By Lisa Hamilton

Guyana is now expected to make its third million-barrel crude lift in the first week of August, a delay from the previously estimated July timeline, due to challenges experienced with ExxonMobil’s gas compressor.

This information was confirmed to the newspaper by Director of the Department of Energy (DE), Dr. Mark Bynoe, on Thursday. “This lift is scheduled for the first week of August 2020. The slippage has been due to the gas compressor issue that meant production had to be carefully managed,” the DE Director explained.

The Oil and Gas Company had encountered issues with its gas compressor during after it increased production in mid-May. Key specialist technicians were required to repair the units but, due to the COVID-19 pandemic, repairs were initially delayed to observe travel restrictions, safety and isolation protocols. The technicians had to first pass through travel restrictions and undergo a two-week COVID-19 screening process.

It caused concern amongst Guyanese who received reports that ExxonMobil resorted to flaring billions of cubic feet of natural gas due to the challenges. Though authorised by the Environmental Protection Agency (EPA) to conduct ‘start-up flaring’ – a common practice when gas and liquids are introduced into new facilities and equipment – the issues encountered with the compressor were unexpected.

As ExxonMobil worked to reduce the excessive flaring, it significantly reduced production on the Liza Destiny to reduce the amount of gas being flared. Senior Director of Public and Government Affairs at ExxonMobil Guyana, Deedra Moe, told the newspaper yesterday that since making some initial repairs, 85 per cent of the produced gas from the reservoir is now being injected and production has been ramped up. “We have two of the three gas handling systems online and are performing additional repairs to be able to safely complete final commissioning of the system,” she said. This is even as Nasdaq reports that, since the positive changes, the previously reduced crude oil production has risen from approximately 27,500 barrels per day (bpd) to 80,000 to 90,000 bpd.

This third lift of Guyana’s share of crude will mark the final for Shell Western Supply and Trading Limited under its contract to purchase Guyana’s first three cargoes.

Guyana sold its first million-barrel of crude on February 19, 2020, raking in nearly US$55M. In its second million-barrel sale the country received US$35M. Along with the US$4.9M in royalties received from first quarter gross production and interest Guyana has over US$90M in its Natural Resource Fund (NRF). The newspaper was made aware that approximately 18.5 million barrels will be produced by the end of 2020 relative to performance given the previous challenges.

Guyana is entitled to five crude cargoes for this year as part of its profit share with ExxonMobil and its Joint Venture (JV) partners. This means that after Shell would have received its three cargoes by August, the country can market its crude to another company or location. This will be in addition to 2 percent royalty on all crude produced at the Liza Phase 1 Development; 12.5 per cent profit oil; withholding taxes; foreign direct investments and benefits from JV initiatives, employment and jobs for service suppliers.
As ExxonMobil liquidates its costs, by 2025, 50 per cent of all Guyana’s oil sold will come to Guyana rising up to 52 per cent return on every barrel of oil sold.

In the meanwhile, 34 large oil traders from around the world have submitted Expressions of Interest (EOIs) to market Guyana’s crude and 19 have been shortlisted by the DE. The Department is also in the process of contracting the services of an O&G Advisor to the Director of the DE; a Contract Administration Specialist and a Sub-surface Engineer. Dr. Bynoe told the newspaper on Thursday that the pandemic has contributed to a delay.

He stated: “As you may be aware, the modus operandi employed by the DE is to have these technical experts in-situ as much as possible to allow for knowledge transfers and mentoring to take place. With the various travel restrictions this would mean that, under the current scenario, they would have to be performing their functions mainly from outside of Guyana. This is not the model the DE wishes to promote.”

Guyana’s two international airports have been closed to unauthorised international flights since midnight on March 18, after Guyana recorded its first COVID-19 case on March 11. However, this does not affect special authorised flights such as repatriation flights, outgoing flights, cargo flights, medivac flights and technical stops. According to the Guyana Civil Aviation Authority (GCAA), it is now expected that Phase Two of Guyana’s air travel re-opening could come by August 28, 2020. It will facilitate limited incoming flights from citizens, permanent residents, international workers and diplomats.