Four leading experts urge Guyana to scrutinise oil companies’ development plans

Jul 25, 2023 ExxonMobil, News, Oil & Gas

---

– call for robust check-list to avoid costly consequences

Kaieteur News – As the search for more sweet oil continues, Guyana and other relatively new oil producers are unwittingly running into more gas. The question becomes—what should be done about it? Should it be burnt, transformed into value-added products, or re-injected to the seabed? Each country’s response has been different, depending on the quantity of gas unlocked.

In Guyana and Suriname, these two CARICOM states have landed upon significant gas resources in their continued search for crude. Both have a zero flaring/burning policy since this releases toxic chemicals into the atmosphere. Both have found so much gas that it is too much to re-inject once certain projects get up and running. Their only choice is to make constructive use of it. But that choice in itself is easier said than done.

Experts who have studied this subject for decades have found that the business of gas is quite complex and governments can make costly mistakes. To ensure some of the well-known pitfalls are avoided, authorities on the matter have produced a policy paper to help Guyana and other nations make smart decisions.

The report titled, ‘Left behind: emerging oil and gas producers in a warming world’ was authored by Dr. Valérie Marcel of Chatham House, Deborah Gordonc attached to the Watson Institute for International & Public Affairs at Brown University, Naadira Ogeer at the Commonwealth Secretariat, and Ekpen Omonbude at the International Institute for Sustainable Development in Canada.

Their report posits that both Guyana and Suriname have unlocked volumes of associated gas that are greater than reservoir reinjection needs, and they must therefore make plans to consume or export the gas or slow/halt oil production. The report said using this gas for power generation purposes could be a useful option as it could displace Heavy Fuel Oil (HFO) in the energy mix and avoid more emissions-intensive Liquefied Natural Gas (LNG) exports.

It was keen to note however that one of the most important but underused mechanisms to help governments determine early on about how they may wish to deal with gas involves a thorough vetting of a company’s field development plans (FDP). According to a Commonwealth handbook, a ‘Field Development Plan’ (FDP), outlines how a company intends to develop a petroleum field and manage the impact on the environment and society. It also has forecasts for production and costs. This involves complex issues such as how to manage the reservoir, how to bring the petroleum to surface (wells), process (facilities), transport to markets (e.g. pipelines, tankers, storage) and sell the various products. The document is therefore the outcome of a complex and long process of evaluating multiple development concepts for a field and selecting the best option that successfully manages risks and delivers the greatest value to its shareholders.

Given the amount of information contained in FDPs, industry experts believe they can be reviewed with the aim of determining the best outcome for gas finds and examining how emissions can be reduced. It said such plans can be required to demonstrate how technology has been leveraged by the company, for example, in the use of zero-bleed controls and pumps, solar or electric motors (instead of diesel or gas engines), vapour recovery units, and leak detection and repair systems.

The industry experts also stressed that effective FDP reviews involve engaging operators early, the use of clear FDP procedures, coordination among agencies, sourcing technical expertise, setting revenue expectations, and managing political pressures.

Since the start-up of the Liza Phase One Project which utilizes the Liza Destiny floating, production, storage and offloading (FPSO) vessel, stakeholders have called for authorities, both past and present, to implement clear FDP guidelines as well as to release same for public perusal. These have not been done. However, four multi-million dollar projects have received government’s approval without the FDP process being properly explained for citizens to understand.

Guyanese also remain in the dark about the experts being utilized for the FDP process and the quality of their advice being provided.

In the meantime, Guyana’s approach to dealing with its gas finds has been to channel a portion of it into a gas-to-energy project. That initiative is being done between the Guyana Government and an ExxonMobil-led consortium that also operates the oil-rich Stabroek Block.

The gas-to-energy project includes the construction, commissioning, and operation of an onshore natural gas liquids plant and a natural gas processing plant (NGL Plant), which is proposed to be located at the Wales Development Site. It would receive gas through a pipeline, measuring some 225 kilometers. That pipeline will run from the onshore facilities and attached to offshore connections to receive gas from the Liza Phase 1 and Liza Phase 2 vessels located within the Stabroek Block. The startup of the onshore facilities is expected to take place by the end of 2024.

While that is ongoing, government is also reviewing a gas utilization study which Exxon was mandated to do. In January last, Senior Finance Minister, Dr. Ashni Singh had revealed that government is in receipt of a study from ExxonMobil Corporation affiliate, Esso Exploration and Production Guyana Limited (EEPGL) regarding the utilization of the nation’s gas resources.

As the oil company continues its hunt for more sweet crude in the Stabroek block, Dr. Singh said the gas resources are increasing. In fact, they have moved from 16 trillion to over 17 trillion standard cubic feet.

The gas study done by the oil giant is one of the requirements of the Petroleum Production Licence (PPL) awarded for ExxonMobil’s Yellowtail Project. According to provisions of the PPL, the oil company was required to conduct a Gas Utilization Study which would examine the associated and non-associated gas available from all approved petroleum production licences (i.e: Liza 1, Liza 2, Payara and Yellowtail) as well as other discovered resources in the Stabroek Block.

This study was expected to consider over the short, medium and long-term, a forecast of potential gas production for export from existing oil ships and the expected use that gas will be put to.

The PPL notes that the study shall also consider scenarios for the demand that might be expected for gas sales locally, in South America, regionally (the countries bordering Guyana) and internationally; as well as consider the cost and feasibility of gas export as Liquefied Natural Gas (LNG) and Liquefied Petroleum Gas (LPG).

---

• continues, Development, exports, Guyana, Liquefied Natural Gas (LNG)

---