Int’l lawyer rubbishes gas-to-shore project

Jul 04, 2022 News

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— says initiative may be illegal, recommends investment in renewable energy options

By Davina Bagot

Kaieteur News – In 2015, the Government of Guyana revised its Nationally Determined Contribution (NDC) to the United Nations Framework Convention on Climate Change (UNFCCC), saying it will aggressively pursue renewable energy to power the national grid. However, seven years down the line, the country under a new government is pressing ahead with the use of natural gas in a bid to reduce its greenhouse house gas emissions.

However using gas instead of heavy fuel oil to generate electricity makes absolutely no sense according to Guyanese Environmental Lawyer, Melinda Janki.
Janki gave this view during a recent Moray House discussion on a review of oil, gas and the environment. While appearing as a panelist, alongside former head of the Environmental Protection Agency Dr. Vincent Adams, Janki explained that the government’s Gas to Energy project may be illegal.

She explained, “First of all I think it’s probably illegal because its contrary to the obligations that Guyana put into the Nationally Determined Contributions 2015 where Guyana actually said we will reduce our carbon emissions. If we start to use gas, you don’t reduce your carbon emissions (or) your greenhouse gas emissions. Secondly, the cost of the pipeline is estimated at about I think it is US$900 million. We all know it’s going to be more than that (so) why would you do that?”

Further, the Lawyer reasoned that there is no study that shows the project would be economically viable. “There’s been a lot of demand to find out how does this work. The Government has not produced a business case for doing this pipeline…the World Bank carried out a study not so long ago and they came to the conclusion that there is little or no domestic market for gas in Guyana. So as far as we can tell there is no economic argument for doing this.”

As a consequence, Janki suggested that the government use the funds that would be used to develop the Gas to Energy project and instead convert the country to 100 percent renewable energy as it undertook to do in 2015.

The government in the 2015 Nationally Determined Contributions said “Guyana is committed to eliminating our near complete dependence on fossil fuels. Given our solar, wind and hydropower potential and relatively small national demand, we believe that with adequate and timely financial support, Guyana can develop a 100 percent renewable power supply by 2025.”

The Environmental Lawyer shared that moving in this direction would be a safer option for the country, especially since it has proven potential for sustainable renewable energy. In fact, she made reference to a recent explosion at a Texas Gas Plant to highlight the dangers that Guyana can be exposed to with the multibillion US dollar venture being pursued with ExxonMobil.

Janki concluded, “Moving from heavy fuel oil to gas makes absolutely no sense. Guyana has undertaken to move from heavy fuel oil to renewable energy and there is no reason whatsoever to go and use gas. There is no business case for that gas, there is no environmental argument for that gas.”

According to her, “Those arguments have to be made by the government of Guyana. They have to produce the information, they have to produce the studies and they have to be done by independent experts so the people of this country can decide for themselves whether they want to have fossil fuels or whether they want to go to renewable energy and that has not been done.”
In touting the feasibility of the Gas to Energy Project, Vice President Bharrat Jagdeo has assured that the venture will slash electricity bills by 50 percent.

The Gas-to-Energy project will encompass three major aspects, that is, the pipeline to transport the gas to Wales; the Natural Gas Liquids (NGL) facility that will treat and separate the gas and the power plant to generate the electricity. So far, Guyanese have been told that the pipeline aspect, which is being pursued by US oil major ExxonMobil, will cost around US$1.3 billion. Even this is expected to increase when Exxon closes critical contracts for same.

It must be noted however, that the Guyanese public will be saddled with the debt for the Gas-to-Energy project over a 20 year period, to repay the investments made. The repayment will be done via their monthly electricity bills based on the overall cost for the venture. But since this cost has not yet been finalized, the cost of electricity too is still in limbo.

The VP shared, “We are doing estimates. We are saying US$1 billion dollars now for the pipeline. That is where we run the numbers. So assuming it comes in at US$900 million, then if it comes in that will come down; the US$1.6 cents will come down to about US$ 1.4 cents so it comes down lower. If it goes to US$1.1 billion, it may go to US$1.7 cents…that’s just the pipeline part…then if you estimate the power plant and the NGL facility to be about US$700million… that will add another one point something cents per kilowatt hour.”

VP Jagdeo said that if one were to consider estimates for paying for the pipeline, NGL and power plant, it can come down as low as four cents to about five cents per kilowatt hour. He said this would be paid back over 20 years.

He was keen to note that while the five US cents per kilowatt hour may be the cost to generate the electricity, another five cents may be lost in the transmission and distribution of the power, which could take the final price for the sale of the electricity to about US$15 cents, after adding five US cents as profits for the company.

The VP boasted that even though these numbers have not been confirmed as yet, government will still be left with the other liquids from the NGL facility such as cooking gas, which will rake in additional revenue.

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