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Natural gas plans…ExxonMobil involvement will likely stop at the pipeline – Patterson
Minister of Public Infrastructure, David Patterson has said that United States oil giant, ExxonMobil will not be involved in the entire process of Guyana’s natural gas production.
Explaining the process, Patterson stated that a pipeline from the oil field will be constructed to land and when the pipe has landed an entity will use a portion of the natural gas to generate electricity. The remainder will be used for other byproducts.
“At this stage only LPG (liquid petroleum gas) is on the cards. Studies are ongoing on the other possibilities, which include urea and methanol,” Patterson stated.
Several companies have expressed interest in executing the government’s plan of using natural gas to generate electricity. At the moment, Government has engaged only Exxon on the pipeline plans.
“Exxon will not be involved in the entire chain. If any involvement, most likely it will stop at the pipeline to shore,” Patterson noted.
According to Patterson, all options including Public Private Partnerships are being considered for natural gas.
ExxonMobil and its partners will start oil production in another two years time. It is estimated that the natural gas to be produced daily is between 30-50 million cubic feet. ExxonMobil officials have told Kaieteur News that most of the associated gas for Liza Phase 1 will be used for re-injection to maintain pressure in the reservoir to increase production of oil.
Government is also considering an industrial park at the onshore location of the natural gas pipeline.
At the Ministry’s end of year press conference in December, the Minister disclosed that a final location to land the pipeline has not been determined. He stated that they are exploring sites in Regions Three and Four, although a site in Region Six has not been ruled out.
Minister of Public Infrastructure, David Patterson
Patterson noted that the determination of the site could be made by the end of the first quarter of 2018. The decision, he said, will be guided by several factors that include land availability, surrounding population and environmental studies.
On Friday, Exxon announced the largest oil find to date in the Stabroek block, making it the sixth discovery offshore Guyana since 2015. The new discovery pushes the estimated amount of oil past 3.2B barrels found so far in the Stabroek concessions.
Under the Petroleum Agreement between Government, Exxon and its partners, it is stipulated that a plan of utilization of associated gas shall be included in the development plan for each oil field. If there is excess gas in the oil field after utilization, Exxon and its partners are mandated to carry out a feasibility study regarding the utilization of the excess gas.
The study is to be included in the development plan of the oil field or be completed no later than five years following the submission of the development plan.
Exxon and its partners are not required to make further investments in the excess associated gas, but the Government and the oil companies are allowed to carry out friendly negotiations in a timely manner to find a new solution to the utilization of the excess associated gas and reach an agreement in writing.
If the companies provide notice to the Minister that the development plan shall not include a plan to develop and utilize excess associated gas, the Minister shall have an election to take off the excess associated gas free of charge at the outlet flange of the company’s separator facility.
Article 12:3 of the agreement deals with the general conditions of natural gas. The companies have the right to use natural gas, both associated gas and non-associated gas, as may be required for oil field and gas field operations, including the right to re-inject for pressure maintenance and enhanced recovery without charge, fee or royalty.
It points out that Exxon and its partners have the right, but not the obligation to process natural gas for conversion to liquids, chemicals or similar gas utilization.
The agreement also gives Exxon and its partners the right to liquidify the natural gas for sale as LNG and compressed natural gas (CNG).
Further, under the agreement, the companies are expected to pursue markets both within and outside Guyana and seek to market natural gas to the highest realization outlets after deduction of transportation costs.
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