Anticipating “significant progress” in the partnership with government in advancing the gas-to-shore project here, ExxonMobil yesterday announced that the associated gas availability from the Liza fields has been changed from 35 million standard cubic feet per day (mmscfd) to 50 mmscfd.
The company also announced that it has already submitted an application for environmental authorisation for work on the project and is in the process of beginning the geophysical and geotechnical surveys required.
“ExxonMobil Guyana expects to make significant progress over the next few years in cooperation with the government to advance a gas-to-power initiative. We have confirmed 50 million standard cubic feet of natural gas per day from the Liza fields to support the government’s proposed gas to power project,” the company yesterday said in response to questions from Stabroek News.
“Discussions with the government are progressing, and we are conducting necessary feasibility studies,” it added.
Since 2018, ExxonMobil had said that studies undertaken internally by the company showed that bringing natural gas to shore would be a feasible form of energy and that negotiations would continue with government.
“There are no agreements today on this gas and power project, I think what you are talking about is under discussion. We have done our own study on this. As you may know, currently the reservoir development plan, which is in the public domain, is that all the gas will be reinjected into the reservoir. The reason you do that is, in reservoir management it is very common to do these types of developments and ultimately to get the most value from the resource by doing that. So Guyana will get more value by reinjecting that gas because it helps reservoir pressure, helps reservoir sweep and ultimately it helps you recover more oil. Now we have done some work that says that Guyana is in a unique position because of the high electricity costs and as far as the community, we have looked and seen how can we divert some of that gas to shore and that’s the project that is under discussion right now,” then Country President Rod Henson had told a Parliamentary Select Committee when asked about the gas-to-shore project.
“There have been no agreements, there is no decision that I am aware of. But essentially, we have been talking with various government regulatory agencies. The project would be to divert 30 to 35 million cubic feet of gas from the Liza Destiny, build a pipeline to shore and then take that natural gas and burn that natural gas for electricity other than the heavy fuel,” he added.
When he had been asked by then Chairman of the Committee, PPP/C MP Odinga Lumumba if the company has completed a study on the matter, Henson replied, “we have done much study work on this matter, absolutely… We have internal studies absolutely.”
But pressed further on if he could release that information to the Committee, he simply said, “No.”
“You are not ready to give a document on this? The Chairman interrupted and again Henson said, “No.”
“Why not?” a seemingly puzzled Lumumba pressed on.
“Because we are not at that point yet. We are at the normal point of discussion; where it gets to be, how much it costs, what capital investments, what power plants… all these things. We are not there yet,” Henson had replied.
With the PPP/C government announcing that Wales on the West Bank Demerara had been selected for the landing of the project, former Petroleum Advisor Jan Mangal has said that government should show through sound justification that the location was not chosen just for political mileage. He declared that it should not only be the government making decisions, but the populace needs to also have an input into the project as it is of great national importance and will be funded by taxpayers.
“My concern about choosing any particular site now is that we do not know whether it is the best site. We have not performed the necessary feasibility study comparing various locations along Guyana’s coastline. We do not know if Wales is the best site, in terms of ground elevation or in terms of proximity to a future industrial zone, deepwater port, and route to Brazil. In addition to providing electricity to Guyanese, electricity from the gas-to-power project should be used to develop a large industrial/manufacturing zone which would create tens of thousands of jobs.” Before any gas-to-shore project is embarked upon, Mangal contended that a detailed feasibility study is needed along with an analysis of whether renewable energy might not be a better option.
‘Unless otherwise agreed’
The former Petroleum Advisor said that if a decision is made to go ahead with the oil and gas project, its management should be entrusted to a reputable international agency given the high costs and risks entailed.
Pointing to the 2016 Production Sharing Agreement (PSA) between the government and ExxonMobil and its partners, the former Petroleum Advisor reminded that it caters for the bringing of natural gas to shore for domestic use but many aspects still have to be negotiated as these are not spelt out in the deal.
According to the PSA as it pertains to Natural Gas for domestic use, it states that “If the Natural Gas requirements of the domestic market in Guyana (the “Natural Gas Domestic Demand”) exceed the Minister’s total entitlement from all Natural Gas production in Guyana, then the Contractor shall be obliged together with any third parties which produce Natural Gas in Guyana, to supply and sell a volume of Natural Gas to be used for such Natural Gas Domestic Demand in Guyana, calculated on the basis of the ratio which the Contractor’s Lifting Entitlement of Natural Gas bears to the sum of Contractor’s Lifting Entitlement of Natural Gas plus the total entitlement of all other producers in Guyana subject to Article 17.2(c). The volume of Natural Gas which the Contractor shall be required to sell under this Article shall not exceed the Contractor’s share of Profit Gas. The Minister shall give the Contractor notice on or prior to April 1 of the year preceding the Calendar Year in which the Government will have the said requirement and the term of the supply shall be on a Calendar Year basis unless otherwise agreed.”
Mangal said that ExxonMobil had created a project team for the gas-to-shore project and they were based in Houston. ExxonMobil, according to Mangal, had planned to take the Final Investment Decision (FID) in 2019 and start constructing the pipeline. The offshore pipeline was to be done by the company and the onshore power plant was to be done by the government.
ExxonMobil yesterday said that it has “submitted an application for environmental authorization to the EPA for our work on the project and we are also in the process of starting the geophysical and geotechnical surveys required for the offshore and near-shore activities.”
And while natural gas will significantly reduce emissions compared to current heavy fuels used here, Chatham House fellow Dr Valérie Marcel says that this country needs to carefully study its future energy mix plan, taking into focus both the economics and environmental impacts.
Dr Marcel who is also the project head of the New Petroleum Group, and whose experience includes advising governments on petroleum sector policy and governance, reasons that studies may show that the mix could vary from region to region, given Guyana’s diverse geographical makeup.
