No study would justify US$2B gas-to-energy project – Patterson

Sep 28, 2022 News

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By Davina Bagot

Kaieteur News – “The Government has done no new study because if they had done that they would have released it already…the reason Government has not done any feasibility study is because obviously I don’t think there will be any study that could justify what they are doing.”

This is the position of Shadow Oil and Gas Minister, David Patterson who in an interview with Kaieteur News on Monday pointed to some of the critical issues that are yet to be addressed for the US$2 billion gas-to-energy (GTE) project being developed by government and its partner, US oil major, ExxonMobil.

Back in 2018, the Inter-American Development Bank (IDB) had partnered with the State to conduct a feasibility study of the planned natural gas pipeline. The primary objective of the study, which was executed by Energy Narrative for US$70,000—an international entity that provides strategic market analyses and advice was to determine the overall feasibility of transporting natural gas from offshore Guyana, building a Natural Gas Liquids (NGL) separation plant and a Liquefied Petroleum Gas (LPG) production plant to market the liquids from the natural gas stream, as well as building a new electricity generation station to use the remaining dry natural gas.

Notably, a table was used in that report that was sourced from ExxonMobil in which the oil company said the pipeline would cost US$478 million. Four years later, Exxon estimates that the structure could cost Guyana US$1.3 billion.

On the other hand, Vice President Bharrat Jagdeo explained that the Government is currently doing estimates for the Natural Gas Liquids (NGL) Plant and the power plant to generate some 300 megawatts of electricity for the country. These two facilities, he said, can cost Guyana an additional US$700 million.

Given this hefty increase in the project cost, stakeholders have been calling for an updated feasibility study to prove the project’s viability. However, the former Minister of Public Infrastructure explained that when the People’s Progressive Party (PPP) Government took office in August 2020, it began streamlining the project for Wales, West Bank Demerara in the absence of any new study. According to him, “they released five of the studies which I myself commissioned as Minister of Public Infrastructure when the energy sector was under my remit and all we did was pre-feasibility studies to see if it’s possible.”

In the absence of new studies for the massive undertaking, Patterson believes the project would merely serve as a “ponzi scheme”. He argued that the Government is yet to explain how the electricity from the power plant would be transmitted to Region Four –  the energy capital. He pointed out, “The last time that they did a submarine cable you know what happened but there’s no comment there’s nothing at all on that so it’s just a ponzi scheme as I always say to enrich people because there are so many other components of it yet to be discussed.”

On the other hand, he reasoned that plans were also announced for the production of Liquified Petroleum Gases (LPG) or cooking gas but there is no information available that suggests how this gas would be transported or stored. Given the flammable nature of these products, Patterson is adamant that the necessary preparations must be made with detailed studies guiding the process.

In addition, the Shadow Oil Minister said, “How are they going to store the gas because you know the pipeline has to be down at least two or three days every year just for routine maintenance so how are they going to store the gas onshore to keep these plants running? All of these things come out in a study but they haven’t even done that or said they are going to think about it or whatever it is but they are going ahead.”

Moreover, Patterson noted that Esso Exploration and Production Guyana Limited (EEPGL) or ExxonMobil Guyana has been very skillful in only opting to take responsibility for the pipeline. “They have skillfully withdrawn themselves from what happens after the gas gets onto shore because I think they recognise the risk for them as a global company. So all they will be doing is saying to the Government of Guyana here is the gas in this pipeline, we will build it and take back the money but when the gas comes to shore there are so many other risks involved but Exxon should know that they will still be liable,” he said.

In pointing to some of the dangers associated with the natural gas brought to shore, the former Minister stated that if there is an explosion at the Wales site, a thorough study would identify the areas that can potentially be affected, as well as highlight measures that must be taken to evacuate citizens if necessary.

Additionally, Patterson explained that there is no plan of how equipment would be mobilised to respond to a gas related disaster. “We need to think about the mobilisation of equipment because the bulk of our firefighting equipment are over at Region Four so therefore if you are going to call up additional emergency personnel where are you going to get them from because there is a weight restriction on the Demerara bridge so they can’t come over filled with water so they would need to go over and get water before they arrive at the emergency site,” he noted.

The Shadow Oil Minister in pointing to yet another factor that underlines the need for more studies into the project told Kaieteur News that there is no information that explains the environmental damage that can be caused by an explosion at the Wales site. He contended, “These are all the things that should be studied in a holistic way. We need to know what can happen, how you would prevent it and how you can treat it and all of this is supposed to be done before you are given a permit. If there is an explosion, what is the radius that would be affected? These are the things we want to know. Are the residents of Wales outside of the explosion blast? If not, what precautions do we have to take? What insurances do we have to have in place to cover these people?”

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