Local affiliate for United States-based ExxonMobil Guyana, Esso Exploration and Production Guyana Limited (EEPGL) is exploring the potential for other gas developments in Guyana that could possibly see Guyana exporting gas.
This is according to Exxon’s Country Chief, Alistair Routledge, during a recent media briefing when he was asked whether EEPGL is looking at any standalone gas export projects in the Stabroek Block offshore Guyana.
Routledge explained that ExxonMobil and its Stabroek Block co-venturers have made significant discoveries, especially further to the south-east towards the Suriname border where there is a higher gas content in the fields that they have developed so far.
“So, we’re looking very closely at the potential for gas development. It would be somewhat unique because there’s a lot of volatile oils, condensate and so on. So, we’re doing a lot of technical work currently, and providing updates to the Ministry as to what may be feasible, but part of that would be looking at options for development of gas, export of gas or use of gas in the country for additional projects,” the ExxonMobil Guyana President indicated.
Currently, the Guyana Government is pursuing its model gas-to-energy project which includes the construction of an integrated Natural Gas Liquid (NGL) plant and the 300-megawatt (MW) combined cycle power plant at Wales, West Bank Demerara (WBD).
The multibillion-dollar transformational project will see gas being piped from the Liza Field in the Stabroek Block to onshore at Wales via pipelines that will be procured, installed and operated by Exxon to the tune of US$1 billion.
During Thursday’s press engagement, Routledge disclosed that this cost will be recovered through the sale of the gas to the Guyana Government.
“We will be selling [gas] to… the Government – it’s a Government entity or a company… but only in the sense that this is a pass through to the power. It’s not the country paying, it’s in order to fuel the power station… and take the NGL off.”
“…in essence that development is just going to pay for the pipeline cost – nothing more. No, like profit element… Our commitment is to deliver this for the country. And so, the revenues just cover the cost of the [pipeline] development – nothing more… there is no profit element in there at all. It’s purely just to pay for that infrastructure,” he stated.
However, it was noted that Government will not be paying for its share of gas. The pipeline cost will be recovered only on the Stabroek Block’s co-venturers’ share of gas. Exxon is the operator of the Stabroek Block and its co-venturers are Hess Corporation and CNOOC Limited.
According to the oil major’s Country Head, the price of the gas has not been determined as yet but assured that it will be at a “very low price” and “very competitive” internationally. He explained that the cost recovery mechanism agreed to stipulates that the price of gas be determined after the pipeline infrastructure is in place to ensure that there is no profit gain or loss incurred.
Once the investment cost is recovered, and there are no additional investments nor impacts on oil recovery, there will be no charge attached to the gas supplied.
Based on studies conducted, Exxon will be able to produce up to 50 million cubic feet of gas per day for this initiative without impacting ongoing oil production activities offshore.
“We’re selling the full 50 million cubic feet a day to the Government or a Government entity that’s being established in order to receive the gas, put it through the power station… At that at point, the Government takes control of the gas and the associated natural gas liquids and could determine does all of the gas flow into the power station if needed, or does it go into some other kind of industry,” the ExxonMobil Guyana President stated.
According to Routledge, that entity could either be a private or State entity.
While there was no formal announcement or any additional information, it was revealed last month that the Guyana Government has established a special purpose company to manage the gas-to-energy project. In fact, during President Dr Irfaan Ali’s visit to India, it was disclosed that the Guyana Power and Gas Inc – a wholly owned company of the Government of Guyana – signed a contract with Engineers India Limited (EIL) for the provision of consultancy services with respect to the construction of the two plants at Wales.
The President Ali-led Government has boasted that the operationalisation of the gas-to-energy project will see current electricity charges cut in half as well as fuel the expansion of the industrial and commercial sectors.
So far, Government has spent $24.6 billion on the start-up of this project. This includes $400 million for the acquisition of private lands to facilitate the laying of pipelines in Region Three and the remaining $24.213 billion was a 15 per cent payment on the Engineering Procurement and Construction (EPC) contract, which was awarded to US companies CH4 and Lindsayca late last year. The total cost of the EPC contract is US$759.8 million.
In addition to the EPC contract, the supervision of the NGL and power plant components of the project will cost another US$23 million.
With a timetable to deliver rich gas to fuel the power plant by the end of 2024 and the NGL plant to be online by 2025, works are progressing on getting the gas-to-energy project off the ground.
