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Oct 26, 2021 News
Kaieteur News – ExxonMobil and one of the government’s regulatory arms, being the Environmental Protection Agency (EPA), kicked off the first session of public consultations for the oil company’s Yellowtail Project. Those discussions were premised on the Environmental Impact Assessment (EIA) that was done for Yellowtail, the fourth oil field to be developed in the Stabroek Block.
It should be noted however, that these consultations were held only after the technical data in the EIA were made public 10 days ago (October 16, 2021). The EIA was published in three volumes and are 7,400 pages long. Volume One has 1,382 pages, Volume Two has 2,544, and Volume Three has 474 pages. The Appendices for the Project also carry a staggering 3,010 pages, thereby bringing the total number of pages to 7,410. Several industry stakeholders have since lamented that Guyanese are therefore left in a disadvantageous position as it is impractical to expect a proper public probe or scrutiny with such a limited timeframe. Some are also of the view that the project should be put on hold so that proper evaluation can be done and the country would have a greater timeline to develop its monitoring capacity.
In anticipation of the latter concern, ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL) which did the project’s EIA, was keen to note that it believes the Yellowtail development should be given the green light for without it, it is reasonable to expect that some environmental and socioeconomic conditions would likely change over time.
EEPGL said, “In particular, without the Project’s revenue sharing with the Government of Guyana, the associated potential for benefits to socioeconomic resources would be reduced and gross domestic product (GDP) growth through associated fiscal revenue would be affected.”
It added, “The National Resource Fund would be deprived of these revenues for sustainable development of the country and initiatives aimed at achieving the government’s vision of an inclusive green economy would likely be reduced.”
EEPGL is also of the view that Guyana desperately needs the project since the Government of Guyana would be able to take advantage of the project revenues to fulfill its objectives to create more job opportunities, address poverty, and improve the overall quality of life.
EEPGL warned that if Yellowtail is prevented, opportunities to boost economic growth through increased foreign direct investment in supporting goods and services in the time leading up to oil production would be reduced.
It further noted that without the project, the forecast of higher levels of GDP would be less achievable. Even as it cited the foregoing, it did acknowledge that there are benefits to the State should the government not proceed with the project. The subsidiary said these include, but are not limited to: decreased economic dependence on natural resources, decreased economic vulnerability to commodity price fluctuations, and reduction in the competitiveness of other sectors.
In the unforeseen event that circumstances arose that warranted stopping the project mid-development due to government’s disapproval, EEPGL said it would abandon the project infrastructure in an appropriate manner, consistent with the concepts laid out in the Preliminary End of Project Decommissioning Plan.
TRILLION DOLLAR PROJECT
On Sunday, Kaieteur News reported that development costs for the Yellowtail project are poised to exceed US$9B or GY$1.8 trillion. Exxon said the costs are expected to be higher since there would be a greater number of development wells and associated drilling costs when compared to its Payara project which will also cost Guyana $1.8 trillion.
Despite the astronomical costs, Exxon believes that the project should be supported as it would generate benefits for the citizens of Guyana in several ways, which would otherwise not be there in the absence of the project.
According to project documents, Yellowtail will consist of drilling approximately 41 to 67 development wells (including production, water injection, and gas re-injection wells); installation and operation of Subsea, Umbilicals, Risers, and Flowlines equipment; installation and the operation of a Floating, Production, Storage and Offloading (FPSO) vessel in the eastern half of the Stabroek Block; and— ultimately—project decommissioning.
The FPSO will be designed to produce up to 250,000 barrels of oil per day. The initial production is expected to begin by the end of 2025–early 2026, with operations continuing for at least 20 years.
The project is expected to employ up to 540 persons during development well drilling, approximately 600 persons at the peak of the installation stage, and 100 to 140 persons during production operations.
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