Jan 10, 2021 News
– But Jagdeo tells oil companies: “Drill, Baby, Drill!”
By Kiana Wilburg
Kaieteur News – As the consequences of global warming continue to worsen, countries across the world have increased efforts towards the transition away from fossil fuels to cleaner sources of energy, so that carbon dioxide emissions can be reduced and therefore lead to a decline in rising global temperatures. As a result of this transition, industry experts have categorically stated that the demand for oil will never be the same again. They have concluded that oil demand has reached its peak, hence the desire of some new producers like Guyana to get the oil out of the ground as quickly as possible and have it sold.
Chatham House Expert, Dr. Valerie Marcel, recently posited that she could understand why Guyana may want to rush its oil development since one does not know how much time each country will have to sell its resources. It will all depend on the cost to develop it and how long the market will thirst for it. Be that as it may, Dr. Marcel warns that the pace at which Guyana is moving is perhaps “too fast” since it risks losing significant value in the process.
During a recent interview on Kaieteur radio’s programme, Guyana’s Oil and You, Dr. Marcel said, “…When you rush the process to develop the oil you are no longer looking at capturing the maximum value from the resources underground. By rushing, you are not thinking of ultimate recovery which is to get as much of the oil and gas out, you aren’t focusing as much on, I think, the importance of an integrated energy and oil development plan.”
By rushing, Dr. Marcel posited, Guyana is not giving itself enough time to craft a map that looks at the development of the discoveries and how some of those projects like Payara and Liza, might be linked to each other to ensure cost savings on infrastructure. By failing to have such a map in place, the industry expert alluded to the fact that Guyana is missing out on the opportunity to ensure cost reductions by having companies working across fields or sharing drilling results.
The Chatham House Associate Fellow said, “There are so many sort of architectural issues that you don’t have time to think about if you are rushing through and I think the fast pace is perhaps too fast for Guyana…I think it is better to get it right and slow it down…”
She added, “…It is extremely important to have that architectural or policy planning view of the whole thing to ensure there is long term value for Guyana.”
DRILL BABY DRILL!
When the People’s Progressive Party/ Civic (PPP/C) assumed office last year, Kaieteur News had published a list of 20 things which the new government must do to set the oil industry on the right path; a path that would allow the nation to build its capabilities to properly govern and monetize the resources. High on that list was the creation of a depletion policy.
In simple terms, this strategy would say how fast or slow Guyana must extract its oil resources.
Several local, regional and international stakeholders have appealed for the nation to have a policy that slows the aggressive rate of extraction by ExxonMobil; otherwise, the country would be left extremely overwhelmed and on a dangerous precipice.
In spite of this, Vice President, Dr. Bharrat Jagdeo, has made it clear that Guyana’s Depletion policy will essentially be “Drill, baby, drill!”
His reasoning behind the “anecdotal” policy was explained during an interview on Kaieteur Radio on December 23, 2020. There, the Vice President said, “My own view is that we have a period in which oil would still be very relevant in the global mix of energy and we have a period but it is a window that is closing because of climate change. The window for Guyana will be open a little longer for us than other countries because we have low breakeven costs and because our crude is sweet, light unlike others which have heavy or sour crude.”
The Vice President also noted that the recently issued regulations by the International Maritime Organization require the removal of 80 percent of the sulphur content from global shipping. Since heavy or heavy sour oil has a lot of sulphur, “everyone is looking for sweet crude now.”
Further to this, Jagdeo had pointed to the fact that the world’s leading economies, China and the USA, have made it pellucid that they will be heading to renewable. In fact, China, the world’s biggest energy consumer, aims to achieve carbon-neutrality before 2060. As for the USA, President-elect Joe Biden has declared intentions to increase the nation’s switch to renewable energy.
Considering the implications of climate change and the global transition to cleaner energy sources, Jagdeo posited that demand for fossil fuel is either going to be static or declining in 15 to 20 years’ time. He had said that this is what has influenced the PPP/C’s position to extract the oil as quickly as possible, use portions of it to build world class infrastructure and education while putting aside some for inter-generational equity.
“That is the depletion policy for you,” the Vice President concluded. (See link: depletion policy time stamp: (1: 05: 26) https://www.youtube.com/watch?v=WA03jUwgIDY)
Origin of the phrase –“Drill, baby, drill!”
“Drill, baby, drill!” was a Republican campaign slogan first used at the US 2008 Republican National Convention by former Maryland Lieutenant Governor Michael Steele, who was later elected Chairman of the Republican National Committee. The slogan expressed support for increased drilling for petroleum and gas as sources of additional energy and gained further prominence after it was used by Republican Vice Presidential nominee Sarah Palin during the vice-presidential debate.
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