OVER the last few weeks, the Stabroek Block operator, ExxonMobil, has been holding public scoping meetings for its new Yellowtail project. Traditionally, companies are focussed on consulting with any groups that might be impacted by development, a few of which include coastal communities and indigenous groups, as well as environmental organisations. Operating companies set up discussions as part of the Environmental Protection Agency’s regulatory requirements and to ensure that environmental and social concerns for future projects are understood.
In May 2021, a video presentation of the EPA’s Environmental Impact Assessments (EIA) process and a Yellowtail Project overview premiered on local television and social media, followed by three in-person consultations in Regions 1, 6 and 4, and four virtual sessions in keeping with COVID-19 restrictions. Although the pandemic might have changed the format of these meetings, they are still a crucial early step in the EIA development process. Input from scoping meetings shape the terms of reference for the EIA, identifying key matters to be considered.
Scoping meetings are the first step towards project development. Ongoing engagements for Yellowtail will support EIA studies and plans to develop the project. Upon completion of the EIA, and with a satisfactory outcome, the government would need to provide environmental permit as well as approval of the field development plan. Following these government approvals, the company would then announce its final investment decision (FID), signalling that the project is officially underway.
The Yellowtail project, ExxonMobil’s fourth planned development offshore, is forecasted to produce up to 250,000 barrels per day. When the floating production storage and offloading (FPSO) for the Yellowtail is in operation in 2025, total production capacity in Guyana could increase to more than 700,000 barrels per day. Although there is still much to be discussed before these projects come to fruition, including ongoing consultations, these announcements are promising for Guyana’s future.
Rebounding international oil prices, as high as US$71 per barrel recently, also have the potential to contribute to Guyana’s economic growth. According to a recent report by the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), Guyana’s economy will expand again in 2021, by over 8 per cent year-over-year, higher than most other regional countries even without additional production from ExxonMobil’s second project, which is expected in 2022.
Higher oil prices and more oil means increased revenues benefitting all Guyanese. According to a report by Rystad Energy, if oil continues to win a high price, Guyana could expect total revenues of more than US$28 billion by the end of the decade. Guyana’s fifth oil lift in February sold for US$61 million, a nearly 25 per cent increase in revenues from the last oil lift in December 2020. The sixth oil lift in April 2021 earned another US$60 million, which would push Guyana’s earnings to US$342.5 million since production began in December 2019
The Yellowtail FPSO will have a storage capacity of two million barrels of oil, significantly higher than that of the Liza Destiny FPSO. This increased capacity bodes well for Guyana as production ramps up, and the oil lifts are expected to increase in frequency. As production from new FPSOs comes online, Guyana will have more funds to support infrastructure projects, including the gas-to-power plant and the Demerara River Bridge project
Continued exploration and development of new offshore wells will be necessary for Guyana to ensure continued economic growth. Experts estimate that Guyana’s offshore oil and gas basins could support up to ten FPSOs in the future. It will be important that operators continue to support robust consultation processes to ensure that all stakeholders have a seat at the table, and equally important that citizens take these opportunities to participate.