Global energy strategist and Vice President of United States utility company Eversource Energy, Roger Kranenburg has advised Guyana against investing in refining oil and gas for resale but strongly supports the proposed Wales gas to energy plant saying that it would bring reliable and cheap power.
“My personal view is economically it doesn’t make a lot of sense for Guyana to invest in refining, these are global markets and you pick what you’re playing in that market. Oil goes to the global market and the current volumes of gas and where it’s located, that’s tough to put on the global market. It may change in the future, but right now that gas is essentially a low-value commodity at best, so [instead] bring that to shore, Kranenburg last week told a forum, on the topic – Transforming Guyana, Episode VI: Guyana’s Role in a world that still needs Oil.
Using global data, he pointed out that while the world will always be seeking alternatives to ensure decarbonization, this being realized will be met faster by developed countries which invest heavily in this area, as compared to developing countries.
Kranenburg, who worked with market intelligence company IHS Markit advising on global energy sector transformation, investment and operations, reasoned that “there will be a demand for oil for some time to come”.
“Fossil energy is here to stay for some time, in a very big scenario, but the world is very focused on a decarbonized future and getting there as best as we can, and for society I think it’s a good thing,” he noted.
He said that in the same way countries like the United States, Canada and those in Western Europe transitioned from wood, then coal and to today setting targets for lesser environmentally intensive fuel, Guyana can learn to use its revenue from the oil and gas sector and diversify its economy, as it sets its own target.
“The caution I would offer is…don’t be completely dependent on oil for some time to come. Use this benefit you have today, definitely make the best use out of it but work to develop a diversified economy. Economies that are just dependent on resources are tough economies to run effectively, even if they are very wealthy. Take this gift and invest it for the future…diversify the economy. Take this money, produce oil but abate the Co2 emissions. Look into the future. As the world drives forward [ask] ‘how do we play?’ he advised.
“Don’t put all your eggs in the one basket strategy. Reality is no one knows what the strategy is going to look like… so be robust in a range of futures,” he added.
From revenue generated from the oil and gas sector, the Chartered Financial Analyst who was born in Guyana advises that immediate needs should not be focused on subsidizing incomes but building systems that are catalysts for development.
“One thing is that it [oil revenue] gives something to everyone and some of those things that I think of is healthcare. Build the absolute best healthcare system that everyone can get on board with. As for education, build the best education system. Leverage the fact that you’ve got access to the world’s knowledge through high speed telecom systems; build infrastructure like telecoms… [and] roads etcetera. Give everyone the reliable electricity. Give everyone clean water, build that foundation. Build that foundation where it’s rock solid, and it’s available to everyone; it’s not if you’re rich, or you’re poor, you can generate your own electricity, it’s afforded to everyone. And it’s a basic foundation as being part of a country, and then build from there”, he said.
Strong supporter
And when advisors ask governments to look to developed countries like Sweden and Finland, to use as models, he said that what must be taken into account is that those countries transitioned as they maximized and monetized their resources. He said that the standard of living afforded to them today derived from revenue used as investments. Those investments trigger a domino effect as it “drives innovation, innovation drives development; development drives stability and stability provides reliability”.
But in the meantime, the energy strategist believes that setting up the gas to shore power plant was a move in the right direction to not only gradually move away from carbon intensive fuel, but to give the people of this country reliable power, a key factor in holistic development.
“I’m a strong supporter of it [gas-to-shore] and would very much like to see Guyana move forward in that project. It may seem expensive, but if you play out Guyana’s future well, it could be such a prosperous future and that expense will be nominal compared to the benefits that can be derived,” he contended.
The pipeline is expected to land at Crane/Nouvelle Flanders, West Coast Demerara, and run to Wales on the West Bank of Demerara, where a natural gas liquids (NGL) processing plant and power plant are to be constructed. ExxonMobil is responsible for the construction of the pipeline while it is the government’s task to construct the plant.
The project involves capturing associated gas produced from crude oil production operations on the Liza Phase 1 (Destiny), and Liza Phase 2 (Unity), Floating, Production, Storage and Offloading (FPSO) vessels.
Some 150 acres of land at Wales have been allocated for the project, which is expected to cut power costs by 50 per cent. The government’s power plant is expected to utilise ‘dry gas’ for electricity generation.
A former advisor to the Edison Electric Institute where he led strategy, policy development, analysis, and advocacy for the electric utility industry in the areas of energy supply and taxation, Kranenburg said that using the associated gases to ensure reliable and affordable power is the way to go. “Guyana has a very bright future in leveraging what’s essentially a waste product or limited valued product, in the associated gas in those fields,” he said.
In a world where power is necessary in every sphere of work and blackouts hamper development trajectory plans, Kranenburg pointed out that Guyana needs reliable power if it is to reach the development benchmarks set. Significant investment also, he reminded, has to be put into a modern grid system that can take off the generation capacity throughout the country.
“Wherever there is a high population density, centralize it [power delivery]. Build that infrastructure for the use of everyone. The reality is that for your businesses and individuals, their first preference for most people is not to spend time thinking about blackouts. In getting 24/7 electricity, you get so many benefits from it to all individuals of every socio economic background… it creates businesses and high economic activity. It is one of the highest value-added for businesses. As long as electricity is there, I will find all the good things I can do with it. So where there is high population density focus on delivering that along with technology,” he said.
And as this country looks to the future, Kranenburg says that it must also be steadfast in holding true to its plans for transition to ever cleaner forms of energy than natural gas because transitioning would not be difficult.
“In the renewables future, if you’ve got a system that’s run off of gas, it actually makes it very much able to integrate renewables effectively. A renewable I find very exciting for Guyana is solar. I think it’s an extremely bright future for the country,” he said.
