Guyana could save US$1B by ditching Exxon’s pipeline – Engineer

Oct 12, 2022 News

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…suggests movement of gas through containerized shipping

…says excess gas can be directly shipped to available markets to reduce onshore hazards

By Davina Bagot

Kaieteur News – US-oil major ExxonMobil is eagerly pursuing a US$1.3 billion natural gas pipeline, with the support from the People’s Progressive Party/Civic (PPP/C) Government in the absence of any updated feasibility studies, even though the Gas-to-Energy (GTE) project’s total investment has jumped from US$478 million to around US$2 billion.

A Guyanese Engineer, Fitzroy Fletcher, with over 50 years of expertise has so far challenged each aspect of the project, insisting that its viability is simply no longer relevant owing to the mammoth increase in cost.

This project entails 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.

 

Fletcher in an interview with Kaieteur News last week highlighted that he is not against the project, but believes Guyana should take advantage of its resources. At the same time, the Engineer pointed out that it is critical for the correct investment decisions be made, backed by detailed and proven data rather than just “wishful thinking”.

He explained, “The pipeline costs have escalated too much and have made the project no longer feasible. Clearly we should go back to the drawing board and rethink the whole project. It is certainly not beyond our ingenuity to find a solution, with the help of carefully selected international experts.”

The Engineer noted that while the natural gas pipeline may no longer be feasible, the Government has options it can consider. For one, he explained that Guyana can use models from other countries that transport natural gas to shore and even to third parties, using containerized shipping (ISO Containers).

This method, he noted, is currently being employed in the Gulf of Mexico by a private sector company. “This private sector company, as it turns out, is transporting gas from Louisiana, USA to an Independent Power Producer in Honduras, Central America, with expected generating capacity of 150 Megawatt in 2022. This compressed natural gas is being shipped by containerized shipping, over a distance exceeding 2,600 km,” Fletcher detailed.

As such, the Engineer concluded that taking the current distance into consideration – from the Floating Production Storage and Offloading (FPSO) vessels to the shore – this strategy could be a more economical option for the country. “This virtual pipeline method of transporting gas has the distinct advantage of cost. It is estimated that the capital cost for this method of transporting gas to shore would be less than US$300 million; one quarter of the recent pipeline estimates,” he contended.

In addition to the revenues that can be saved by employing this strategy, Fletcher also pointed out that the environmental harm the country could cut back on as the pipeline would have to pass through communities, putting lives at risk in the event of a disaster.

While he recognised that shipping the gas via containers could encompass its own hazards, the engineer believes it will be of lesser impact.

In a previous article, it was reported that the engineer believes in upgrading the existing power plants across the country, rather than building a new 300-megawatt power plant at Wales.

Should this option be considered by the administration, the Engineer added that there would be even more benefits to his ‘virtual pipeline’ suggestion. For instance, he pointed out that the gas could be shipped directly to existing GPL generating locations, as the gas can be treated on or alongside the offshore FPSOs.

This option could also ensure that all of Guyana gets electricity from the natural gas, rather than only specific Regions. “Another huge benefit of the ‘virtual pipeline’ is the ability to economically sell large quantities of gas to nearby countries, which have made clear their critical need for additional gas,” the Engineer explained.

The GTE project

The GTE project will involve capturing associated gas produced from crude oil production operations on the Liza Phase 1 (Destiny) and Liza Phase 2 (Unity) Floating, Production, Storage, and Offloading (FPSO) vessels, transporting approximately 50 million standard cubic feet per day.

The project has a planned life cycle of at least 25 years.

In ExxonMobil’s environmental studies for the project, it was clearly stated that the venture can result in chronic hardships for farmers. This newspaper had reported that hardships for farmers within close proximity to the plant and pipeline can be affected, as impacts to their agricultural products could extend beyond the construction phase to the operations stage of the facility.

The EIA explains that the project’s use of land when construction starts and during the operation stage will reduce access to land for agriculture and other purposes. It added that the loss of access to personal properties can result in temporary and/or permanent economic displacement for people who may depend on these lands for their livelihoods, employment, and/or income-generating activities.

The document pointed out that this impact will be relevant to rice fields, north and south of Crane, West Minister/Lust-en-Rust rice fields and pineapple and mixed crops in the northern part of Canal Number Two and the south and northern half of Canal Number One.

Beyond the construction phase, farmers can brace for additional impacts as their overall quality of produce can be reduced. The document says that, “the Project could also result in a change in the quality of agricultural crops harvested from the Primary Study Area. This could result as an indirect effect of dust deposition during the construction stage, which could conceivably extend beyond the project footprint to affect adjacent areas.”
The EIA said that construction activities could generate dust through vegetation clearing, earthworks, and movement of equipment and vehicles on unpaved surfaces. Dust emissions from construction areas could be deposited on nearby crops, and could adversely affect crop growth or productivity.

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