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Guyana's Exxon Payara project held up by gas flaring and other environmental issues

Guyana Times

Minister Vickram Bharrat

- Flaring, dumping of processed water back into the ocean, are the main environmental issues
- Govt wants gas to energy project included in Payara contract September 7, 2020
- Natural Resources Minister says FDP review complete, work ongoing on licence

By Guyana Times

Petroleumworld 09 14 2020

With the evaluation of Bayphase's review into the Payara Field Development Plan (FDP) complete, efforts are being made to smooth out lingering environmental issues and also include provision for the gas to energy project. Natural Resources Minister Vickram Bharrat

In an interview with this publication, Natural Resources Minister Vickram Bharrat confirmed that the Canadian team has completed their review of the work done by Bayphase Limited, which was hired by the previous Government to review ExxonMobil's Payara FDP.

“The review is completed and we have a draft license that the legal and technical team from the Department of Energy and Exxon is currently engaged in,” Minister Bharrat explained to this publication.

“They're meeting tomorrow (today) again. There are still issues that have to be worked through. But we already have a draft license agreement, based on the consultant's report,” the Minister also said.

The Stabroek Block, where the Payara field is located

When it comes to the gas to energy project, Vice President Bharrat Jagdeo had recently said that the People's Progressive Party (PPP) Government is eager to make this project a reality. It would not only provide cleaner and more reliable energy for Guyana, but also cut the country's Heavy Fuel Oil (HFO) bill. According to Bharrat, they are looking to have this project included in the agreement.

“There are still some environmental issues we're looking at. Issues like pumping water into the ocean. We're trying to tie in also into the contract, the gas energy project. That is a discussion taking place as well,” he said.

Part of a US$20 million loan that the previous Government had signed with the World Bank had gone towards funding a study to examine the merits of bringing natural gas onshore for the local energy market.

Exxon itself has said that the gas that would be required for the gas-to-shore project is available. Estimates have put the figure required for the gas to shore project at 30 to 35 million cubic feet of natural gas.

Previously released data from Norwegian research company Rystad Energy had indicated that less than 20 per cent of the 1.8 billion Barrels of Oil Equivalent (BOE) discovered last year was gas. The Haimara discovery made by Exxon last year was found to have 207 feet of high-quality gas condensate sandstone reservoirs.

But for reasons unclear, little progress was made by the previous Government on the gas to shore project. There had only been talk of a natural gas and liquid petroleum plants, with the pipe carrying the gas to shore at a location along the East Coast of Demerara (ECD) and the power being integrated into the Guyana Power and Light (GPL) system.

Natural gas

Natural gas, while not a renewable source of energy, is composed mostly of methane and small amounts of hydrocarbon. Its emissions contain a significantly lower level of carbon dioxide, compared to oil.

In fact, natural gas, when used for power generation, also emits fewer sulphur and nitrogen oxides, making it the cleanest of all fossil fuels. As such, Government has previously said it can use natural gas to transition to a “Green State.”

Already, private companies like Demerara Distillers Limited (DDL) have begun the transition. Last year, the company commissioned Guyana's first Liquefied Natural Gas (LNG) gasification terminal.

However, Exxon has for some time been engaged in flaring excess gas in the Stabroek Block, an exercise that caused environmentalists to be up in arms since this is generally viewed as harmful to the environment.

Earlier this year, the Center for International Environmental Law (CIEL) had released a statement in which it called on the company to stop flaring gas offshore Guyana. CIEL had claimed that the flaring exceeded the levels approved by the Government, a level that now puts Guyana among the top ten gas flaring countries in the world.

In Exxon's defence, the company has said that delays in commissioning its gas handling systems were behind the decisions to flare. At one point, Exxon also reduced its production of oil in a bid to cut down on flaring.

The issue of flaring, as well as the dumping of processed water back into the ocean, are some of the environmental issues that have held up discussions on granting approval for the Payara project.

The Payara development plan includes a floating production, storage and offloading (FPSO) vessel, named Prosperity. It is expected to produce 220,000 barrels per day, supporting up to 45 wells, including production, water injection and gas injection wells.

Story by Guyana Times 09 07 2020


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