MUCH has been debated about the flaring of natural gas at Exxon’s offshore production facility that has gone on longer than many of us expected. While not ideal, it is important to put the situation into context and avoid hasty policy decisions based on hyperbole and a lack of technical knowhow.
When wells are drilled into an oil reservoir, “associated” gas comes up to the surface under pressure along with the oil. Companies have a few options to handle this gas, such as reinjecting it, processing it as liquefied natural gas, or flaring it. As a new producer, Guyana lacks the infrastructure to use the gas at this time, says Dr. Morgan Bazilian, director of the Payne Institute at the Colorado School of Mines and a former lead energy specialist at the World Bank, “[so] the practice is to flare or burn these gases.”
Unexpected issues with a gas compressor on the Liza Destiny floating production storage and offloading (FPSO) ship in the Stabroek block led to flaring being continued months after first-oil production began. While it is within Exxon’s permit to flare during the start-up phase, it had been hoped that by now the company would have been able to move to full production and use up nearly all of the associated gas through re-injection and to power the equipment on the vessel.
Any level of routine flaring is undesirable, no matter what the volume. Fortunately the Liza project was designed to avoid routine flaring beyond the start-up phase, barring technical glitches. It is the responsibility of Exxon and the other companies operating offshore to address these issues as quickly and safely as possible.
However, it is also important to put these numbers into perspective and not be led astray by pronouncements from some critics, who would prefer Guyana to sit on its oil wealth and be denied the revenue from developing this resource.
The top four gas-flaring countries are Russia, Iraq, the United States, and Iran, which together account for 45 per cent of all global gas-flaring, while the top 30 oil-flaring countries account for almost 95 per cent of total flaring. Contrary to some recent sensational claims, Guyana is not in the top 10 or even in the top 30 flaring countries. Those reports confused cubic feet and cubic metres, making it look as though Guyana’s output is much higher than it is in reality. Let’s give those critics the benefit of the doubt that it was an accidental mathematical error and not a deliberate attempt to mislead.
But while Guyana’s flaring is relatively minor in context and is occurring 200 kilometres from shore, it still has left many Guyanese wondering why it’s happening at all.
All new oil-production operations require some degree of flaring during startup for safety reasons. Even countries with the strongest environmental approaches allow flaring when production gets underway, or in the case of emergencies or equipment malfunctions. Liza Destiny is designed to avoid routine flaring, but in this case, flaring has enabled malfunctioning equipment to be safely repaired while allowing for some production and revenues to Guyana. Future plans to tap some of the gas to generate electricity onshore should also help.
At the end of the day, Guyana is the world’s newest oil producer and while unfortunate, it is also natural that there have been some speedbumps. Does that mean we should halt all production (and forego millions of dollars of revenue, the jobs and economic benefits) to decrease short-term flaring that is insignificant compared to the top 30 flaring countries?
According to Exxon, repairs have been hindered by travel restrictions due to COVID-19 that have also thrown a wrench into the supply chain. The current state of the world has made it much more difficult for specialised technicians to travel to fix critical equipment such as the gas compressor. Therefore, equipment had to be sent abroad for repairs by its manufacturers.
But, once repairs are made, Guyana should be able to follow the example of countries such as Norway that are on the path to eliminating routine flaring within the next few years. Liza Destiny and the other FPSOs planned by Exxon are already designed with this in mind and our government would do well to make eliminating routine flaring a policy goal as well.
Oil producers in the Stabroek block appear committed to avoiding routine flaring. Now it is up to them to get the situation with the current equipment challenges under control and put measures in place to ensure it does not happen again.
If they can accomplish that, Guyana will be well on its way to a status as one of the most environmentally friendly oil producers. It is important to ensure that the flaring currently happening, unfortunate as it is, is just temporary.