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US$800M for gas pipe line alone is money for the boys
…previous estimates peg entire project at US$200M less — Patterson
“…a project cost of US$800M is very high and should be challenged, if not the country shall end up with another white elephant.”
Kaieteur News – The price tag of US$800M for a Natural gas pipeline alone, as part of the much vaunted gas-to-shore power project, is simply another scheme by the People’s Progressive Party/Civic (PPP/C), or “money for the boys.”
At least, this is according to Shadow Minister with responsibility for the oil and gas sector, David Patterson, who on Wednesday addressed the matter, since the ruling administration has now “changed its narrative from the cost of the project and the burden to our country, to, we will save US$160M per year with this project.”
Patterson was keen to note that the current proposed pipeline costs of US$800M, is some US$200M more than the conservative estimates that had been secured from the operator of the Stabroek Block — ExxonMobil Guyana.
Shadow Minister with responsibility for the oil and gas sector, David Patterson
The shadow minister qualified his outlined positions by providing, ‘conservative’ figures for the project which were secured prior to the PPP/C administration taking office.
According to Patterson, Energy Narrative, an international energy consultancy firm had estimated the cost of a 12” diameter pipeline, with 1” thick metal walls, inclusive of installation, to be US$165M.
He said US$43.5M had been estimated for the onshore plant.
According to Patterson, a 12” diameter pipeline was selected, since it has the capacity to deliver approximately 140 million cubic feet of gas (MCFD) per day to shore.
The government minister under the coalition administration noted that the maximum listed volume was almost five times the committed volume of gas of 30 MCFD that is available from the Liza development.
He explained that it had been sized up to that capacity, “in the event that additional gas became economically available in the near future.”
ExxonMobil, he said submitted a preliminary estimate for a 12” diameter pipeline landing on the East Coast, with a total project cost “as of 2018 was between US$500M and US$600M, and even these sums were preliminary and conservative and were expected to reduce with further detailed designs.”
He detailed that modifications to the Liza Destiny—Floating, Production, Storage and Offloading (FPSO) Vessel—was estimated at some US$10M and that this was completed before the ship came into operation.
Additionally he noted that the requisite Risers, at a Front End Engineering Design (FEED) or Engineering Procurement and Construction (EPC) formats, would cost some US$10M.
The pipeline under same arrangements would be had at some US$220M, together with the Owners Costs of US$46M giving a total of US$308M.
This, he remarked “is significantly different from the US$800M now being claimed as the pipeline costs.”
He noted too that some of the significant other costs of the project include the power plants of maximum capacity, being188 megawatts (MW) using 10 x 18MW units.
According to Patterson, inclusive of civil works, this was estimated at US$275M.
Patterson used the occasion to underscore too that “even this is overestimated since on average, it costs US$1M for 1MW of dual-fuel generation.”
He said too, the new substations, transmission lines, civil works and other required activities for the Guyana Power and Light (GPL) Company was estimated to be around US$20M.
Patterson observed nonetheless that with all the significant pieces being considered, the total project cost was between US$500M to US$600M, some US$200M less that the price tag being touted for just the pipeline alone.
The former government Minister in providing the details prefaced his position by saying, “a project cost of US$800M is very high and should be challenged, if not, the country shall end up with another white elephant.”
He posited, “…these costs will be impossible to justify for the average citizen, but for the PPP/C, it will be a walk in the park” and highlighted as an example, the changed narrative from cost to savings.
Accordingly, Patterson observed that “this was the same reasoning they used when they (PPP/C) attempted to foist the Amalia Falls (Hydro Electric) project on the country” and exhorted, “don’t be fooled.”
He reminded that, “when the spiraling costs (for the Amalia Project) were challenged, the PPP/C resorted to, don’t mind the cost or the viability of the project, we will save US$200M per year.” According to Patterson, the party supporters parroted this version without even seeking to verify its truthfulness.
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