Friday’s budget presentation by APNU+AFC MP David Patterson was noteworthy for several reasons. First, he offered on behalf of the opposition full cooperation to the government in holding a common line in relation to ExxonMobil and its partners. Critics will of course say that it is easy for APNU+AFC to take this stance now having allowed ExxonMobil to coerce it into signing the scandalously unbalanced 2016 Production Sharing Agreement (PSA) which will cost this country billions of dollars and has left gaping vulnerabilities on the environmental and accountability fronts.
Furthermore, critics will say that despite the outpouring of opprobrium over the 2016 PSA and the secrecy that attended it and the signing bonus, APNU+AFC disgracefully made no attempt to renegotiate it and appeared to have been locked into an iron-clad deal with Exxon.
Be that as it may, it is still early days in Guyana’s oil and gas existence and ExxonMobil’s present conduct on gas flaring and other matters such as insurance coverage underline why it is important that the country unites to ensure that the 2016 PSA is renegotiated and that all the laws governing its offshore operations are complied with. Can this be achieved? It appears that the PPP/C government has eased comfortably into APNU+AFC’s role while it held the reins of government and that there is little immediate hope for a revamping of this horrid 2016 deal.
Mr Patterson’s claim that the government is not consulting or sharing information with it is exceedingly troubling and this must be reversed immediately. While in government, he said that the then Minister of Natural Resources, Raphael Trotman, made it mandatory that Exxon briefed the then opposition PPP on every new oil discovery and development but that the current opposition is yet to enjoy any such briefing by any of the operators here. “The government has requested that no information be shared with us – this is in stark contrast to our handling of this sector and does not reflect the claims of inclusiveness that the government has been making speeches about,” Mr Patterson alleged in Parliament.
One hopes that the bipartisan Natural Resources Committee of Parliament will be regularly provided with information by the government and that the Committee will summon oil companies and convene hearings when necessary. ExxonMobil’s current gas flaring offshore is ripe for such examination.
However, it was what Mr Patterson had to say about the PPP/C’s inchoate plan for the gas to shore project that was particularly numbing and concerning. The public must bear in mind that just months into its tenure, the PPP/C government has declared its intent to terminate its gas to shore project at Wales, West Bank Demerara. To date, President Ali’s government has not presented to the public a single document that would confirm reasoned justification for siting the project at Wales. As it is, it would appear the decision to locate the project at Wales is a political one considering that the area is a traditional PPP stronghold which had fallen on hard times as a result of the closure of the sugar estate there under the former APNU+AFC administration.
Given the enormous investment that would have to be made in piping gas from the Liza-1 offshore platform to the West Demerara coast and then to Wales and the construction of the plant to transform the gas into power for feeding into the national grid, the PPP/C government has to commission robust studies to determine whether the project is financially feasible and if so, and taking account of the likely tapping of other associated gas deposits, the optimal location for such an enterprise. Having declared the site, the government has since said that studies will be done which presumably are intended to provide confirmation of the choice. That is not the way things are done in the real world and given the gigantic investment that will be required of taxpayers’ monies and the modest oil revenues – unless some investor is mobilised – the PPP/C government cannot be cavalier in this matter
If feasibility was to be established and a site chosen, a full-fledged Environmental Impact Assessment will still have to be done which itself could raise serious doubts about the project given safety risks and the prospects of pollution. The question of whether Exxon should have to pay Guyana to be relieved of the gas when account is taken of the requirement for it to reinject it into its well should also be considered.
According to Mr Patterson, a September 2016 study `Screening Evaluation of sites for proposed onshore base to support fledgling offshore oil and gas industry’ by the then government had recommended Berbice as the most suitable location for future onshore bases.
He further said that the supply of gas to shore will be interrupted for at least 2 – 3 days per year for routine maintenance of the equipment and to keep the plants working there will be need for a steady fuel supply.
“The location (Wales) makes it very difficult to supply with Heavy Fuel Oil (HFO) – the recommended storage capacity is 7 days’ worth of HFO. Compare this to GPL’s 26MW at Vreed-en-Hoop which requires a tanker every 10 days, using the largest tanker which is 25,000 barrels – Wales at 250MW will need 10 times this amount,” Patterson cautioned.
He went on to state that while the Liza-1 and Liza-2 wells will produce 30 million cubic feet of gas per day, enough for power generation, additional money will be required to be spent on infrastructure to tap into the gas reservoirs of the Longtail and Turbot wells, since they are located closer to Berbice. These wells are expected to be commissioned by 2030.
The minister also said that the likely use of the Demerara River for such a project is also unwise, as it is one of Guyana’s busiest rivers for commercial activities and fastest flowing.
“A British expert indicated that it would be an act of lunacy to place a gas pipeline across the mouth of our busiest river. Like most South American rivers – the Demerara River is fast flowing, US Army don’t even allow their divers to do salvage work in rivers of this speed”, Mr Patterson added.
He also took exception to the timeline proposed by the government for the completion of the project – sometime in 2023.
“Hogwash, if it is done within acceptable standards – the FEED (Front End Engineering Design) which is done after the completion of the feasibility takes nine months, the fabrication of the pipeline alone takes two years, laying of the pipeline is another nine months – not to mention the civil works for the power plants as well as the sub-stations for GPL… another pipe dream”, Mr Patterson declared.
These are serious points raised by Mr Patterson and President Ali and his government must take full cognisance of them. The gas to shore project should not proceed unless a good case is made for it in a properly conducted feasibility study. Too much is at stake here and the country cannot risk a badly conceived project of this magnitude. We urge that the Natural Resources Committee of Parliament immediately take this matter up with the objective of gathering as much information as possible and seeking testimony from experts here and further afield.
