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The Cost of Inexperience

Dec 05, 2019 Letters

DEAR EDITOR,

In a recent press release dated November 7 [https://www.stabroeknews.com/2019/11/07/news/guyana/exxon-to-get-first-oil-lift/], the director of the department of energy Mark Bynoe, expresses his expectations about the first oil, along with the financial, and monetary implications for the people, and the government of Guyana.
Bynoe mentions volume potential for crude oil to be produced and lifted from Stabroek block, along with the financial expectations of agreed 2% royalty over the whole extracted volume of crude oil, plus a 50% of the 25% cut remaining after a gigantic 75% Exxon take, assigned to cost recovery.
Particularly for Liza field, anticipated crude oil type is likely to yield a high Gas to Oil Ratio, meaning high gas produced along with the crude oil. Bynoe says no words about the gas to be produced along with the crude oil, no words about who will monetize it, and not words about the way shrinkage will be handled. At peak production of 120.000 BPD, assuming a typical GOR for volatile to condensate of say 4.000 SCF/STB very conservatively speaking, gas production could be as considerable as 480.000.000 Scf/Day, which at current (low) price of around 2.8 $/MMBTU yields the no little amount of over $1.300.000 per day. Who will take this revenue and why hasn’t it been a single word mentioned about it?
On the other hand, a detailed review of ExxonMobil’s field development and business plan should be undertaken as soon as possible by a panel of qualified experts, with not only theoretical experience, but also practical and qualified expertise. Field and operational variables should be carefully understood. A small error during testing and volume metering could imply a sizable lost or a sizable win for one or the other, depending on not only how well trained the government representative really is, but also on the type and nature of metering device being use for either phase; oil or gas.

Regards,
Millan Arcia Einstein

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