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Exxon’s oil operations in Guyana facing increasing risks as more hurricanes, other natural disasters predicted for Caribbean region

May 14, 2023 News

– Exxon shareholders want detailed assessment of looming impacts to their pockets

Kaieteur News – Exxon shareholders are expressing concerns about the potential risks of increased hurricane activity leading to an oil spill in offshore Guyana. Mercy Investment Services, an Exxon shareholder, made a proposal, recorded with the Securities and Exchange Commission, emphasizing the need for Exxon to address these risks. They highlight the company’s Liza Phase One project, which is currently operating beyond its design capacity and safety thresholds.

Mercy proposes that Exxon conduct a worst-case scenario assessment, considering the possibility of an extended uncontrolled release similar to previous oil spills, like the devastating BP Macondo spill. They argue that Exxon’s existing spill scenarios only account for releases lasting 30 days, while the shareholder believes a more comprehensive assessment is necessary.

The proposal also emphasizes the need for Exxon to incorporate the projected increase in severe weather events caused by climate change into their spill assessments. As climate change intensifies, scientists predict a doubling of intense hurricanes and typhoons worldwide by 2050. With Exxon’s operations in Guyana extending until at least 2053, Mercy asserts that the company’s disclosures should account for the expected rise in natural disasters in the Caribbean region.

Shareholders are also concerned about how the potential impact of severe weather conditions can complicate spill response and cleanup efforts. Hazardous weather conditions can lead to delays in these operations, as seen during the response to the BP Macondo disaster when Tropical Storm Bonnie approached. Mercy argues that delayed response times can prolong the duration of spills and increase the range of oil dispersion.

Additionally, shareholders raised reservations about Exxon’s use of outdated ocean current data in their spill scenario mapping. They pointed out that increased hurricane frequency can result in faster ocean currents, leading to a larger area affected by oil spills and faster spreading of surface and subsurface oil. The ecological damage to coastlines and marine life is a significant concern.

The proximity of Exxon’s multiple development projects in the Stabroek Block raises the possibility of multiple well failures during extreme weather events. Mercy cautions that such a scenario could result in a much larger volume of oil being released into the Caribbean than what Exxon’s limited single well release scenario accounts for. The financial risks and challenges associated with responding to and containing multiple well releases would be significantly higher.

In light of these concerns, shareholders urge Exxon to address the risks associated with increased hurricane activity and incorporate them into their spill assessments and risk mitigation strategies. Failure to do so could have severe consequences for Exxon’s reputation and financial stability.

Meanwhile, the Environmental Protection Agency (EPA) is challenging a ruling by the High Court that calls for the provision of an unlimited parent and/or affiliate guarantee for Guyana.

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