No evidence that Wales Gas Plant will cut electricity costs - Citizens tell High Court

No evidence that Wales Gas Plant will cut electricity costs – Citizens tell High Court

Aug 16, 2023 Court Stories, ExxonMobil, Features / Columnists, News, Oil & Gas

…Gas-to-Energy Court case

Kaieteur News – Two citizens challenging the Environmental Permit, granted to Esso Exploration and Production Guyana Limited (EEPGL) for the pipeline aspect of the Gas-to-Energy (GTE) project in the High Court have highlighted the fact that there is no feasibility study that confirms government’s assertion of lowering electricity costs.

In their July 28, 2023 submission to the Court, Vanda Radzik and Elizabeth Hughes said, “The Deponent makes wild claims about the public interest and public benefit…for which the Deponent has produced no evidence whatsoever including no feasibility study, no gas Utilization Plan, and no financial model.”

The women explained that in a letter dated January 13, 2021, their attorney, Melinda Janki wrote to President Irfaan Ali highlighting that there was no business case for Guyana to produce oil, flagging the risk of stranded gas assets for the country. She requested a Natural Gas Business Plan, the state’s Energy Plan, an Economic Competitiveness and Rate Plan and Fiscal Plan. To this end, Radzik and Hughes told the Court that there has been no response from the President or the deponent in charge of the project- referring to Winston Brassington.

The citizens said, “In the absence of independent credible financial analyses, its beggars belief that spending US$1.7 billion can deliver cheap electricity to 800,000 people of Guyana, or more accurately a portion of the Guyanese population since there is no evidence that the project will provide energy beyond the Demerara Berbice Interconnected System (DBIS).”

The table used in the pre-feasibility study done by the IDB pegged the project at US$478 million. The cost has more than tripled since then.

The women moved to the High Court on March 27, 2023 challenging the decision made by the Environmental Protection Agency (EPA) to issue a Permit for the pipeline, in the absence of the required paper work. They are seeking an Order of Certiorari to quash the agency’s decision, citing a breach of the Environmental Protection Act (Cap. 20:05), and more particularly, the Environmental Protection (Authorisation) Regulations.

The citizens outlined that ExxonMobil in its application, dated June 24, 2021 includes details of the project site, the proposed route of the pipeline and the areas to be used and affected by the project, which includes residential properties, commercial properties and state-owned properties. Be that as it may, the application did not include or provide any proof of ownership, a lease or other agreement with the land owners of the said area.

Even though the costs associated with the project are more than triple what a pre-feasibility study anticipated, there has been no updated analysis to confirm the success of the project by government. In fact, Vice President Bharrat Jagdeo is quoted as describing the initiative as a “no-brainer”.

Government anticipates that the pipeline being constructed by Exxon would cost US$1B while the Natural Gas Liquids (NGL) plant and power plant will cost an additional US$759 million. Associated contract costs for the transmission of the project are pegged at US$160 million and US$2 million for land acquisition to facilitate the project. This means the total cost of the project is approximately US$2 billion.

Back in 2018, the Inter-American Development Bank (IDB) had partnered with the State to conduct a feasibility study of the project. 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 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 which was sourced from ExxonMobil; it stated that project would cost US$478 million. Five years later, the gas project is now costing Guyana at least US$2.1B.