FOR decades, oil and gas producing countries across the world, both developed and developing, have pursued gas to power projects to supplement electricity generation and support the development of new industrial sectors. Countries can also use gas to power projects to complement ongoing renewable energy development and meet sustainability goals. While these projects create numerous benefits, it is important to understand the process that makes them possible.
Associated natural gas is commonly found alongside oil in geologic reservoirs. This gas is extracted as a normal part of the production process. While the amount of gas found with oil varies widely from project to project, the industry uses it in a variety of ways to increase production, provide power, or supply other benefits.
In some cases, including Guyana, associated gas can be reinjected into the reservoir, which is safe and environmentally responsible. It can also be a profitable option if the reinjected gas is utilised to manage the pressure within an oil reservoir and maximise oil production. Many companies also use associated gas to power floating production storage and offloading vessels (FPSOs) or platforms to reduce operating costs.
Finally, associated gas can be sent by pipeline to shore and used for a number of applications including power generation and support for additional industrial sectors. Compared to reinjection and onboard power, piping gas to shore does require significant additional infrastructure and planning but once on shore it can deliver low cost energy on a large scale.
In addition to an underwater pipeline that can safely deliver gas to shore, gas to power also needs an onshore Natural Gas Liquids (NGL) processing plant that splits the associated gas into useable, purified natural gas, while separating out other products like ethane and butane that have other industrial uses. The purified natural gas, which consists primarily of methane, can be used for industrial purposes like fertiliser manufacturing or in a power plant, where gas-driven turbines can create low cost and highly reliable electricity.
While the infrastructure for gas to shore facilities may take time and significant resources to build, many countries have pursued gas as one of the cheapest and most reliable electricity sources. As Guyana is expected to become a prolific oil producer in the coming decade, the country has the opportunity to take advantage of associated gas and reduce electricity costs for many households. According to a study done by Energy Narrative for the government and the Inter-American Development Bank, electricity costs could fall by over half current prices, to as little as 7 US cents per kilowatt hour (kWh).
Canada has long piped associated gas to shore to generate cheap and reliable electricity. Today, over 11 percent of Canada’s electricity is generated with natural gas, some of which is piped to shore from FPSOs and platforms on the Atlantic coast. Gas to power efforts have also helped Canada’s energy mix become more environmentally friendly by reducing emissions from coal.
Regionally, Colombia has started using associated gas from its own oil production to generate cheap electricity and to complement hydro power, which can be disrupted by seasonal changes or drought. Trinidad and Tobago, perhaps the most prominent example given its proximity to Guyana, has used gas produced in tandem with offshore oil production for decades to generate electricity and fuel its profitable chemicals sector.
Although every country follows its own unique pathway in oil production, Guyana has an opportunity to take advantage of increasing amounts of associated gas being produced offshore. Gas to power provides several advantages including cheaper, more reliable electricity that generates fewer greenhouse gas emissions.
Transitioning to gas also provides Guyana with a pathway for renewable energy development. While gas provides more reliable, cheaper electricity in the medium-term, it can also serve as a complementary energy source once the country transitions to renewables. In the event of weather changes that impact wind or solar energy, gas to power can produce electricity in times of need and can quickly reduce production once renewable sources are available again.
Historically, Guyana’s high energy costs have held back development, but with gas to power, businesses could be able to operate much more cheaply. According to a study by the International Monetary Fund, Guyanese could expect basic living costs to fall by over 5 percent per month on average if the country switches to gas for electricity.
These feasibility studies are worth exploring and are widely available online and through government websites. Guyana’s Environmental Protection Agency (EPA) is also holding scoping meetings for the public to share their concerns and provide input on what should be evaluated by the Environmental Impact Assessment. These meetings also aim to increase transparency surrounding the project and engage the public as the project progresses.
As discussions continue, it is important to remember the full benefits that gas to power will provide to all Guyanese. In addition to lower household costs, reduced electricity bills can open up new industries, create more jobs and encourage new investment far beyond oil and gas—setting Guyana up for a better economic future over the next several decades.