OIL and gas exploration and marketing and the resultant revenues have transformed the Guyana economy so much that it is now unrecognisable from what it was just six or seven years ago. Since oil is part of the equation, which is far more important and impactful than gas, most citizens are aware of the basics of the oil industry, but comparatively, few know the basic facts of the gas industry, and the media reports often confuse readers. For instance, the media often speaks of ‘Gas to Shore’ and ‘Gas to Energy’ as if they were different projects while they are identical. In this article, we shall endeavour to provide the elements of the gas industry.

In every oil well, an amount of gas is either released into the atmosphere by being burnt or, in rare circumstances, pumped back into the well. Accordingly, chimneys with continuously burning gas fires are part of the “trade mark” of the oil industry. Gas could be converted into electrical power or cooking gas, but this requires establishing a new industry with heavy financial investment.

The Government of Guyana has decided to invest in the gas industry, and the reason they have done so is first, because the gas is free, and second, the gas could be converted into power, and this will bring down the cost of electricity by 50%. This would not only be a financial relief to every family, but it would also make power much cheaper for the industry and could stimulate an Industrial Revolution. Plans are also made to convert the gas to liquid cooking gas, which will also be cheaper than the present imported cooking gas, and the surplus could be exported. It is estimated that the new gas industry would save the country US$100 million annually.

There was much discussion and lobbying about whether the gas installation should be located at the former sugar estate in Wales on the West Bank, Demerara or at Palmyra in East Berbice. Wales was chosen since the swampy conditions at Palmyra would have entailed greater expenditure and some delay.
The establishment of the project could be broken down into five elements: The first is laying the pipelines; the second is building the Power plant and the natural gas plant; the third would be to move the power to the control centre; the fourth would be to build that control centre; and fifth would be to upgrade the Transmission and Distribution Systems to be able to receive the power from the Control Centre and efficiently distribute. Each of these elements has a large number of ancillary activities attached.

The first thing that had to be done was to lay aside one billion US dollars to cover the first element, which was the laying of the pipelines. The gas would be accumulated on ExxonMobile’s Floating Production Storage and Offloading (FPSO) vessels and the transmission pipes would be connected thereto. The landward side had to be prepared for the pipes, which involved the site preparation of 100 acres and a laydown yard, repairing /constructing roads leading to the site, and establishing the material offloading facility. The connecting of the pipeline to the FPSOs takes about four weeks, and this would imply a loss of revenue, but Exxon has been able to have its maintenance shutdown of two weeks coincide with the pipeline connection process, so there would be a loss of revenue for two weeks instead of four. Exxon’s contractors are responsible for the pipe laying, which involves laying 200km of 12-inch pipe from the FPSOs to the state-of-the-art Power plant and Natural Gas Liquids facility.
Thereafter, the power goes to the control centre, which is modern and well-equipped, and then is transmitted to the Guyana Power and Light (GPL) Systems, which have been upgraded. This Gas to Energy project will come on stream next year, 2025, and if, in the unlikely event that the Contractors fail to deliver on time, they will be subjected to pay liquidated damages of US$11 million per month.

The Guyanese public looks forward to the completion of the project since it will reduce every family’s electricity bill by more than half, and the business community enthusiastically welcome it since it will reduce costs, improve profitability and open the way for new manufacturing and industrial undertakings. A manifestation of this is the revelation of the President of the Guyana Manufacturing and Services Association (GMSA), Mr Ramsay Ali, that blueprints for a glass bottle factory and a waste recycling plant would be ready when the new power prices come into being.