ExxonMobil gets green light for fourth project

Apr 02, 2022 News

Kaieteur News – The Environmental Protection Agency (EPA) announced yesterday that it approved the Environmental Authorization for the US$10B Yellowtail Development Project. The Environmental Permit was granted for a period of five years to ExxonMobil subsidiary and operator of the Stabroek Block, Esso Exploration and Production Guyana Limited (EEPGL) to undertake the requisite construction and operation of production facilities.

Map showing the location of the Yellowtail Project

The approval comes after the EPA considered public inputs during all statutory periods for public consultations and review. The EPA was keen to note that it took into consideration, the technical review and recommendations from a team of Independent International Experts, and the Environmental Assessment Board (EAB).
The permit contains several key provisions which speak to flaring, oil spill response and financial assurance and monitoring. It also includes a new provision on receipt of grievances.
On the matter of flaring, the Permit strictly prohibits routine flaring and venting, and specifies that it is only permissible during commissioning, start-up and special circumstances. The Permit also goes further to maintain payments in instances where flaring is conducted beyond permitted durations. Kaieteur News previously reported that EEPGL would have to pay US$45 per tonne of carbon dioxide equivalent, which it is permitted to flare.
Among its other notable conditions, the permit requires EEPGL to procure a Capping Stack to be maintained, tested, and stored in Guyana. A capping stack is a large well closure device that connects to the top of the blowout preventer (BOP) and is capable of sealing off a well. It is a form of modern technology (available post the Gulf of Mexico, Macando incident) to cap a well in event of a loss of well control, and failure of the blowout preventer (BOP). Additionally, EEPGL must maintain access to at least one (1) overseas subscription service, to allow mobilization of a Capping Stack to the project location. This serves to fortify safety and emergency response efforts since wells would be swiftly capped in the event of a well blow-out.
Importantly, the Permit also ensures that EEPGL is held liable for all costs associated with clean up, restoration and compensation for any pollution damage, which may occur as a consequence of the project. EEPGL is also required to have financial assurance which includes a combination of Insurance which must “cover well control, and/or clean up and third-party liability on terms that are market standard for the type of coverage.”
It also requires a Parent Company/Affiliate Guarantee Agreement which indemnifies and keeps indemnified the EPA and the Government of Guyana in the event EEPGL and its Co-Venturers fail to meet their environmental obligations under the Permit. Further, the Permit states that the financial assurance provided “must be guided by an estimate of the sum of the reasonably credible costs, expenses, and liabilities that may arise from any breaches of this permit. “Liabilities are considered to include costs associated with responding to an incident, clean-up and remediation and monitoring.
In seeking to ensure EEPGL meets its obligations to prevent and mitigate environmental harm, the Permit imposes comprehensive requirements for monitoring and management of any impacts affecting biological, physical, and socio-economic resources within the Area of Influence of the project, including targeted and updated environmental baseline studies. The permit also requires EEPGL to submit safety case information, including a risk assessment prior to drilling and development of wells.
Further, EEPGL is also enjoined to establish and maintain a Grievance Mechanism in keeping with the World Bank’s Approach to Grievance Redress in projects, to ensure that complaints from individuals and communities who may be affected by the project are received and addressed. There is a requirement for reporting same and what actions were taken to address the grievances to the EPA.
The full text of the Yellowtail Permit is available for download on the EPA’s website at www.epaguyana.org.

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