Exxon makes US$35 on every dollar it pays Guyana for flaring

Exxon makes US$35 on every dollar it pays Guyana for flaring – Former EPA head

Aug 07, 2022 News

By Davina Bagot

Kaieteur News – Citing the irreparable damage being caused by natural gas flaring, former Head of the Environmental Protection Agency (EPA), Dr. Vincent Adams, has calculated that the US oil giant, ExxonMobil, has been pocketing US$35 on every dollar it pays to the regulator as a fine for the harmful activity.

Former EPA boss, Dr. Vincent Adams

He shared this revelation in a missive to this newspaper in which he explained that the company’s subsidiary and operator of the Stabroek Block, Esso Exploration and Production Guyana Limited (EEPGL), had rampantly flared associated gas at the Liza One field for close to three years rather than cut back on the number of barrels being produced. It must be noted that every barrel of oil pumped also contains a fraction of gas.

Gas flaring at the Liza One operation

To this end, he argued that the “greed” of the oil company, coupled with the “incompetence” of the EPA led to a flaring fine being introduced. Dr. Adams reasoned, “It is repulsive that their only gas talk is to insultingly boast about the scam of a pittance they throw at us as a flaring fee which turns out to be a measly three percent of the money they reap from the flaring. Simple petroleum engineering calculations say that flaring at Liza 1 could have been stopped with cutting production by a mere 7-15 percent, or about 7,000-15,000 barrels of oil per day (bopd), based upon the reported 7–15 million cubic feet of gas per day (mscfd) being flared.”

However, the step taken by the two parties have left Guyana’s environment, health and safety at risk, for a few extra dollars.

Dr. Adams, a retired Environmental Engineer and former Manager at the United States Department of Energy explained, “at the current oil price of say US$100 per barrel, such a production cut would cause lost revenues of $700,000 to $1.5 million per day, approximately 35 times the meagre fine of about $21,000 to $45,000 per day.”

Offering an alternative explanation, he noted, “You are making $35 for every dollar spent in fees when you flare. If you disagree, we challenge you to reveal your hidden data that show otherwise.”

The former EPA boss noted that the oil company is benefitting from a “super incentive” rather than a deterrence to flare as claimed by the government, which he said has effectively turned basic environmental principles on its head.

Flaring of gas at the Liza One operation commenced soon after the startup of oil production in 2019, due to a faulty compressor that was only rectified last month.

The Production Manager of ExxonMobil Guyana, Mike Ryan engaged members of the media, explaining that the woes have finally ended and that a total of US$10 million in fines had been paid over to the EPA for the flaring of gas. However, Ryan neatly concealed data on the total amount of gas that had been flared during the period.

Exxon responds

Last Friday, ExxonMobil Guyana’s Media and Communications Manager, Janelle Persaud in a letter informed that, “To date, we have made payments on 279,537.33 tonnes of CO2e (Carbon Dioxide equivalent) flared.”

The company’s response came in after environmentalists and transparency advocates called out the hiding of information as a breach to transparency best practices.

Exxon reported that after the recent installation of a new gas compressor on the Liza Destiny Floating Production Storage and Offloading (FPSO) vessel, operations on Destiny and Unity are currently achieving background flare of less than one million standard cubic feet per day during normal operations consistent with their design basis.

The oil company said it remains proud of its “strong safety record” and that it has been reporting all its emissions and releases to the EPA. According to ExxonMobil, “The company has always been open and transparent about the volume of gas being flared and has routinely provided this and other operational information to the government, media, and other stakeholder groups.”

Contrary to these claims, one Energy Technologist, Mr. Alfred Bhulai said that his requests for flaring data from both the oil company and Exxon have been ignored.

Flaring, as the word suggests, is the process of burning associated gas that is brought up during oil production. Notably, this process emits harmful gases into the atmosphere that can, not only affect seabirds and marine creatures, but also climate change. In addition, it must be noted that there are alternative options available to the oil company to avoid flaring, such as gas re-injection. However, Exxon has publicly made it clear that it is cheaper for the company to flare the associated gas, rather than re-inject it into the wells.

Various studies conducted have outlined that gas flaring is a major source of greenhouse gases (GHGs) that accelerates global warming. Flaring releases two major GHGs – Carbon Dioxide and Methane.

Furthermore, there have been over 250 identified toxins released from flaring including carcinogens such as benzopyrene, benzene, carbon disulphide (CS2), carbonyl sulphide (COS) and toluene; metals such as mercury, arsenic and chromium; sour gas with Hydrogen Sulfide (H2S) and Sulfur Dioxide (SO2); Nitrogen oxides (NOx); Carbon dioxide (CO2); and methane (CH4) which contributes to the greenhouse gases.