Selling Natural Gas requires further technical studies — Exxon Confidential Report

Sep 19, 2021 News

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…premature supply estimates can lead to inefficient investment planning

Kaieteur News – The Guyana Government has conceded that it is not fully aware of the specific amounts of associated Natural Gas, or its make-up, to be had from the Liza I Oil Field in the Stabroek Block being produced by the Liza Destiny Floating Production and Offloading (FPSO) vessel.
The administration is however pushing ahead with the gas-to-shore project as a transitional energy source but according to the Stabroek Block Operator, “Identification of excess Associated Gas volumes for utilisation/commercialisation requires substantial technical due diligence.”
The warning was given to the administration by the ExxonMobil Guyana in a confidential 2018 document in which the company outlined that Associated Gas is a critical component of oil field management to ensure efficient oil recovery (gas injection) and to fuel the FPSO; understanding oil production requirements is the priority.
To this end, the oil major cautioned that Gas supply estimates could prove highly misleading if provided prematurely and lead to inefficient investment planning.
According to the company, the FPSO alone will require 0.1 trillion cubic feet of gas at an amount of 20 million cubic feet per day.
Additionally, maintaining adequate pressure in the gas reservoir in the Liza I oilfield would require some 0.5 trillion cubic feet of Natural Gas to be re-injected.
The company cautioned in its confidential report that gas cycles in and out of reservoir over time will significantly decrease as a result of gas being exported to shore.
As such, the company determined based on the available data at the time that, 0.2 trillion cubic feet would be left available for sales at 30 million cubic feet per day.
ExxonMobil did note in its confidential report that as it relates to the available gas for sales, “Reservoir and facilities modelling for evaluation of feasibility for up to 50 Mcf/D export on-going.”
The administration in it’s a briefing earlier this year had intimated that while ExxonMobil had been willing to supply some 35 million cubic feet of gas per day, it had managed to secure a commitment for the supply of 50 million cubic feet of gas daily.
ExxonMobil in its confidential document did seek to point out that it will conduct feasibility studies to assess the commercialisation potential for additional excess Associated Gas, if any.
The information comes to light as the public debate over the proposed gas-to-shore energy project intensifies with more questions now than answers.
This publication on Thursday reported that while Government is actively pursuing private investors for joint participation in gas related projects to accompany a Natural Gas fired power plant to primarily power an industrial park at the Wales Development Zone (WDZ), the related gas ventures such as the production of urea/fertiliser and other associate products are expected to be financially challenging.
As such, their viability will be dependent on significant incentives on the part of the government such as tax breaks and waivers in order for any such venture to be deemed feasible.
This much was disclosed to the administration following a site assessment that was conducted by Stabroek Block Operator, ExxonMobil Guyana.
In a summary of the findings that were presented to Cabinet in 2018, it was documented that ExxonMobil had progressed feasibility studies for the potential commercialisation of gas volumes in the event future discoveries identify suitable gas supplies above gas-to-power requirements.
It was found that “analysis has highlighted that while economics are challenged, requiring incentives, methanol and urea (fertiliser) producing large-scale industrial facilities appear to be the more likely viable foundation industries for investors.”
As it relates to Methanol, ExxonMobil had recommended that export vessels would require deep-water draft and as such, pursuit of such a venture sees an export pipeline connected to offshore loading buoy in deeper water appearing to provide a viable Guyana coastline export solution.
As it relates to Urea, it was noted that granular product with viable road-based sales domestically and potentially to immediate neighbouring countries is likely viable but screening assessment revealed the need for the construction of extended jetty and loading berths for direct regional exports via 5000 DWT vessels requiring 3-6M water depth.
The Ministry of Natural Resources had earlier this year invited private investors to provide an Expression of Interest (EoI) to partake in Joint participation in the proposed gas-to-shore project with the government and Esso Exploration and Production Guyana Limited (EEPGL)—ExxonMobil Guyana.
According to the advertised EoI, the government and EEPGL are looking for partners “in designing or utilising the outputs from an NGL (Natural Gas Liquids)/LPG (Liquified Petroleum Gas) facility and related facilities.”
This includes, according to the Ministry, design, construction, and financing of a power plant fuelled by Natural Gas, where the power will be delivered into the Guyana Power and Light’s (GPL) distribution grid.
This is in addition to industries that can utilise Natural Gas for, “Natural Gas driven developments and growth.”
The WDZ encompasses over 14,000 plus acres of land of which approximately 1,300 acres will be set aside for heavy Industry/gas-related investments.

 

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