Natural Gas will be flared at Wales operations

Mar 03, 2023 News

…US$50 per tonne fine if above prescribed limits – EPA Permit

Kaieteur News – Guyana has as a policy of no flaring in the development of its nascent hydrocarbon industry, which includes onshore and offshore developments, one such being the establishment of the Wales Development Zone (WDZ).

That project, entails the piping of Natural Gas from the Liza Destiny and Unity, Floating Production Storage and Offloading (FPSO) vessels, to that site on the West Bank of the Demerara (WBD) River.

It is expected that Natural Gas will be supplied to the project at a volume of some 50 million cubic feet per day, using an offshore and onshore pipeline.

According to the Permit that was handed to Esso Exploration and Production Guyana Limited (EEPGL), by the Environmental Protection Agency (EPA), in November last year, provisions are made for the treatment of flaring during the operations, including a US$50 fine per tonne, should flaring exceed permissible limits.

In that permit that was handed to EEPGL—ExxonMobil Guyana—by the EPA, and addressed to the US super major local President, Alister Routledge, it was noted that in addition to the pipelines, the company was given permission to construct the Natural Gas Liquids Plant.

The EPA in giving permission to EEPGL noted that firstly the operations is only allowed 60 days of flaring during its start up.

It notes however, that if during start up, the flaring is expected to exceed that 60-day window, then the permit holder would have to inform the EPA no later than five days before that allowable flaring period ends.

Additionally, the permit goes on to state that with the exception of background flaring, where special circumstances may exceed two weeks, the EEPGL would have to seek permission and that this must be done within 96 hours of the actual flaring.

Another clause in the permit, spells out penalty for flaring above permissible or approved limits.The document stipulates that ExxonMobil Guyana would have to pay US$50 per tonne of Carbon Dioxide equivalents emitted as a result of excess flaring beyond what is provided for.

There are included in the EPA permit, a number of other provisions that is intended to guide the operations of the facility that clearly illustrates that a NGL facility at WDZ will employing flaring as part of its operations.

Provisions are embedded in the permit that caters for reporting and metering, when it comes to flaring events, employing the use of a number of equipment to address a flaring event, in addition to adhering to a number of international standards in relation to flaring in such facilities.

Guyana has over the years touted its low carbon policies and trajectory and has holds itself out as one of the few countries in the world to have implemented tax on flaring referencing the levy that was introduced to deal with the offshore flaring.

In the Energy Brief for 2023, compiled by the Petroleum Department it was noted that the incumbent administration intends to continue dialogue with oil producers to ensure that, alongside the above measures, exploration and production operations continue to explore all possibilities for lower carbon technological innovation – including the use of renewable energy in oil production, Carbon Capture Utilisation and Storage (CCUS) and, – when technologically viable – green hydrogen.

The Institute for Energy Economic and Financial Analysis (IEEFA) had last year noted however that when it comes to flaring in Guyana, “sometimes an agreement is not worth the paper on which it is written.”

The analysis by the IEEFA was done by industry specialist, Tom Sanzillo, who had noted that ExxonMobil, Hess, CNOOC and the government of Guyana mutually consented in 2016 that flaring would be prohibited from oil wells drilled pursuant to their offshore exploration and production agreements.

“What happened was something very different, and a court is now considering what to do about it.”

He expanded saying that ExxonMobil, as the project operator, invested in technology that purportedly would have allowed it to comply with the ambitious goal of zero flaring and that “If achieved, the project would have been precedent–setting; Accordingly, the preferred technology would have resulted in all of the gas being reinjected into the wells.”

He noted however that since then, all parties have recognized that the technology is not resulting in zero flaring.

He said too that while the government of Guyana, is within its rights to halt production until the project complies with the zero-flaring goal, “At first, the parties agreed to continue production while ExxonMobil repaired or replaced the technology; Now it seems the government of Guyana has granted significant concessions that undermine the flaring prohibition.”

To this end, he referenced the new rules that permit flaring under special circumstances and “these exceptions are quite generous.”

At the end of the first full year of operations offshore Guyana, the EPA collected some US$4.5M in payments from ExxonMobil Guyana for flaring at the Liza I operations in the Stabroek Block.

• 50 million, Floating Production Storage and Offloading (FPSO), Liza Destiny, Natural Gas, operations