EPA defends conditions in Liza I Permit

Mar 15, 2023 News

…says improvements are made as agency learns more

Kaieteur News – Vice President Bharrat Jagdeo last week during a press engagement, lamented the lack of a comparative analysis of the environmental permits granted to the ExxonMobil Guyana led developments in the Stabroek Block by the private media, in order to differentiate the improvements made under his administration versus his predecessors.

Against this backdrop, the agency in a public missive captioned, ‘EPA’s Response to Misconstructions published in Kaieteur News over the weekend’, sought to do just this.

EPA Head, Khemraj Parsram

In the process however, it has in effect confirmed the limited nature in which the permits had been tweaked, such as getting Esso Exploration and Production Guyana Limited (EEPGL) —ExxonMobil Guyana—to commit to improving treatment standards.

Additionally, the EPA has since defended the provisions embedded in the first permit that had been issued. In the missive EPA drew reference to the fact that from the outset, flaring had been prohibited, except where prescribed. To this end, the EPA sought to point out that this was strengthened by the adding of a fine to be imposed, in the event of ‘non-routine flaring.’

Critics of this change have long since rubbished the move, as more of an incentive to the oil companies to flare and pay the US$50 per ton of natural gas burned and released into the atmosphere, than to remedy the problems that would have caused the flaring in the first place.

ExxonMobil Guyana has already flared considerable amounts of the pollutants into the atmosphere especially from its, first Floating Production Storage and Offloading Vessel (FPSO), the Liza Destiny, as a result of a damaged flash gas compressor.

Additionally, the EPA in seeking to outline the improvements made for permits pointed to new requirements being introduced for developments at the third and fourth identified oil fields in the Stabroek Block namely, Payara and Yellowtail. “EPA is always learning and improving, and its work is not about any one person within or external to the EPA. As anyone will appreciate, with new and improved understanding of the oil and gas sector, a modern regulator will make appropriate changes as necessary to improve and ensure robust regulation of the sector.”

Only recently former Head of the EPA, Dr. Vincent Adams, was forced to remind that it is the current head of that regulatory body, Mr. Khemraj Parsram that had issued the first permit for Liza I. As such, in defense of the original terms and conditions in that permit, EPA cited as example that “the Liza 1 Permit stipulated that produced water discharges meet the World Bank/IFC standards for oil in water at 42 mg/L per day and 29 mg/L average per month.”

According to the agency, “this condition was also retained and in all subsequent Permits” and added that, “many other conditions stated in the Liza I Permit have been retained in the subsequent Permits.”

Speaking to improvements being had as a result of the learning curve, the EPA noted that these can be clearly demonstrated in the Permits issued subsequent to the Liza I and Liza II Permits, such as, the Permit for the Yellowtail Project and the Renewed Permit for the Liza I Project.” The latter Permits, the EPA said both reflect significant improvement through the inclusion of a number of new requirements, such as “a phased reduction of oil content specification of produced water to levels lower than the current international standard of 42 mg/L per day and 29mg/L average per month.”

Additionally, the agency pointed to a requirement for the application of the Oslo and Paris Conventions (OSPAR) Harmonized Mandatory Control System (HMCS) for use and reduction of offshore chemical discharges.  This system, the EPA said, requires incorporating a Chemical Use and Management Plan and OSPAR’s Harmonised Offshore Chemical Notification Format (HOCNF) among other aspects. The agency pointed too to the requirement for a physical Capping Stack to be available in Guyana and the maintenance of subscription for access to another one overseas and sought to stress that this was not a requirement in either the Liza I nor Liza II Permits.

A Capping Stack, the EPA said “is a new technology that is used to cap a well in event of a loss of well control, and failure of the blowout preventer (BOP).” Additionally, the EPA spoke to mandatory simulations of the entire Oil Spill Response Plan (OSRP) with relevant stakeholders as approved by the Agency as well as the requirement for environmental effects monitoring related to biological, physical, and socio-economic resources within the Area of Influence (AOI) of the project, including targeted and updated environmental baseline studies.

Other improvements,

The EPA in defence of the improvements made in permits made subsequent to 2020 highlighted a requirement for annual independent external compliance audit on all embedded controls, including the Operations Integrity Management System (OIMS), the Oil Spill Response Plan (OSRP), and controls relating to critical drilling and production operations. “The requirement for submission of safety case information, including a risk assessment prior to drilling and development of wells,” according to Ms. Forde were not included in the permits for the first two projects.

The same obtains for the new requirement for a Grievance Mechanism, which she said is, in keeping with the World Bank’s Approach to Grievance Redress, to ensure that environmental complaints from individuals and communities who may be affected by a Project are received and addressed.  That requirement too, she said was not provided for in the first two permits.

Additionally, the EPA spoke of the requirement for the Permit Holder to indemnify and keep indemnified,“ the Government of Guyana for liabilities and that Financial Assurance be guided by an estimate of the sum of the reasonably credible costs, expenses, and liabilities for a worst-case oil spill scenario.”

Critics have and continue to argue that this in itself is inadequate, since EEPGL does not have enough assets or insurance coverage to cover a “worst case oil spill scenario.”

To this end, there has been a growing demand from sections of the Guyanese populace to have the parent companies for the subsidiaries operating in the Stabroek Block, to provide a signed guarantee, obligating itself to picking up the costs beyond what can be provided by EEPGL, in the case of an oil spill. The entity in defense of its position, said bluntly, “it is unheard of to this day, to reasonably require “unlimited coverage” insurance. Insurers are disinclined and have never provided this level of coverage.” The EPA has since also argued that “it must be emphasized that beyond Permit conditions, and the Environmental Protection Act which address the liability of Permit Holders and ensure that environmental damage will not go unpunished or unremedied, through the vicarious liability principle, a Parent Company can be held liable for unfulfilled obligations (default) of its subsidiary.”

• Bharrat Jagdeo, ExxonMobil, Guyana, Stabroek Block, Vice President