-says key insurance document still to be signed
The former Executive Director of the Environmental Protection Agency (EPA) Dr. Vincent Adams yesterday said that if he was still head of the regulatory body he would’ve halted ExxonMobil’s oil operations until the issue with the Liza Destiny oil platform flash gas compressor was solved.
“The permit is explicit in the law that the EPA has the authority to terminate operations at any time and that is what I would’ve done because we have been bending over for Exxon,” Adams stated in response to a question from Stabroek News during a press conference by the Alliance For Change (AFC) yesterday.
On January 29th, Exxon issued a brief statement announcing the gas compression problem, resulting in it having to temporarily increase flaring above pilot levels in order to maintain safe operations. It has since sent the faulty compressor to Germany for repairs.
President of Exxon-Mobil Guyana, Alistair Routledge had recently disclosed that oil production has been pared to 120,000 barrels per day (bpd) – its previously stated maximum capacity – while gas flaring has increased to 16 million cubic feet per day. The company confirmed that at the time of the failure of its stage three Flash Gas Compressor (FGC), the Floating Production, Storage and Offloading (FPSO) vessel was producing 130,000 bpd.
Adams added that shutting down production is the only thing that can drive Exxon to swiftly move to have the issue with the flash gas compressor fixed once and for all and if this is done, he guarantees that the problem will be solved very quickly. Adams stated that the executives of ExxonMobil Guyana are concerned about production goals and if those goals are not met, they can be fired so if they are forced to cease all operations, they would have no choice but to have the gas compressor fixed as soon as possible.
Further, Adams stated that shutting down operations would not be unreasonable on the part of the EPA because Exxon was given the entire 2020 to have all mechanical issues on the Liza Destiny FPSO repaired. He revealed that when Exxon first started their operations on the Liza Destiny, they said the wiring was wrong after which they said that there was an issue with the seal and then the valve.
He added that although they were given time to repair the gas compressor, it seems as though it was only fixed temporarily which is why more issues have now emerged.
Get away with it
“You cannot tell me that Exxon have many of these ships operating all over the world and they cannot fix a simple compressor seal… What the heck is going on? This is not a… cake shop operation. We expect much more of them,” he stated, before adding that these issues are only occurring in Guyana because they are allowed to get away with it.
In terms of the penalty for breach of contract, Adams said that the highest fine is $1 million but repeated that production can and should be halted. With flaring offshore estimated to reach 14 billion cubic feet (cu ft.) of gas by the time ExxonMobil expects the problem with its compressor to be resolved – hopefully in April of this year – government recently said that it is “hamstrung” in instituting penalties since the company has argued that it is within the limit allowed by the EPA.
Adams had previously stated that Exxon’s new public relations strategy is to engage in a campaign of confusion and misinformation, so that people won’t notice their illegal flaring which allows them to stay on their maximum oil production rate of 120,000 bpd to make maximum money for the corporation, never minding the damage to Guyana’s environment and its people’s health.
“Guyana is a pristine country and if we do not nip this in the bud this country will become overwhelmed with pollution,” he said repeating that the permit is clear; there should be no flaring during normal operations.
Further, he said that Exxon knows that the flaring is illegal as it is also clear in the permit that they should have spare parts for the FPSO. Adams also called for an independent check to be done of the compressor problem aboard the Liza-1 FPSO platform and called for national unity on environmental and safety matters in the oil and gas industry as in the case of border matters.
As far as renegotiations goes, Adams said it can be done and he has been calling for this stressing that his stance on the Oil and Gas sector has nothing to do with politics.
Bluff
Adams recalled that when he was at the EPA, they changed two things in the Liza-2 permit. One he said, was the insurance for an oil spill and this clause had stated that Exxon’s subsidiary Esso Explora-tion & Production Guyana Limited (EEPGL) would self-insure. He stated that they threatened to bring their President into the discussions but that he called their bluff and told them they couldn’t pump a barrel of oil until they transferred the liability to their parent company. They eventually agreed, he said, and had wanted to insure for US$2.5 billion but the EPA said that this was not enough and demanded that the parent company provide unlimited coverage. Although it was agreed upon, he said to date Exxon is yet to sign the document. He said this should be of concern to the Government and questions need to be asked in this regard.
He revealed that when he was working at the EPA, he had told Exxon that they will have to comply with standards similar to the United States which only allows flaring for 48 hours after start up in relation to the Liza-2 permit. The Liza-2 well will come on stream next year. Adams noted that since he left he has been made aware that the EPA will now allow Exxon to flare for 60 days. Additionally, he said that the EPA should begin looking to ensure that they have a 24/7 presence on the FPSO to ascertain that the information coming from Exxon is true.
“Even though it’s in the permit …they have not signed that document,” he said, adding that this is one of the reasons that he is calling for a unified political stance. “Exxon cannot do without the oil of Guyana. If Exxon wants to walk, the company will have to file for bankruptcy,” he said noting that this comment is based on Exxon’s latest financial report.
Meanwhile, Member of Parliament David Patterson who was also at the press conference stated that the opposition have officially communicated with the Government stating that they are ready to support any actions they intend to take in relation to the oil contracts that will benefit Guyana.
“We 100% endorse and support and that’s on record but we have not received any request and nor have we had any consultation. There have been no attempts from them to communicate with the opposition,” he added.
Commenting on the monies that will be allocated to the EPA in this year’s budget, Adams said that the $609 million for recurrent expenditure is reasonable but he hopes this will be spent on critical areas such as capacity building which paves the way for the filling of a 34-member oil and gas unit that was developed in partnership with the World Bank. He noted that one of the objectives of that unit is to have highly skilled people monitoring oil and gas activities, and also, to have someone onboard the FPSO 24/7.
Adams noted, however, that the $30 million allocated for capital expenditure is too low as the EPA does not have any equipment to go into the fields to take any measurements of water, air and soil. He added that they would usually borrow noise meters from the Guyana Police Force.
