Pipeline for Gas to Shore project is more expensive option

Feb 04, 2022 News

…confirmed by cheaper EU/Israel Project halted over cost concerns — Opposition

By Gary Eleazar

Kaieteur News – Budget 2022 is filled with throwing money at issues without proper analysis, a deduction made by Alliance for Change (AFC) General Secretary, David Patterson when he delivered his Budget presentation to the National Assembly for 2022 and dealt with the controversial issue of the proposed Gas to Shore Initiative now pegged at some US$1.3B.

Patterson in a scathing condemnation of the administration’s approach to the project sought to outline that it was being pursued in the absence of detailed analysis and studies—analysis that would have highlighted the fact that Guyana is pursuing a more expensive path.
To this end, he drew reference to a recently halted gas pipeline project due to cost concerns—a project that would have seen gas being transported at 30 percent less than what is being proposed in Guyana. He was at the time referencing a proposed 1,800 km pipeline designed to transport 1.2 billion cubic feet of gas per day between Israel and the European Union (EU), that has since been put on hold.

“Paused partly because of concerns of a lack of financial feasibility expressed by both the Israeli and the US Governments. This concern about feasibility for that pipeline project should have raised a red flag for our Guyana pipeline project, since the EU pipeline would be transporting gas at more than 30 per cent less cost than our pipeline project.” He used the occasion to remind that just last week the government refused to do a proper analysis of the pipeline proposal for bringing gas to shore, and to allow the Parliamentary Natural Resources Committee to assess its viability, “which is another glaring example of poor governance.”

According to Patterson, a detailed study of this project would show that the pipeline solution proposed is simply not the best to utilize our natural gas resources. Qualifying his position, Patterson sought to outline that the pipeline, gas to shore solution is much too expensive.
“It is transporting gas for electricity generation at a cost of about US$4.50 per million Btu. A cost for transportation that exceeds the average market price for gas worldwide over the past year. This cannot and will not result in cheaper electricity for our nation.”

According to Patterson, had government agreed to further studies into this project, “they would have likely been made aware that in some scenarios, transporting gas in the form of compressed natural gas (CNG) to shore by ISO Containers is much more cost effective than a pipeline.” He suggested too that a study would likely have brought to light that transporting gas to shore by ISO containers would be almost 75 percent cheaper than by a pipeline.
“Further studies would also likely have brought to light that the ISO Container method of transporting gas has the possibility of opening huge export markets for Guyana into CARICOM and Brazil.”
According to Patterson, had the government been more willing to “conduct a more detailed analysis, they would have discovered that a private sector company has a take or pay contract with a power generating company in Central America to supply CNG by ISO Container for electricity generation, and has applied to the US Department of Energy for approval to ship CNG to Central America and the Caribbean by this method using its technology and experience in the use of this method of gas transportation.”
As such, he was adamant, the opportunities to utilize Guyana’s gas reserves are enormous and “as we have stated before, the opposition will lend our support to the Government in negotiations with the Stabroek Block Operators in getting, a better oil contract, lowest price for the gas, and better conditions for the Guyanese public.”
Subject Minister of Natural Resources, Vickram Bharrat, in his rebuttal however, insisted that government would be pressing ahead with the Gas to Shore initiative because it is being viewed as a project that would not only transform the landscape of the country and reduce cost of living but would also bring about significant opportunities for businesses and consumers alike.
To this end, he sought to remind that one of Guyana’s biggest bugbears with regard the manufacturing industry is the cost of power and reliability of power.
Further defending the pursuit of the project in its current form, Bharrat was adamant the project will result in electricity prices being slashed by half in addition to the reduced emissions to be realised.