Davina Bagot, Kaieteur News

GEORGETOWN
EnergiesNet.com 05 12 2022

Guyanese are still clueless about the cost it will be billed by ExxonMobil to transport the gas, via a pipeline from the Liza Phase One and Two fields, in the Stabroek Block, to the Wales Power Plant on the West Bank of Demerara.

This is the case as the Gas-to-Energy Project Manager, Mr. Friedrich Krispin refused to field questions on this critical aspect of the deal during a public consultation hosted by the oil company yesterday. The consultation was hosted at the Umana Yana, in Kingston Georgetown specifically to hear from the public on the Environmental Impact Assessment (EIA) recently submitted to the Environmental Protection Agency (EPA). However, both the oil company and the government have been silent on the cost to transport the gas, even though some experts believe that the feasibility of the project hinges on this charge.

At the meeting on Wednesday, Krispin while responding to a question from Kaieteur News made it clear that the transportation cost is not in any way associated with the EIA and he will therefore not answer. He said, “I am very sorry, I will not be able to answer your question and that is for one simple reason; cost of production is not part of the scope of the EIA and I am not privy to disclose this at this time.”

Back in 2018, the Inter-American Development Bank (IDB) had partnered with the State to conduct a feasibility study of the planned offshore natural gas pipeline which was initially pegged at US$900M, but now stands at US$1.3 billion. The primary objective of the study, which was executed by Energy Narrative for US$70,000—an international entity that provides strategic market analyses and advice was to determine the overall feasibility of transporting natural gas from offshore Guyana, building a Natural Gas Liquids (NGL) separation plant and a Liquefied Petroleum Gas (LPG) production plant to market the liquids from the natural gas stream, as well as building a new electricity generation station to use the remaining dry natural gas. (See link for report: https://nre.gov.gy/wp-content/uploads/2021/04/Feasibility-Study-for-Guyanas-Offshore-Natural-Gas-Pipeline.pdf)

According to the study, the project’s financial feasibility hinges on the price of natural gas that will be negotiated between the Government of Guyana and ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL). The consultant was keen to note that in this negotiation, EEPGL’s priority will be to secure a price for the natural gas and LPG that will provide the greatest return on investment.

The environmental study for the gas pipeline was submitted to the EPA on April 20, 2022, triggering a 60 days comment period on the project.
The project

The Gas-to-Energy project is being pursued by Esso Exploration and Production Guyana Limited (EEPGL), on behalf of itself and its coventurers (Hess Guyana Exploration Limited and CNOOC Petroleum Guyana Limited). It proposes to bring the associated natural gas, produced from the Liza field in the Stabroek Block, to shore for use.

The Government of Guyana is pursuing a separate project to construct a power plant that would use a portion of this associated natural gas as a fuel source. Accordingly, EEPGL, at the request of the Government, is proposing the Project to provide fuel for the Power Plant.

The project will involve capturing associated gas produced from crude oil production operations on the Liza Phase 1 (Destiny) and Liza Phase 2 (Unity) Floating, Production, Storage, and Offloading (FPSO) vessels, transporting approximately 50 million standard cubic feet per day (MMscfd; 1.4 million standard cubic meters per day [MMsm3/d]) of rich gas via a subsea pipeline and then an onshore pipeline to a NGL processing plant, treating the gas to remove NGLs for sale to third parties, and ultimately delivering dry gas meeting government specifications for use at the Power Plant.

Construction will begin after the company receives all necessary authorizations, with a target date of August 2022 for start of NGL Plant site preparation, and will take approximately three years. The combined offshore and onshore pipeline system is targeted to be ready to deliver rich gas by end of 2024, and the NGL Plant is targeted to be operational by mid-2025. The Project has a planned life cycle of at least 25 years. The aspect of the project for which the oil company is responsible, that is to say, the installation of the offshore and onshore pipelines, is set to cost a whopping US$1.3B.

kaieteurnewsonline.com 05 12 2022