Secret FDPs reveal ExxonMobil already taking out US$9.5B to decommission five oil projects

Aug 25, 2024 News

Vice President, Dr. Bharrat Jagdeo

Kaieteur News – ExxonMobil is likely to bill Guyana close to US$10B to decommission the first five oil projects sanctioned in the Stabroek Block. The budget could increase overtime or reduce depending on the final abandonment plan submitted by the company.

Decommissioning refers to the cleanup and restoration of the environment at the end of a project life.

It should be noted that the Government of Guyana (GoG) was reluctant to release the Field Development Plans (FDPs) for the deep-water developments approved in the Stabroek Block; however this newspaper has managed to secure copies of the documents.

An FDP is the blueprint of a project and outlines how a company intends to develop a petroleum field, manage the impact on the environment and society, as well as forecasts for production and costs. These documents are critical to holding both the developer and government to account on the management of the country’s oil resources- the key driver of Guyana’s economy.

Kaieteur News understands that the Liza One abandonment or decommissioning budget is estimated at US$1.165B. The cost of Liza Two however jumped to a massive US$2.649B according to the FDP. Meanwhile, Payara’s abandonment is expected to cost another US$1.710B. Exxon’s Yellowtail project will require another US$2.094B while the fifth project – Uaru – is likely to cost US$1.850B for cleanup activities.

It should be noted that the decommissioning budget varies for each project since the developments differ according to the number of wells and the fact that the projects are located in different water depths offshore. These are some factors that affect the decommissioning cost.

Additionally, Exxon has not yet finalized the decommissioning plans for the oil projects. The initial plans outlined in the FDPs however indicate that Exxon will permanently abandon the wells by restoring suitable cap rock to prevent escape of hydrocarbons to the environment.

With regard to the Floating Production Storage and Offloading (FPSO) vessels to operate the developments, Exxon said the surface facilities will be disconnected and towed offsite for reuse or dismantling / disposal.

The waste streams which include hazardous and non-hazardous material will be managed and disposed of in accordance with standard industry practice and applicable regulations, the project developer informed regulators. “Methods may include injection down hole into the reservoir, separation and incineration offshore or transport to shore for proper management and disposal,” Exxon stated.

Meanwhile, with regard to the subsea facilities, the developer said it is expected that the risers, pipelines, subsea equipment, mooring lines and anchor piles will be abandoned in place, unless an alternative strategy is selected based on the results of comparative assessments.

Even though Exxon will require the funds to decommission the projects 20 years after the startup date, the company has already commenced deducting Guyana’s oil money to pay for the activities. In fact, the company took the country’s oil money last year to pay for decommissioning works for the fourth project- Yellowtail– which has not yet commenced oil production.

FDPs too technical

Vice President, Bharrat Jagdeo had told reporters during his weekly press conference two weeks ago that the FDPs required “specialized people” to read them, since the documents contained technical information.

He said, “Ask the Minister (of Natural Resources, Vickram Bharrat)…and who would read it? Glenn Lall? I can’t even go through that. You need technical people. A field development plan for an oil and gas sector you need specialised people. They would put Glenn Lall, the specialist to read it. Who in your agency would read it if you see it?”

Meanwhile, Bharrat during his mid-year press conference made it clear that the FDPs contained proprietary information and technical data that could not be made public.

He said, “I’m not sure if everybody has had an opportunity to see what an FDP looks like, it’s about 1000-2000 pages; that’s the size of an FDP and it’s very technical with proprietary information as well too.”

To this end, he advised that persons with specific questions on the FDPs can submit questions to his office for responses.

• abandonment, decommissioning, FDP, plan, secret