– Ministry of Public Infrastructure

ALTHOUGH some have criticised ExxonMobil’s flaring of natural gas during production start-up instead of the government allowing for its use on shore, the Ministry of Public Infrastructure (MoPI) has emphasised that it commenced preparations for the use of natural gas since 2015.

ExxonMobil has flared over two billion cubic feet of natural gas due to challenges during production start-up and critics have taken note. In a Stabroek News article, former Presidential Adviser on Petroleum Jan Mangal was quoted as noting his preference for the gas to be used by Guyanese for electricity and other purposes.

In a subsequent release on Monday, the MoPI made it clear that the process of utilising natural gas on shore commenced shortly after the government took office and is not a mere afterthought, as planning takes time.

Providing a timeline of the events, MoPI noted that since September 2015, Cabinet was informed by ExxonMobil that the initial period of production at Liza Phase 1 would result in the flaring of the associated gas. However, Cabinet had advised that flaring of the gas would not be permitted and requested alternative solutions.

The following year, moving closer to ‘first oil,’ ExxonMobil informed Cabinet that the re-injection of associated gas was possible. It was at that period of February 2016 that they were asked to determine what quantity of natural gas could be made available to be transported to shore without adversely affecting oil recovery.

In July 2016, the ‘Guyana Power Generation System Expansion Study’ was presented to Cabinet by the MoPI. The study is supported by the Inter-American Development Bank (IDB) and included the option of powering part of Guyana’s generating system by natural gas.

Based on the study, results and subsequent discussions, the Ministry of Natural Resources officially requested in September 2016, that Esso Exploration Production Guyana Limited (EEPGL) consider the possibility of bringing gas to shore. The official agreement of this request occurred in February 2017.

In the first quarter of 2017, the government commenced early discussions and internal considerations for associated natural gas in the first quarter of 2017. Discussions were held between the Ministry of Natural Resources, the MoPI and EEPGL. It was noted then that ExxonMobil would continue to work towards a more detailed assessment of the implications of gas re-injection and gas export.

“Exxon confirmed the possibility of supplying 30 – 50 million cubic feet per day (MMcfd) to shore for the purpose of power-generation,” the release had indicated.

In March 2017, the very month that Mangal was appointed Adviser to the Ministry of he Presidency, the MoPI commenced an independent desk study to provide pre-feasibility information. The study was titled ‘Options, Costs, Economics, Impacts and Key Considerations of Transporting and Utilising Gas from Offshore Guyana for the Generation of Electricity for Local Consumption.’

Under Mangal’s tenure, on April 1, 2017, the company ‘Energy Narrative’ was contracted on April 1, 2017 to conduct the said desk study following a restricted tendering process utilising firms on the Inter-American Development Bank (IDB) shortlist.

The release indicated: “During this period, government continued meetings (April 27) with EEPGL regarding an update and status of activities and projections, including further information on natural gas data, including composition, quality and potential volumes.”

The final report of the desk study was submitted on June 8, 2017 by Energy Narrative to the government with guidance on options, costs, economics, impacts and key considerations of transporting and utilising gas from offshore Guyana for the generation of electricity for local consumption.

This was followed by the visit of a delegation from the government to ExxonMobil’s Houston Campus where the matter of natural gas continued to be discussed between the parties. Three site areas were proposed by ExxonMobil for further consideration.

After the visit, the MoPI established an independent Site Selection Team to provide options and recommendations regarding the landing of the pipeline and development of the power plant. This team comprised the Guyana Energy Agency (GEA), Guyana Power and Light (GPL), Ministry of Natural Resources, the Guyana Lands and Surveys Commission (GLSC) and the Ministry of Business.

On September 12, 2017, a Working Group was convened comprising key organisations including the MoPI, GPL, GEA, Ministry of Finance, GO-INVEST, the Ministry of Business, the Ministry of Natural Resources and more. Its aim was to provide technical advice based on information submitted by ExxonMobil regarding gas-to-power generation.

From the 19-20 of September, the Working Group held discussions between the government and ExxonMobil, which involved a presentation of the project overview, engagement and feedback from the Working Group and discussions on the way forward regarding activities to be pursued.

On October 3 and 6, 2017, the discussions continued to focus on the Site Selection Report, and an additional site was proposed for a cost/benefit analysis and further meetings continued to be held among government representatives through 2017 into the first quarter of 2018.

“Pursuant to the 2016 study, the government undertook an update of the study on system expansion of the generation system, preparations for which commenced in November 2017, with support from the Inter-American Development Bank. This update was essential to develop scenarios for potential use of natural gas and renewable energy sources. Concurrently, a draft Proposal for a Full Feasibility Study was submitted by Energy Narrative to the MoPI and the IDB for consideration on November 3, 2017,” the ministry stated.

Between November to December 2017, documentation for the procurement process
with the IDB for an update of the Study of the Generation System and System Expansion was prepared. However, in accordance with the IDB’s process, this contract did not officially commence until February 2018.

On January 8, 2018, a Cabinet Paper on Site Selection and the Natural Gas Project was prepared and presented to ensure continued transparency and awareness. Then in February 2018, a scoping meeting was held between the MoPI and the World Bank to determine
areas of possible technical cooperation and assistance.

Brugman SAS, a consultancy group from Colombia, was contracted by the IDB for the Update of the Study of the Generation System based on discussions and plans made in November – December 2017.

In March 2018, the feasibility study by Energy Narrative commenced on the proposed natural gas project as an update to the Desk Study completed in 2017. As an offshoot of this feasibility study, a technical ‘Gas to Power Study’ Expression of Interest (EoI) was advertised by the IDB for consulting services for a technical and economic feasibility study for the development of natural gas use in electricity generation in Guyana.

This was followed by a presentation to Cabinet by the Working Group on March 20, 2018 which led to permission being granted to continue to explore further the most suitable sites identified in the report. April 2018 saw discussions and document-preparation being continued with the World Bank for contracting an economic adviser for gas matters. It was also in this month that Mangal’s appointment ended.

From April to May 2018, the MoPI reconvened the Site Selection Team as a Site Development Team to conduct further internal developmental work to evaluate
various technical and economic considerations. From May to June 2018, a completion and presentation of the study by Brugman SAS was made to the government and stakeholders.

Then, in August 2018, the Department of Energy (DoE) was established which saw oil and gas matters and further discussions on natural gas being diverted to the DoE. A Working Group was therefore established in September 2019 with EEPGL regarding associated natural gas.