US$50 fine per ton of pollutant an insult to Guyanese

Jun 03, 2022 News

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– Former EPA boss says it’s cheaper for Exxon to flare gas than to re-inject

By Zena Henry

Kaieteur News – Despite Guyana increasing its charge for unauthorised flaring onboard the Liza 1 Floating Production Storage and Offloading (FPSO) unit to US$50 in the recently renewed environmental permit, it seems that the paltry penalty is serving as an incentive more than a deterrent to oil giant, ExxonMobil.

What should have been a positive move for the country to prevent unwanted flaring by Esso Exploration and Production Guyana Ltd (EEPGL), is earning the oil company more money as it is cheaper for them to flare than to re-inject the gas into the offshore field.
During the Kaieteur Radio Glen Lall Show Wednesday last, former head of the Environmental Protection Agency (EPA), Dr. Vincent Adams informed that Guyana is losing heavily on the financial and environmental sides, while EEPGL, ExxonMobil’s subsidiary, secures massive income from continued flaring. Dr. Adams revealed that while Guyana would be receiving a meagre US$12,000 from its US$50 flare charge, EEPGL would be making about US$500,000 per year from the sale of oil produced through illegal flaring.
Adams simplified that based on the information available, some four million cubic feet of gas is being flared per day onboard the Liza Destiny FPSO. For every barrel of oil that is brought to the surface, he said it brings up 1000 cubic feet of gas. So if the idea is to cut out the four million cubic feet of gas that is flared for that day, then all that is needed is to cut production by 4000 barrel per day. This he said would require the company to bring its production down from 120,000 barrels per day to 116,000B/D. As such, zero flaring could be achieved. But this is not an avenue the oil company would want to take since it would decrease the income as a result of the cut back, the former EPA head opined.
ExxonMobil does not expect to completely address the issues it faces with its flaring equipment until mid-year 2022. Since last year, the company has been facing issues with its equipment. In January last, EEPGL’s Communications Manager, Janelle Persaud had disclosed that the installation of the new gas compressor for the Liza Destiny FPSO could not be implemented that month as the company sought the installation of upgraded equipment “by mid-year (2022).” She had stated that the third-stage flash gas compressor (FGC) currently on the Liza Destiny FPSO continued to operate steadily in the interim. She had noted then that flare levels were being maintained below 15 million standard cubic feet of gas per day when the Flash Gas Compression system is offline and below 7 million standard cubic feet of gas when the FGC is online.
Adams noted however that flaring could be stopped completely if the company only decided to reduce the amounts of barrels of oil that contribute to the gas to be flared. But again, Adams explained, this would not be in the interest of the company since Exxon would be paying Guyana US$12,000 for the four million cubic feet of gas it flared for the 4000 barrels of oil produced, but at the current market value, profiting some half a million dollars for the sale of the said 4000 barrels of oil. In other words, “They (ExxonMobil) are paying US$12,000 to get half a million dollars”.
In the initial Liza 1 permit, Guyana had no provisions for massive flaring. The Liza 2 Environmental permit then introduced a US$45 charge per tonne of carbon dioxide emitted onboard the Liza Unity FPSO. The recently approved Liza 1 permit includes the flare charge and upped the existing cost by a mere US$5 or G$1000. The former environmental agency head described this act as, “an insult to the Guyanese intelligence,” especially since he claimed that measures he implemented to create a highly skilled team to provide 24/7 monitoring against flaring onboard the FPSO was removed by the current administration. He said too that since the idea was to stop flaring all together as per the rules in the Liza 2 permit, his position during his time at the EPA was that the gas should be injected back into the reservoir.
Additionally, Adams noted, the four million cubic feet of gas being flared is being described as only two or three percent, “and they keep talking about the two percent because it is a small number. Two percent sounds small. But its four million cubic feet a day; that is the lowest they have gotten,” Adams reported. And this is onboard Liza one alone since the information for Liza 2 is not yet available.
In relation to monitoring, Adams recalled accessing sponsorship from the World Bank to the tune of a million dollars for the verification of flaring amounts. He said the Bank brought in an expert with whom he sat along with a more than 30-man team of highly specialized petroleum and environmental persons, “to be on those ships 24/7”. This move, he said, was critical to ensure the monitoring of the unhealthy practice. That is how it is done in the petroleum industry in the US, and Adams said that is how he wanted it done here in Guyana, to have that same type of monitoring. It is important to be on the ship, Adams continued because the oil companies will say one thing but do another to protect their interest.
But Adams said as soon as he left, the government abandoned the monitoring initiative, “even though the World Bank spent a million dollars to help put together that team, they abandoned that program and said they don’t need that program.” He said that the World Bank and the EPA both have documentation on the 36-man team, their qualifications, experiences, among other information. The team would have entailed high-powered petroleum and environmental engineers, some of whom would have come from aboard. All of this was budgeted for at the time, Adams said.

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