Gas-to-shore pipeline alone to cost US$800M

Mar 30, 2021 News

– country will still have to invest in capacity to make industry feasible
– must do independent audit of gas reserves; don’t depend on ExxonMobil— Fmr. T&T Energy Minister

Former T&T Energy Minister, Kevin Ramnarine.

Kaieteur News – Guyana’s Vice President, Dr. Bharrat Jagdeo, has suggested that in light of the perceived benefits, a gas-to-shore pipeline from the Liza Field to the Wales Estate is a “no brainer” given the possibility of reducing the cost of generation of electricity in Guyana.
Former Energy Minister of Trinidad and Tobago (T&T), Kevin Ramnarine, is of the view that Guyana needs to do much more before forging ahead with the project, since, among other reasons, the touted US$800M price tag is just for the pipeline alone.
The stark warning was given by Ramnarine during a recent webinar on Guyana’s proposed gas to shore project, hosted online by OilNOW.
Drawing on the T&T’s experience, Ramnarine noted that the bulk of the natural gas produced in that country does not go into electricity generation directly, despite the fact that all electricity in the Twin Island Republic is generated using natural gas.
He noted that the gas recovered from the field can be used for varying purposes, in addition to electricity generation.
It was explained that while electricity can be generated using the methane in the gas, there are other associated gases that can also be commercially feasible and spoke of propane that is for cooking and butane that are used in cigarette lighters.
He was adamant that the feasibility of bringing gas to shore will require a holistic approach that will guide a strategic strategy for the country’s industrial development.
These would include the proposed gas to power plant to generate electricity for the domestic grid in addition to separate facilities for the processing of the other gases.
The former energy minister was adamant too that if Guyana is serious about developing a feasible natural gas industry using the associated gas discovered so far in the Stabroek Block, it must first undertake an independent audit of the gas reserves.
The country is currently dependent on ExxonMobil for its data regarding the Stabroek Block potential.
The former energy minister was keen to point out that his country, which currently produces all of its natural gas from electricity, only use a small amount of its production for this purpose.
According to Ramnarine, data currently available from ExxonMobil indicate that about 20 per cent of the just about nine billion barrels of oil is associated gas.
He reminded that the company has committed to supplying some 50 million cubic feet initially on a daily basis.
According to Ramnarine, the proven reserves currently indicate about 9.6 trillion cubic feet of natural gas but the country would need to be able to ascertain that there is enough gas in order to sustain the industry for some 20 years.
“There is a significant amount of natural gas out there, 20 per cent of eight billion barrels of oil equivalent is 1.6 billion equivalent, which when converted into gas is 9.6 trillion cubic feet of natural gas.”
He explained that the gas does present a huge development opportunity for Guyana but there is a need for a well thought out natural gas master-plan “as to how the country plans to use the gas.”
He reiterated that the 50 million cubic feet tranche of gas that can potentially begin landing onshore in 2024 “is only the beginning of the gas story in Guyana.”
As such, Ramnarine was adamant that such an independent audit would be able to inform the industrial development of the country and optimizing the use of the gas.
He said “increasingly, as the decade’s progress, I think more gas will be making its way to the shoreline, so the question is what is the best way to use this gas to develop industries that are sustainable.”
“Liquefied natural gas is certainly a growth industry; gas is going to be around for a long while,” according to Ramnarine, and as such, he suggested that the Guyanese government may wish to “have an independent third party assessment of the reserves that have been discovered thus far.”
According to Ramnarine, such an independent assessment will give the country a better idea of the reserves in its possession “so right now, we have some figures and those figures have been given to us by Exxon(Mobil) out of their reporting.”
The former T&T Energy Minister was unwavering in stating that “it would be useful for the Guyana government to have an independent third party assessment; audits like that would give the Guyanese government a good idea of what sort of resource base you are playing with.”
This, he said, would inform industrial strategies and planning going forward in order to make the gas-to-shore initiative economically feasibility.
According to Ramnarine too, the technology exists to bring the pipeline and he estimates it would cost between US$600M and US$800M and that the cost would be minimal when juxtaposed with the total returns from the Stabroek Block and would probably reduce electricity generation in Guyana by about half. The industry, he advised, must be approached in a holistic manner.