ExxonMobil will from today begin paying for the flaring of its estimated 15 million cubic feet (MMcf) per day of associated gases as it has applied for 36 days of flaring and the total accrued for the period under the revised Environmental Permit would be around US$1.3 million, says Vice President Bharrat Jagdeo.
Expecting to fix the problem with its flash gas compressor at the Liza-1 operations by the end of June, the company would stop paying if the problem is rectified before or it will have to seek another extension and continue the payment as calculated.
“The fees start on May 26th [using] the Polluter Pays Principle. They said to the EPA that they need 36 days… they are saying that by then, probably, they will fix the problem so they are saying 36 days,” Jagdeo told reporters as he explained how the fines will be instituted.
According to his calculation, the country would earn about US$1.3 million if the company flared for the entire period it asked for.
“Exxon says they’re flaring about 15 million cubic feet of gas per day now. That will be equivalent to about 1,152 tonnes of CO2 equivalent, or just below… And so, if you work out one thousand one hundred and something, maybe tonnes per day, by 36 days, it should take us to about US$1.3million, around that, for the period they have applied,” Jagdeo reasoned.
He echoed the Environmental Protection Agency’s position which last week stated that this country would not have to foot the bill for the fines nor will the Stability Clause of the Production Sharing Agreement with Esso Exploration Production Guyana Limited (EEPGL) be affected.
The agency had pointed out that while in its role as an environmental regulator, it does “not typically concern itself with the contractual arrangements between the Ministry of Natural Resources and Esso Exploration and Production Guyana Limited (EEPGL), during discussions with the company regarding the modifications, it was indicated that any such payments would not be recoverable against the Government of Guyana.”
The release had followed blistering criticism from former EPA Director Dr Vincent Adams who last week told this newspaper that he sees a cunning attempt to immunise flaring of 14 billion cubic feet of gas using the revised permit.
While not naming Adams, the EPA responded that there were several misconceptions and inaccuracies being peddled.
The Agency stated that the modification was pursued in strict accordance with the legislation due to the intermittent periods of flaring conducted by ExxonMobil’s subsidiary EEPGL due to technical issues offshore Guyana.
“Prior to its modification, the Permit prohibited ‘Routine Flaring’; however, process upsets, equipment failures and maintenance events are not considered ‘Routine Flaring’ in the Oil and Gas Industry. Such events were not specifically addressed or regulated in any way by the original Permit. Further, the original permit only required EEPGL to notify the EPA for flaring sustaining a volume of at least 10 MMCFD and lasting at least five (5) days. How-ever, the modified Permit now includes specific timelines for detailed instances of flaring, and notification and approval processes, during which the company must justify its reason(s) for flaring and the EPA reserves the right to reject this request if unjustified,” the EPA explained.
It said that the timelines prescribed by the Modified Permit are consistent with the US Code for Federal Regulations which establishes that flaring may not exceed 48 hours without seeking approval.
Further, it notes that, “international benchmarking shows that the initial start-up period averages approximately 90 days, however, the modified permit specifies a more conservative start-up period of 60 days, below the average international benchmark. This is also consistent with the recently issued Payara Environmental Permit. Any flaring in excess of these timelines requires the company to pay for the emission of Carbon Dioxide equivalent [CO2e] at the rate of US$30 per tonne of CO2e.”
Not only was the EPA guided by the Polluter Pays Principle, it stated, but said that it “utilised carbon pricing benchmarking to determine this payment, so that the monies acquired from the pollution events could be used for Supple-mental Environmental Projects [SEP].”
Moreover, the determination of US$30 per tonne of CO2e was a result of rigorous research and is consistent with introductory prices for CO2e implemented by developed countries such as Canada. In determining the volume of CO2e emitted, Condition 3.10 of the modified Permit specifically prescribes multiple methodologies, including but not limited to: American Petroleum Institute’s (API) Compendium of Green-house Gas Emissions Methodologies for the Oil and Gas Industry; and Intergovernmental Panel on Climate Change (IPCC) Guidelines for National Greenhouse Gas Inventory.”
