Apr 30, 2019 News
By Kiana Wilburg
ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), has received approval from the Environmental Protection Agency (EPA) to develop the second phase of the Stabroek Block Liza discovery. It is expected to produce over 6 million barrels of
crude oil per month.
According to EPA documents, oil production from the Liza Phase Two Development is expected to last at least 20 years. EEPGL will drill approximately 35-40 wells offshore to support extraction of the oil from below the sea floor. Each well will be drilled to a depth which is over 5,000 metres (m) below the sea floor. EEPGL will then install some of the oil production facilities on the sea floor at approximately 1500-1900 m (4900-6200 ft) water depth. These subsea facilities include various types of pipes and hardware. The subsea facilities allow the oil from the wells to be gathered and moved t
o the surface of the ocean for further processing.
Kaieteur News understands that EEPGL will install other oil production facilities on a vessel, which floats on the surface of the ocean. The vessel is called a Floating Production, Storage, and Offloading (FPSO). The FPSO will be moored on location in approximately 1,600 m (5250 ft) of water depth and will remain on location throughout the life of the facility.
Further to this, oil production facilities on the FPSO will further process the oil extracted from below the sea floor. The FPSO will have the capacity to produce approximately 190,000 to 220,000 barrels of oil per day. During the early stage of production operations, the FPSO is anticipated to produce an average of approximately 5,700,000 to 6,600,000 barrels of crude oil per month.
At peak, EPA documents note that EEPGL will utilize approximately 1,200 personnel offshore during the stage where the wells are being drilled and the offshore oil production facilities are being installed. Kaieteur News understands that this number will decrease to less than 200 personnel during the production operations phase. A smaller number of personnel will then be utilized at the onshore support facilities.
According to reports perused by this newspaper, there are some key differences between the Liza Phase Two Development and the Liza Phase One Development.
In the area of Oil Production Rates, the Phase Two production rate will be approximately 190,000 to 220,000 barrels of oil per day while Phase One’s production rate is 100,000 barrels of oil per day with the ability to operate at sustained peaks of 120,000 barrels per day.
With respect to FPSO Oil Storage Volume, Phase Two storage volume will be approximately 1.6 to 2 million barrels, depending on the hull selected. Phase One storage volume is 1.6 million barrels.
In terms of the number of wells, Phase Two will have approximately 35-40 wells. Phase One has 17 wells.
The reports held by the EPA notes that the Liza Phase Two project comes with a fair number of possible effects on people, wildlife and the environment.
The effects include changes in quality of air; disturbance of seabed; changes in quality of ocean water; impacts to whales, dolphins, sea turtles, fish, birds and protected species; changes in food sources for fish and wildlife; restriction on fishing around drill ships (temporary) and FPSOs; and oil spills, which could impact the environment (e.g. coastline, protected areas), indigenous communities, and the livelihoods of farmers and fishermen.
A BUMPY ROAD
The approval of the Environmental Permit for the Liza Phase Two Project came with a number of challenges. The EPA’s Head, Dr. Vincent Adams was adamant on ensuring that Exxon supplied Guyana with an internationally recognized insurance policy. While it was able to do so to the tune of US$2.4B, it did not use a local broker to secure the insurance. The EPA granted the permit on the condition that it would rectify this by working along closely with Bank of Guyana, which is in charge of monitoring the insurance sector.
The permit was also held up due to reviews that were being conducted on the Field Development Plans for the Project. In February last, the Energy Department had announced that UK based firm, Bayphase Oil and Gas Consultants, won the contract from Guyana to review the Field Development Plans.
But prior to this, Kaieteur News had exposed that Bayphase is a client of ExxonMobil and even some of its primary contractors working here. In fact, Bayphase which was established in 1986 is an employee of NEXEN, a subsidiary of the Hong Kong based China National Offshore Oil Corporation (CNOOC) which holds 25 percent interest in the Stabroek Block.
With the Liza Two Permit in hand, ExxonMobil is now pushing to get approval for the development of the Payara area in the Stabroek Block, which would serve as the third oil and gas development project in Guyana.
AUBREY NORTON FRIGHTEN RENEGOTIATION AND RING-FENCING
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