Latest update April 24th, 2024 12:59 AM
Jul 20, 2018 ExxonMobil, News
By Abena Rockcliffe-Campbell
The Government is steaming full speed ahead in preparation for its proposed gas to power project. But is this a case of putting the cart before the horse?
The entire project is essentially dependent on ExxonMobil and the decisions that that company has to make. But the oil giant is still to make any final decision on that front.
The Production Sharing Agreement that exists between Guyana and ExxonMobil clearly gives ExxonMobil the right to re-inject associated gas into the oil producing wells. Therefore, the company cannot be forced to do otherwise.
Indeed, the contract provides for alternative arrangements like the gas to power project. But, that sort of arrangement is predicated on a feasibility study that the contract states, has to be done by ExxonMobil.
ExxonMobil’s Country Manager, Rod Henson, revealed that the study is yet to be done. He revealed this to the Parliamentary Sectoral Committee on Natural Resources during a recent meeting.
Chairman of the Committee, Odinga Lumumba, asked Henson about ExxonMobil’s active involvement in the project and about “studies and agreements” that the company will be guided by.
Henson said, “There are no agreements to date and this gas to power project is essentially under discussion. We have done our own study work on this. Currently, the development plan for Liza Phase-One is that all the gas gets re-injected into the reservoir and the reason we do that is reservoir management.”
Henson said that the re-injection method is a “very common, normal way to do these sorts of developments. Ultimately, you get the most value for your resource by doing that. So, Guyana would get more value by re-injecting that gas. Because it helps reservoir pressure and ultimately it helps you recover more oil.”
Henson said that while this is generally the case, ExxonMobil has taken into consideration the uniqueness of Guyana and its needs.
He said, “We have done some (assessment) work that says that Guyana is in a unique position because of the high electricity cost. As part of the community, we are looking to see if we could we divert some of that gas and that is the project under discussion right now; but there are no agreements yet.”
Pressed further by Lumumba as to the existence of any sort of final agreement, be it verbal or written, Henson said, “There have been no decisions that I know of. There have been discussions that I am aware of and essentially, we have been talking with various elements of the government regulatory make up.”
Henson said that there is a possibility that ExxonMobil can divert 30 to 34 million cubic feet of gas from the Liza Destiny, build a pipeline to shore, then take that natural gas and burn it to generate electricity rather than the heavy fuel oil that is currently being burnt here.
Lumumba then asked how it is that Henson can provide such details about the approximation of cubic feet in the absence of a feasibility study.
Henson responded, “We have done much study on this matter but no formal document (has been prepared.) We have internal studies. Respectfully Sir, this is nothing difficult to do in the realm of oil and gas. You do not need a feasibility study from a technical standpoint. This is very feasible.”
Henson went on to disclose, “We are in early discussions; (brainstorming) where the plant would be, the cost, capital investment, who builds the power plant, stuff like that.”
Lumumba asked Henson if ExxonMobil would construct the plant, pipeline and other needed facilities as well as manage the project. Henson responded, “That is something we are still discussing internally. We haven’t reached an internal discussion on the role we will play.” He added, “we’re just not there yet.”
Lumumba asked Henson how long ExxonMobil would take to bring gas to power in Guyana into a reality. Henson said that it can happen within the next four to five years.
He said, “If we get approvals in a timely manner with Environmental Impact Assessments, etc. we will be looking at 2022-2023.”
In response to a question by PPP/C Member of the Committee, Pauline Sukhai about ExxonMobil’s “intention” to work with Government for the project, which forms part of the green state strategy, Henson said, “We do not have any intention to do this. This is something that we are discussing, it is an opportunity that we want to work with Guyana to see if we can make something work here.”
However, Minister of Public Infrastructure, David Patterson, had said publicly that a site has been identified, but the necessary technical studies will have to be conducted. The site is 475 acres, while the natural gas and liquid petroleum plants will be approximately 20-25 acres. Patterson, who is responsible for the energy sector, said the remaining 450 acres have been dedicated for an industrial park aimed at incentivizing the manufacturing sector with inexpensive electricity.
Already, GPL has advertised for Expressions of Interest for construction of a 50 megawatts natural gas plant to produce power. (See full story here: https://www.kaieteurnewsonline.com/2018/04/06/govt-steams-ahead-with-landing-natural-gas-pipeline/.)
Further, Patterson went as far as saying that more than 200 Guyanese will be employed during the civil works and construction phase for natural gas and liquid petroleum plants.
He said, “It could be more because we have to do work on the site; the foundation for the plant, fencing. (Guyana Power and Light) would be running a new transmission line from the site to the new substation, so we will need persons for those works.
“Of course, ExxonMobil would have its own employees on board as well,” Minister Patterson explained.
When the plant becomes operational, the Minister stated that 30 to 40 persons will be permanently employed as maintenance and operational crew.
“Other benefits we’re looking at from the natural gas plant include making the same cheap electricity available to our manufacturing sector directly, rather than them going to GPL and then coming back.
“If any of the industries wish to use natural gas to power their operations, they can receive as well. That way, they will be able to produce products cheaper,” Patterson underlined.
A US$70,000 desk study is being conducted by consultants, Energy Narrative, on the options, cost, economics, impact and key considerations of transporting and utilizing offshore natural gas for electricity generation. (https://www.kaieteurnewsonline.com/2018/05/29/manufacturers-offered-options-of-sourcing-power-directly-from-natural-gas-plant/.)
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