Govt. gives EPA thousands to monitor billion-dollar oil operation

Feb 09, 2022 News

By Gary Eleazar

Kaieteur News – Esso Exploration and Production Guyana Limited (EEPGL)—ExxonMobil Guyana—first announced the discovery of commercial quantities of hydrocarbons (sweet light crude) in the Stabroek Block in 2015.
Production or ‘First Oil’ was had in December 2019 but from then to now, Guyana’s monitoring of the crude being extracted from the Stabroek Block has been largely dependent on the information provided to the local authorities, primarily the Environmental Protection Agency (EPA). This is the government agency responsible for the monitoring of the operations and according to Minister with responsibility for Parliamentary Affairs and Governance, Gail Teixeira, this year the administration is investing a miserly few thousand US dollars to monitor the production of US billions in crude being extracted from Guyana Exclusive Economic Zone (EEZ).

Minister of Parliamentary Affairs and Governance, Gail Teixeira (front, right) and a team of technical officers during consideration of the Estimates on Monday.

This much was made clear to the Members of the National Assembly on Monday when the Legislative Body met in its Committee of Supply to consider and approve the expenditure identified under Office of the President for which the EPA would be receiving in excess of $100M (US$500,000) to boost its capacity in this regard.
With in excess of 10 billion barrels already discovered in the Stabroek Block alone thus far, Guyana’s oil and gas section is essentially a US multi-trillion dollar operation.
The House was at the time considering a US$1.5B allocation for the Environmental Management and Compliance department of the Office of the President when Members were told that the EPA would be receiving G$48M or US$240,000 for training at the EPA.
Minister Teixeira, when queried on the allocation, informed the House that this money had to do with training the EPA staff for the remote real time monitoring of the operations in Guyana’s EEZ and other sectors falling under its remit.
When asked by opposition Member of Parliament Tabitha Sarabo-Haley, to be provided with a work programme for the year for the EPA, Minister Teixeira told the House, she could give no such commitment at the time since that would have to be a decision taken by the EPA Board.
Additionally, it was pointed out to the House that there was an allocation of some $100M set aside for the EPA, but the Budget document did not provide much information and as such MP, Annette Ferguson asked that it be disaggregated since, “this is tax payers’ money and it must be accounted for.”
It was at this point Minister Teixeira informed the House that of the $100M, some $74.9 will be spent on digital monitoring, geographic information systems, remote monitoring systems and dashboard and other equipment. She was quick to point out however that the equipment will not be used exclusively for oil and gas in terms of dealing with surveillance and tracking the operations of the Floating Production Storage and Offloading vessels in the EEZ, such as its flaring—a bone of contention since operations began.
She said too, the EPA would be using some of the money to purchase some scientific and laboratory equipment that would be needed by the EPA.
Guyana currently produces some 120,000 barrels of crude daily from the Liza Destiny FPSO. However, as a result of problems being experienced with its Flash Gas Compressor on the FPSO, it has been unable to re-inject the Natural Gas into the reservoir and has instead resorted to flaring. The second production ship, the Liza Unity, is also gearing up for production as it is in its final stages of hooking up for commissioning.
Minister within the Office of the President with responsibility for Finance, Dr. Ashni Singh, in presenting the Budget to the National Assembly on January 26 last, had indicated that ongoing exploration activities have continued to yield positive results, with 28 commercially viable oil discoveries to date in the Stabroek Block and an estimated recoverable resource of over 10 billion oil-equivalent barrels, “a mere 6 years after first discovery.”
The Stabroek Block currently has three identified production areas Liza I, Liza II, and Payara. Production capacity is currently at 120,000 bpd with the Liza Destiny FPSO in operation.
The coming into operation of the Liza Unity FPSO, according to Dr. Singh, “early in 2022 will raise capacity to 340,000 bpd, and the deployment of the Liza Prosperity FPSO in 2024 will further raise capacity to 560,000 bpd.”
Additionally, he told MPs, “with the anticipated fourth production area, Yellowtail, estimates are poised to reach 810,000 bpd by 2026/27 and additional developments under consideration could see us reaching 6 FPSOs producing 1 million bpd by 2030.” According to Dr. Singh, “with two FPSO vessels expected to be in operation this year, it is anticipated, that there will be 94 lifts from the Stabroek Block, 13 of which will be Government lifts.”
From this, he said, it is estimated that deposits into the Natural Resources Fund for 2022 will total some US$957.6M, comprising some US$857.1M earned from the Government lifts of profit oil, and an additional US$100.5M from royalties. Under the Production Sharing Agreement, Guyana is paid a two percent royalty and profits split 50/50 but not before ExxonMobil deducts 75 percent of the total production for each month to pay back costs, fund daily operations and other expenses, such as the repayment of loans.
At the end of the first day of the consideration of the estimates for this year’s G$552.9B biggest budget ever, for allocated spending for the agencies and departments falling under Office of the President were all approved. This year’s Budget is being financed in part by the earnings had from Guyana’s oil production since its commencement in December 2019, identified at $126B.