Latest update November 15th, 2024 1:00 AM
Exxon ‘shaky’ on supply of gas from Liza Field
Kaieteur News – As the discussion continues on the need for a feasibility study, to utilise the gas in the Liza Fields for the purpose of electricity generation to power the national grid, operator of the Stabroek Block, Esso Exploration and Production Guyana Limited (EEPGL)- ExxonMobil Guyana- has signaled that the supply of the natural resource is just on the border of impacting the recovery of oil.
ExxonMobil Guyana President, Alistair Routledge
For those unfamiliar with the process, during the recovery of oil from a well, gas and water is also pumped from the reservoir. Both the produced water and associated gas can be re-injected into the well to maintain a stable pressure in the safe recovery of the liquids. There has been an ongoing discussion of the need for a feasibility study to examine the pros and cons of transporting the gas to shore for the uses outlined above, since the 2016 Production Sharing Agreement (PSA) makes if clear this is required for utilization of the excess gas. ExxonMobil Guyana had pointed out that there is no excess gas, hence no need for this study to be conducted. https://www.kaieteurnewsonline.com/2023/05/18/no-feasibility-study-for-use-of-excess-gas-in-liza-required-exxon/
This statement however sparked worry that there is not enough gas to fuel the Government of Guyana’s (GoG’s) Gas-to-Energy (GTE) project that is currently pegged at US$2.1 billion. President of ExxonMobil Guyana, Alistair Routledge was on Friday, during a press conference, asked to explain why the GTE venture is being pursued if there is truly no excess gas in the Liza Field. In response, Routledge elucidated that the company examined the gas available and has been using all the resources as fuel or for re-injection.
Meanwhile, as it relates to the 50 million cubic feet of gas per day (mcfd) required by government to power the 300-megawatt gas plant, he said, “we are within the sort of error of margin on will there be an impact or not on the liquids recovery.” Routledge noted that the oil company believes “there may be certain things we can do to mitigate that over time which is why we truly don’t believe there is excess gas.”
Still on the supply of the 50 mcfd, Routledge said, “We think it is right in the modeling, it is right on the edge of the level of accuracy that we have, we are only three years into the life of operating a huge field and we are trying to make a forecast over 20 to 30 years of how the reservoirs will perform. So our agreement with government is that it is close enough that on a risk basis, we can make available the 50mcfd and over time, we will assess and work out what are the mitigation, what are other sources of gas that we can find that will ensure we don’t affect in any substantial way the recovery of liquids from the field.”
During an Alliance For Change (AFC) press conference last month, executive member of the political group and former head of the Environmental Protection Agency, Dr. Vincent Adams accused Exxon of breaching the ‘sanctity of contract’ for failing to conduct the feasibility study for use of the excess gas in the field, as required under the PSA.
Article 12.1 (b) of the Exxon contract states, “…If there is any excess Associated Gas in the Oil Field after utilisation pursuant to Article 12.1(a) the Contractor shall carry out a feasibility study regarding the utilisation of such excess Associated Gas of such Oil Field.”
In flagging the issue, Dr. Adams argued, “No feasibility study has been done at that location (Wales, West Bank Demerara). As a matter of fact, it (Exxon) violated this sanctity that this administration keeps talking about. They violated the sanctity of the contract…it says before any gas project is implemented, there has to be a feasibility study and there was no feasibility study.”
He continued that Vice President Bharrat Jagdeo has merely given assurances that the project is a “no-brainer”. Dr. Adams, a Petroleum Engineer however noted, “Every project starts with planning and it ends with planning,” adding that this detailed plan would craft the necessary steps regarding possible changes in the economics of the country, taking its development and other factors into consideration.
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