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ExxonMobil to take Liza oil production offline to hook up pipeline for Wales gas project
Liza Destiny FPSO
Kaieteur News – ExxonMobil is preparing to temporarily halt oil production at its Liza field in the second half of 2024, according to Chief Financial Officer Kathy Mikells. This move is meant to facilitate the installation of the Gas-to-energy pipeline.
During the company’s 2023 Q4 earnings call, Mikells stated “At some point in the second half, we are working on the Gas-to-Energy project and laying the pipeline down to bring that gas from Liza 1 and Liza 2 onshore, to kind of plug it into the power plant that ultimately will drive down costs for consumers in Guyana.”
The Liza field, which is currently operated by two floating production, storage, and offloading (FPSO) vessels, has a combined oil production capacity of 400,000 barrels per day (bpd). The Payara project, which lies outside the Liza field, contributes an additional oil output of 220,000 bpd. Exxon is tasked with the installation of the pipeline that will transport natural gas from the Liza field in the Stabroek Block to onshore facilities, a project that is currently in progress.
The construction of a 300-megawatt (MW) power plant is expected later this year as part of the integrated facility at Wales. This facility, to be constructed by the US-based group CH4-Lindsayca for US$759 million, is a focal point of the Gas-to-Energy project. CH4-Lindsayca is currently undertaking hiring activities in anticipation of the project’s construction phase, set to commence in the second quarter of 2024.
The Gas-to-Energy project is aimed at facilitating the transportation of natural gas from the offshore Liza oilfield to Wales. It promises to deliver gas at an initial rate of 50 million cubic feet per day for power generation. With the government planning to slash electricity costs by 50% by transitioning from heavy fuel oil (HFO) to the cleaner-burning natural gas, the project is expected to impact consumer electricity costs.
Supporting the Gas-to-Energy project, Kalpataru Projects International Limited (KPIL) was awarded a contract worth approximately US$159 million to establish transmission lines and substations. This is crucial for integrating the power plant and is targeted for completion in 2024.
Vice President Dr. Bharrat Jagdeo is confident that a US$660 million loan from the United States Export-Import Bank will be approved to help fund the project. Despite environmentalists’ efforts to discourage the U.S. government from funding gas projects abroad, Jagdeo remains determined to deliver the project. “We govern, we are elected by the people of this country, and we promised them, and they asked basically to get cheaper, reliable electricity. We have to fulfill the promises to the people of this country,” he said during a press conference last Thursday.
The Vice President also mentioned discussions about a contingent line of credit to potentially replace the EXIM Bank loan if necessary. The project has so far been financed from Guyana’s consolidated fund. He said, “The project shall be completed, and it will make a huge difference in the lives of people here, the ordinary people, as well as our business community.”
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