Liza Two poses grave danger to Guyana without full coverage insurance

Liza Two poses grave danger to Guyana without full coverage insurance – Attorney Melinda Janki

Feb 14, 2022 News

Kaieteur News – The PPP/C Government along with many industry actors have publically stated that they view the recent commencement of operations at the Liza Phase Two Project using the Liza Unity FPSO in the Stabroek Block as a major achievement for the oil producing State.
On the other end of the spectrum however, are several other patriotic observers who are cognizant of the lopsided Production Sharing Agreement (PSA) the project is tied to, as well as the fact that it has no full coverage insurance. In light of these two factors, these individuals are deeply concerned about the project’s dangerous environmental implications.
Specifically, Attorney-at-Law, Melinda Janki, is of the firm conviction that the Liza Phase Two Project poses a grave danger to Guyana.

Attorney-at-Law, Melinda Janki

In an invited comment, Janki—who has been passionate about the protection of the environment especially with the onset of Guyana’s prolific oil discoveries—said with over 30 wells drilled to support the project, the risk of a blowout increases.
She further notes that the Liza Phase Two Environmental Impact Assessment (EIA) admits that an unmitigated oil spill could hit Guyana’s shores, affect marine life in the ocean, devastate Caribbean countries and could harm Guyana’s fishing sector. If this happens, Janki articulated that no amount of insurance can replace the natural resources that enable people to live. She alluded to the suffering that therefore looms in the absence of adequate insurance for protection.
Further to this, she said ExxonMobil has admitted to using faulty equipment in Liza Phase One project which utilizes the Liza Destiny. Mechanical issues that affected the Liza Destiny’s gas compressor system since 2019 has led to the flaring of over 15 billion standard cubic feet of gas. ExxonMobil now projects that it will address these gas compressor woes until half year.
Given the mechanical issues that led to the pollution of the air space from toxic chemicals released from flaring, Janki said all Guyanese should be worried about whether ExxonMobil is likely to repeat the same mistake on Liza Two.
It is therefore Janki’s belief that there should be a halt to oil production until the Government and ExxonMobil can show beyond the shadow of a doubt that the Liza Phase Two operations are safe.
According to project documents, oil production from the Liza Phase Two Development is expected to last at least 20 years. During that time, approximately 220,000 barrels of oil would be produced per day via the Liza Unity FPSO. That ship is also expected to develop 600 million barrels of oil over its lifecycle.
Esso Exploration and Production Guyana Limited (EEPGL) which is the operator of the Stabroek Block and the subsidiary of ExxonMobil has said that the entire Liza Phase Two development costs US$3.5B. Guyana is yet to verify whether this cost is correct.
KEY DIFFERENCES
According to reports perused by this newspaper, there are some key differences between the Liza Phase Two Development and the Liza Phase One Development which commenced in December 2019.
In the area of Oil Production Rates, the Phase Two production rate will be approximately 190,000 to 220,000 barrels of oil per day while Phase One’s production rate has hovered around 120, 000 to 130,000 barrels of oil per day.
With respect to FPSO Oil Storage Volume, Phase Two’s storage volume is approximately 1.6 to 2 million barrels. Phase One’s storage volume is 1.6 million barrels.
In terms of the number of wells, Phase Two well has approximately 35-40 wells. Phase One has 17 wells.
POSSIBLE EFFECTS
The reports being held by the Environmental Protection Agency (EPA) notes that the Liza Phase Two project comes with a fair number of possible effects on people, wildlife and the environment.
Although the probability of an oil spill reaching the Guyana coast is very low, the EIA for the Liza Phase Two project states that a subsea release of crude oil from a well control, event at a Liza well would likely impact marine resources found near the well, including marine turtles and certain marine mammals (especially baleen whales) that may transit or inhabit the area impacted by a spill, as well as marine water quality.
It was further noted that a spill could potentially impact Guyanese fisherfolk if commercial fish and shrimp resources were impacted. Kaieteur News understands that the magnitude of this impact would depend on the volume and duration of the release as well as the time of year at which the release were to occur (e.g., whether a spill would coincide with the time of year when these species are more abundant in the Project Development Area).