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Govt.’s draft strategy says country does not have adequate gas for LNG plant to make money
Kaieteur News – The recently unveiled Draft National Gas Strategy, released by the Government of Guyana (GoG), has sounded a cautionary note regarding the reliance on associated gas for Liquefied Natural Gas (LNG) production.
Vice President (VP), Bharrat Jagdeo
For those who may not be familiar with the term, associated gas is gas which is produced with oil primarily in an oil field. In contrast, non-associated gas is gas found in a reservoir which contains no crude oil, and can, therefore, be produced in patterns best appropriate to its own operational and market requirements.
The draft strategy emphasizes that LNG is essentially natural gas cooled into a liquid form to reduce its volume significantly. It acknowledges the intricate nature of LNG value chains and the reliance on long-term contracts to support substantial capital investments and mitigate risks along the value chain.
The document also highlights the fact that the number of countries engaged in LNG production has nearly doubled, increasing from 12 to 23 between 2000 and 2022. Nevertheless, it points out that despite the considerable global LNG production capacity under construction, there is continued demand for additional LNG supply beyond 2026.
Importantly, the draft strategy notes that the vast majority of LNG projects worldwide rely on large non-associated gas reserves. In contrast, Guyana has primarily focused on oil-related activities thus far. It was emphasized that while there is a significant amount of associated gas in the region, relying on the associated gas entails greater risks compared to sourcing it from dedicated, non-associated natural gas reservoirs. In the case of the Stabroek Block, all currently produced gas is either reinjected to support oil production or used as on-site fuel.
This revelation comes at a crucial time, especially since Vice President Bharrat Jagdeo had previously expressed enthusiasm about the PPP-administration gas strategy, emphasizing its role in the government’s larger plan to monetize some 17 trillion cubic feet of gas found in the Stabroek Block. He had stated, “We’ve made it clear; we want to monetize our gas assets. This strategy will outline our approach to the industry.”
Moreover, Guyana is actively pursuing the use of natural gas in the Liza One and Liza Two fields for the Gas-to-Energy (GTE) project, situated at Wales, West Bank Demerara (WBD). ExxonMobil Guyana will be funding a 12-inch pipeline to transport the resource to Wales, where a Natural Gas Liquids (NGL) plant will process and separate the gas for use in a power plant.
This power plant is expected to generate 300 megawatts of electricity for the national grid and produce products like cooking gas for sale, aligning with the government’s goal of energy self-sufficiency. Despite some expert concerns about the projects’ nearly US$2 billion cost, the government remains resolute about its viability.
For access to the Guyana Gas Monetisation Strategy and participation in the public consultation, interested persons can visit the ministry’s official website at https://petroleum.gov.gy/. The deadline for public consultation is November 14, 2023.
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