to this natural gas project, which makes no sense in that location… The area proposed, it was a swamp and you can’t develop a deepwater port, and the pipeline should not land in anywhere like Mahaicony”, he said.
And armed with the knowledge that Guyana would produce oil for at least the next 40 years, Mangal said that it was on this basis that he argued for a landing location to be near to an area that could be developed continuously.
“You do not only have one oil discovery. There is Liza 2 and possibly Payara and others, so there will be more gas that could come to shore in addition to that from Liza 1. If there are other operators on other blocks, they too may find gas. When you build a pipeline, you don’t want to size it just from the current project because then when more gas is found the pipeline would be too small. You always want to put in some redundancy and extra capacity. It is always good to consider the trade-offs and consider more than what you need because you have to plan for the future,” he said.
200 megawatts
“The pipeline we were considering for Liza 1 gas would likely have had a maximum capacity of about 50 Mmscfpd (million standard cubic feet per day), but initially about 30 Mmscfpd would be sent to shore. This amount would produce about 200 megawatts of electricity, which is about what all of Guyana uses. Then there was the possibility that the amount of gas would increase over time,” he said.
But when he left as government advisor in July of 2018, more than three years after Guyana’s first discovery and as preparations were forging ahead for first quarter 2020 production, he said that it was unclear to him what the David Granger administration would do about his proposal for the onshore gas feasibility project.
He said that he had also advised government, in addition to having a feasibility study done to determine the best location for the landing of the gas pipes and setting up of a power plant, to do a study on the impact of such a project from rising sea levels because he felt the two needed to go “in co”.
“Climate change and sea level rise are issues that need to be looked at. It is worrisome to think that this is not being considered because we could waste billions of US$ building all this new infrastructure in areas which will likely be underwater soon, like in Mahaicony. We don’t want to start doing development in areas that would flood. I pushed for the consideration of sea level rise in the comprehensive feasibility study. We need do the right thing now, and our coastline is already being flooded. How would it be to invest a huge amount into projects and then in ten years’ time all that money is wasted?” he questioned.
In recent months, several areas of the Mahaicony coast have come under direct threat of erosion by the Atlantic Ocean and emergency works have had to be undertaken.
Mangal is still appealing to policymakers in Guyana to press for a gas-to- shore project because for too long Guyanese have been without cheap electricity and this has hindered manufacturing development here.
The APNU+AFC government has proposed that as it seeks to transition to renewable energy, that natural gas be brought onshore in the interim and talks have been ongoing with ExxonMobil to this end.
Up to last year, ExxonMobil’s Country Representative Rod Henson had said that the discussions were still ongoing towards this end and that if an agreement was reached soon, Guyana could see natural gas being used in its energy mix by 2022.
“I think our current view is, if we can do it in a timely fashion, get the environmental impact assessment and what’s not, we are likely looking at 2022, 2023 timeframe, plus or minus,” the ExxonMobil official had told the Parliamentary Committee on Natural Resources in 2018.
His views were echoed then by Minister of Public Infrastructure David Patterson who told Stabroek News that even as the negotiations continue, government was preparing for the cleaner and cheaper alternative to heavy fuels, while it simultaneously put mechanisms in place to one day convert to renewable energy sources.
“That is a fair comment [the 2022-2023 projection by Henson]. The timeline is dependent on when we reach final agreement. We still have much to do, important things such as the EPA [Environmental Protection Agency] approval. However, the idea was always to have the units up and running before the gas is delivered”, he had said.
The opposition PPP has also said that it is committed to bringing natural gas onshore in its first five years in office.
Mangal said that government changes should not hinder the project or by extension any national development plan.
“Ministers are not there to personally influence national development. It is the country’s development. At most, Guyanese politicians are only capable of thinking five years ahead to the next election, and only seem interested in their personal fortunes…So the pipeline details and location should not be tied to politics. That should have been for technocrats to deal with. Still the government does not have anyone with oil and gas experience and it has been five years and look at where we are,” he lamented, while adding that he was “hammering home the need to hire oil and gas professionals” but his advice fell on “deaf ears.”
