Former EPA Head calls for independent investigation of Exxon’s operations

Mar 04, 2022 News

…says company in breach of Liza Two Permit on full liability coverage
…EPA has the authority to impose penalties

By Davina Bagot

“Throughout my 30 years with the US Department of Energy, my job was to manage many high risk operations and I experienced firsthand the consequences of permit violations including fatalities, so I know a high risk operation when I see one and the offshore oil operations (in Guyana) is one for certain. And you don’t have to search far to see what happened when procedures were not followed as in the case of Piper Alpha where 167 people died and in the BP spill where 8 died with horrendous environmental consequences.”

Kaieteur News – Former Head of the Environmental Protection Agency (EPA), Dr. Vincent Adams is calling for an independent investigation into the operations of US oil giant, ExxonMobil, accusing the company of violating the Liza Two Permit regarding full coverage liability.

Former EPA Head, Dr. Vincent Adams

ExxonMobil in its permit granted by the EPA, for its initial project Liza Phase One was not required to provide Guyana any insurance in the event of an oil spill. Recognising this dangerous flaw in the document, the former EPA Head said upon his appointment, he started the discussions to ensure the country is covered from such a dreaded event. To this end, Exxon’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL) permit for its second project, Liza Phase Two, where production recently started, was required to be covered by insurance and additional liability coverage from not only the operator but also the parent company and affiliates.

Head of the EPA, Mr. Kemraj Parsram

Although this is required by Section 12 of the Liza Two Permit, Exxon has blatantly denied that the oil company ever agreed to any insurance coverage. Instead, the company said in a recent statement that it is now working with the EPA and its co-venturers to put in place a combined $US2 billion of affiliate company guarantees.
This however, is in violation of the permit issued to EEPGL for the Liza Phase Two project. Section 12.1 of the Liza Two Permit seen by this publication says, “The Permit Holder shall have insurance…” Section 12.5 of the document goes on to say, “The Permit Holder (EEPGL) must, as soon as reasonably practicable, provide from the parent company (ExxonMobil) and its co-venturers (affiliates) one or more legally binding agreements to the EPA, undertaking to provide adequate financial resources for Permit Holder and its co-venturers to pay or satisfy their respective environmental obligations regarding the Stabroek Block, if EEPGL or its co-venturers fail to do so…”
Dr. Adams while appearing virtually on the Glenn Lall Show on Wednesday evening, therefore concluded that ExxonMobil has breached the laws of Guyana, by denying the country full liability coverage, as mandated in the Liza Two Permit, and all other subsequent permits issued by the EPA.
He reasoned: “of course they have made it public that they don’t have the documentation. Well the Permit says you got to get the documentation. So where is the documentation? You say you don’t have it, so you can’t show it now that you say you don’t have it, which means that they violated the Laws of Guyana by going out, based on their own word, by going out and starting up Liza Two without producing these documents.”
With thousands of virtual listeners and viewers of the programme streamed on the various social media platforms, Dr. Adams said that the oil giant has “screwed up” big time by telling the nation that it does not have any insurance for Guyana and that there was no agreement binding the parent companies.
As a consequence, he urged that the current EPA administration, headed by Mr. Kemraj Parsram, conduct an independent investigation into the operations of ExxonMobil. “It is obvious that they cannot be trusted. And who knows what else is going on in their operations to the detriment of the nation?” he said while substantiating his call.
Dr. Adams told Kaieteur News that the EPA as the regulator body has the authority to impose penalties up to and including suspension, resulting from violations by the Permit Holder, EEPGL, to the Permit. Section 12.4 of the Liza Permit states, “The EPA shall reserve the right to request and review the environmental liability insurance policy…”
To this end, Dr. Adams explained, “Throughout my 30 years with the US Department of Energy, my job was to manage many high risk operations and I experienced firsthand the consequences of permit violations including fatalities, so I know a high risk operation when I see one and the offshore oil operations (in Guyana) is one for certain. And you don’t have to search far to see what happened when procedures were not followed as in the case of Piper Alpha where 167 people died and in the BP spill where 8 died with horrendous environmental consequences”.
In a recent letter to this newspaper, Dr. Adams urged ExxonMobil to show the country precisely how much insurance the nation has from the permit holder, and the agreement from the parent companies, in accordance with the Permit, to cover costs associated with the dreaded eventuality of an oil spill.
His comments came after the President of ExxonMobil Guyana, Alistair Routledge responded to commentaries which he says “inaccurately suggest that ExxonMobil Guyana will not be able to effectively manage response activities”.
While Routledge boasted about his company’s assets he included that the oil company is working with the EPA and its co-venturers to put in place a combined $US2 billion of affiliate company guarantees, in addition to the almost US$5 billion in assets owned by the operator and its subsidiary, EEPGL.
The company was keen to note that it never agreed to an insurance value of US$2.5 billion with the previous EPA administration, headed by Dr. Adams. The need for Guyana to secure full coverage insurance for a possible oil spill has been highlighted in scenarios around the world. Only recently, an oil spill occurred in Peru, a South American country. The oil spill occurred on January 15, 2022 at one of the La Pampilla refineries off the coast of Ventanilla in the region of Lima, Peru.
It was reported that the spill was caused by shock waves from an undersea volcanic eruption near Tonga in the South Pacific Ocean. Almost one month after the spill, the country is still grappling with the cleaning up of the aftermath of more than 12, 000 barrels of crude that contaminated its shores. The clean-up and remediation of the spilled crude that contaminated the shores and waters of Peru will cost US$65 million, according to the Spanish oil giant, Repsol’s, Chief Executive Officer (CEO), Josu Jon Imaz.