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Gas-to-shore…Major capital projects require feasibility study – API Economist
Kaieteur News – Since assuming responsibility for overseeing the oil sector, Vice President, Dr. Bharrat Jagdeo, has been at the forefront of championing the need for major initiatives such as the gas-to-shore project, noting specifically that it would bring cheap electricity for all.
API Chief Economist, Dr. Dean Foreman
But his commentary over the past few months about reduced electricity costs have failed to mask the need for Government to answer the most crucial question at hand — is the gas-to-shore project feasible?
In spite of growing criticisms, Jagdeo has been adamant that a feasibility study is not necessary. Based on his calculations, the Vice President has argued that the project is economical and therefore, the country should move ahead with the environmental studies.
Vice President, Dr. Bharrat Jagdeo
However, several concerned Guyanese have challenged Jagdeo’s approach, saying that no major capital project in the world, particularly those that are run by transparent and accountable governments is pursued without a feasibility study.
In agreement with the need for such a fundamental step to be taken for the gas project is Chief Economist attached to American Petroleum Institute (API), Dr. Dean Foreman.
In an invited comment on the gas-to-shore project, Foreman categorically stated, “Any major capital project requires a feasibility study that should encompass supply, infrastructure, processing, transportation, marketing and stakeholder relations under different scenarios, including timing, prices and financing.”
If Guyana and its industry operators are to successfully develop a gas-to-shore project, Dr. Foreman said, their views on all of the foregoing issues would need to align.
Furthermore, without more information (that is to say, studies or commentary outside of what has already reported on ad nauseam by the Vice President and other government officials), Dr. Foreman said it would be impossible for API to determine the project cost and feasibility of Guyana’s gas-to-shore project.
The Chief Economist said determining same would depend not only on the gas volume but the depth and project drilling unit configuration, processing needs, and distance for transport.
Dr. Foreman said, “Time also equates to money, so if a project like this advances it would be important for Guyana to synchronise its domestic gas market development to monetise the gas efficiently.”
He added, “If a Guyana project is executed to high standards in accordance with API’s Recommended Practice for the Design, Construction, Operation, and Maintenance of Offshore Hydrocarbon Pipelines (Limited State Design), the integrity of operations should be strong.”
In general, the Chief Economist posited that Natural gas, when consumed for power generation, has been beneficial to the environment as a cleaner, lower carbon resource, supplanting coal and liquid fuels in many emerging economies.
As regards the kind of expertise the country would need for the management of a gas project, the API Chief Economist said veteran industry experience in offshore gas developments would be key in addition to an in-depth technical understanding of the potential trade-offs of different infrastructure configurations. He said too that having coordinated risk management to ensure all issues above and belowground are addressed along with financial and gas market acumen, would be in Guyana’s best interest.
Should Guyana find itself in a situation where it would end up bringing more gas-to-shore than it needs, Dr. Foreman said the country could find itself doing a number of things, which include having to build additional gas-handling capacity and finding additional markets for the gas, re-injecting the gas or limiting oil production.
Overall, Dr. Foreman’s general perspective is that Guyana should be guided by international best practices, and at the very least, a feasibility study so that it can determine the way forward on the gas-to-shore project.
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