United States oil major ExxonMobil has said it is on track to deliver natural gas from its operations offshore Guyana to land by year-end.
This is according to ExxonMobil Chairman and Chief Executive Officer Darren Woods, on Friday, as the company presented its first-quarter earnings for 2024.
During the earnings call, Woods was asked about the benefits of the model Gas-to-Energy (GtE) Project in Guyana which includes the construction of an Integrated Natural Gas Liquid (NGL) plant and a 300-megawatt (MW) combined cycle power plant at Wales, West Bank Demerara (WBD), utilising natural gas from oil production activities in the Stabroek Block.
ExxonMobil Guyana, which is the operator of the oil-rich Stabroek Block that it co-owns, is responsible for laying the pipeline that would transport associated gas from the Liza Phase 1 and 2 Projects offshore to the onshore gas-processing facilities.
According to Woods, “I think it’s kind of a win-win proposition, particularly for the people of Guyana. So, we’re working on bringing that gas to shore. Our expectation is we’ll have that brought up sometime end of 2024. Obviously, the Government’s working on the receiving end of that gas and responsible for putting in the power station.”
As part of a US$1 billion agreement that includes the installation of the pipeline, the US oil major is also working with the Guyana Government on upgrading and modernising its aged power distribution system.
“I think the impact of that [GtE Project] will come when we get both pieces together and get that linked up and effectively delivering power to the [Guyanese] market,” Woods posited.
The ExxonMobil CEO went on to note that this type of collaboration is something that the company is looking to emulate in other countries where it has operations.
“I think as we look at going into some of the countries that are on a growth path, on a developing path, we look for opportunities of how our footprint and presence in those countries and markets can help the people in the community, and this is a great example of that, of getting the gas that’s produced offshore, onshore, so they can replace what is a relatively inefficient, high-emissions power generation system that’s fairly unreliable with something that’s cleaner, lower emissions, and much more reliable and should be much more cost-effective,” the Exxon Chairman added.
The Guyana Government has envisioned start-up of the GtE Project by 2025, thus realising its commitment to deliver cleaner, cheaper, and more reliable energy to the population.
While the Government is working with a number of partners to establish the NGL and the power plant components, ExxonMobil will be laying 200 kilometres of subsea pipeline from the Liza Destiny and Liza Unity Floating Production, Storage and Offloading (FPSO) vessels to the shore. Upon landing on the West Coast Demerara shore, the pipeline would continue for approximately 25 kilometres to the NGL plant at Wales.
The pipeline would be 12 inches wide, and is expected to transport some 50 million standard cubic feet per day (mscfpd) of dry gas to the processing facilities, but it can push as much as 120 mscfpd.
ExxonMobil Guyana President Alistair Routledge told reporters back in February that the onshore portion of the pipeline installation is about 40 per cent completed, while the offshore component is about 55 per cent completed.
“Last year, we had installation campaigns in two parts: we had the ultra-shallow piece, which are mud flaps at low tide…we did about 18 kilometres. So, we executed a good portion of that…then we also installed in the shallow water…going from that 18-kilometre mark out to where the shelf drops down into the deep water,” Routledge had stated at a press conference.
This year, the remaining works include installing risers on the Liza Destiny and Liza Unity, the deepwater pipelaying, and connecting the pipeline to the power plant, which will not come on stream until the end of the first quarter in 2025.
While Exxon has assured that the pipeline would be completed by the end of this year as scheduled, Vice President Bharrat Jagdeo has stated that the pipeline would be tested and sealed until it is ready for use by the power plant.
Moreover, it is expected that the two Liza field productions will be taken offline to facilitate the pipeline connection to the FPSOs.
According to the Vice President earlier this month, this is expected to take just two weeks and has been considered in the planning process. He also refuted claims that the country would lose US$1 billion during this period.
“This was taken into account in our forecast for revenue for this year. It is not a billion dollars of loss, we estimate six to seven million barrels of deferred production, but [Exxon is] hoping to bring forward maintenance for that period on the FPSOs for the period when they have to shut them down to make the connection,” Jagdeo had explained.
Even as Exxon is expected to deliver the pipeline by year end, the construction of the power plant and NGL facility has been delayed by at least six months.
The contractor, a US-based consortium – Lindsayca CH4 Guyana Inc (LNDCH4), is engaged in a disagreement with Government over the timelines of the project and associated costs.
LNDCH4, which was awarded a US$759 million contract in November 2022 to build the power plant and NGL facility, is making financial claims to the tune of US$50 million over delays from other components of the project were overseen by Exxon, saying that the late handover would affect its delivery according to contractual timelines.
The Guyana Government has rejected the claim, resulting in the contractor moving to a dispute resolution mechanism that would see a three-member board set up to mediate between the two parties.
In light of the delays, Government has extended the deadline, but the contractor is not satisfied and wants more time.
