Like many small-to-medium scale agro processors, 63-year-old Sandra Craig is eager for a solution to Guyana’s unstable power supply. Since moving from a small “snackette” in Orange Walk, one of the bustling streets in Georgetown, Guyana’s capital, to having her own agro-processing facility in Norton Street, Craig said major expansion could have been on the horizon were it not for the challenges posed by the country’s unreliable grid.
Craig’s modest business entails an irresistible line of over 20 sweet to savory sauces and meat seasonings. Despite the success she has had with her innovative products, Craig lamented that high electricity bills continue to gnaw at her profit margin.
“My energy charge is about GY$67,000 (US$320) a month,” said Craig, adding that frequent power outages, known colloquially as “blackouts” have been a daunting challenge for her business. “It really keeps me down because, sometimes, in the height manufacturing, we have to stop and do our blending manually.” Craig explained that this sets her back with her orders on many occasions.
Overall, she said “blackouts” have cost her approximately GY$500,000 (US$2400) in losses. Craig said she would welcome with open arms any project that the government can bring to give her business reliable energy while slashing costs by 50 percent.
Told that this is the promise of the Guyana Government’s US$1.7 Billion Gas-to-Energy Project, Craig said, “If it is able to deliver on that promise, I would gladly accept it because that would cut down my costs and the money I am paying on electricity can do something else for this company. I would be grateful if this project can come through because I can expand my business.”
The government wants to make good on this promise not only for Craig but the entire manufacturing industry. In August 2020, the Irfaan Ali-led People’s Progressive Party/ Civic Government (PPP/C) promised that it would bring an end to power outages on or before the next General and Regional Elections set for November 2025. Guyana’s Senior Minister with responsibility for Finance, Dr. Ashni Singh predicted that the gas-to-energy project will transform Guyana’s economy.
Notably, this project, set to be the most expensive undertaking in the country’s history at a whopping US$1.7 billion, is being done in partnership with an ExxonMobil-led consortium.
For ExxonMobil and its partners Hess and CNOOC, they are collectively tasked with building a massive 12-inch diameter pipeline network set to cost approximately US$1 billion. That structure will first connect to the Liza Phase One and Liza Phase Two Projects in the Stabroek Block, located in Guyana’s ultra-deep waters. At least 50 million standard cubic feet of gas would be transported through the onshore pipeline network, then into integrated facilities at the Wales Development Site, West Bank Demerara (WBD). Notably, the pipeline will be big enough to offtake 130 million standard cubic feet of gas per day, should there be enough demand for it locally and regionally.
As for the Guyana Government, it is responsible for the onshore facilities which entails a 300 MW natural gas power plant and a natural gas liquids (NGL) plant. The construction of those two plants is managed by US-based partnership CH4/Lindsayca at a cost of approximately US$759 million. The entire project is expected to come online by the end of 2025. Thus far, approximately GY$73 billion was spent in 2022-2023 by the central government on this project. Guyanese authorities also budgeted an additional GY$40 billion for the project in 2024, accumulating GY$113 billion, equivalent to US$542 million using a $208.5 to 1 exchange rate. It has since applied to the US Exim Bank for a US$660M loan that up to the time of publication of this article, was still awaiting approval.
“It goes without saying why this project is critical,” Minister Singh said. “Beyond the fact that it will provide Guyana with a more reliable and cheaper source of electricity generation when compared to HFOs, thereby making our manufacturing sector more competitive, there is potential for other industries to be created,” said Minister Singh.
With the gas-to-energy project, Minister Singh believes Guyana can produce its own cooking gas and cheaper fertilizers for the agriculture industry. These are both seen as major anchors for a diversified Guyanese economy. Additionally, Minister Singh said Guyana boasts the raw materials necessary to build out a major petrochemicals industry which supports the manufacturing of products such as plastics, soaps, detergents, and pesticides.
With the possibility of gas triggering a new industrial revolution, the government has embarked on a National Gas Monetization Strategy for the 17 trillion cubic feet of gas unlocked thus far across the Stabroek Block.
As it continues the process of refining that document, the government in January 2024, issued a Request for Proposals (RFP) seeking private sector pitches for the design, financing, construction, and operation of gas infrastructure to support current and future upstream developments.
In the meantime, the government’s focus remains on getting the gas-to-energy project up and running on or before the next electoral cycle.
GPL’s Role
The success of the Gas-to-Energy project is hinged on the Government’s ability to transform the archaic, ailing power systems at its state company— the Guyana Power and Light (GPL). This agency is expected to ensure that the national power grid can serve as an effective conduit for the additional 300MW of power come 2025.
GPL’s systems are currently struggling to keep pace with the electricity needs of Guyana’s booming economy, often leading to constant power outages. As an interim solution, the government hired a powership from Karpowership International out of Turkey to inject up to 36MW of power into the national grid.
Once the Gas-to-Energy project comes on stream, GPL said it can convert at least four of its main power plants at Garden of Eden, Kingston and Vreed-en-Hoop to consume natural gas as the primary fuel and HFO as the contingency fuel.
In its Development and Expansion Plan for the period 2022 to 2026, GPL said the conversion of these power plants will result in significant reduction of its present operating costs and extension of their economic operational life by 12 to 15 years.
Overall, GPL’s document says the Gas-to-Energy project would be supported by HFO backup systems.
Opportunity for Prosperity
Trinidad based – Energy Strategist, Anthony Paul agrees with stakeholders like Guyana’s Senior Minister of Finance, that gas has the potential to usher greater prosperity for the nation, provided that all the right moving parts are in place.
“It is a highly valuable resource that you should not leave in the ground. In many ways it can bring larger sustainable benefits to Guyana,” said Paul, who hails from the Caribbean’s longest hydrocarbon producer for more than a century. But Guyana’s success would be hinged on several critical factors, said Paul. Along with ensuring the infrastructural affairs of GPL are in order, Guyana needs to have a comprehensive understanding of how much gas it has in the ground, said Paul.
“That’s such an important factor…By not knowing exactly how much you have, you are depending on the company (ExxonMobil and partners) to tell you what is possible and when…” the Energy Strategist explained.
Guyana continues to work with a 2022 resource count from ExxonMobil which states that it has about 17 trillion cubic feet of gas. However, there have been a slew of other discoveries since 2022.
Speaking to press in February, Country Manager for ExxonMobil Guyana, Alistair Routledge pointed out that his company is no longer focused on carrying out appraisals for resource updates. The objective for Exxon is bringing into operation, the six projects already approved by local authorities. By 2027, Guyana is expected to produce over 1.3 million barrels of oil per day.
As work continues on those six projects, Routledge said some exploration and appraisal work will be done in 2024 to determine where gas is optimally deposited in the South Eastern portion of the Stabroek block. Routledge said there are ongoing discussions on concepts that can be used to facilitate gas production.
“When we are producing black oil developments, the typical FPSO approach works exceptionally well,” Routledge said.
“When you have a lot more gas relative to liquids (in a well), is that still the right concept? We are asking those questions and we are doing a lot of facility concept evaluations in parallel with understanding the resource,” the ExxonMobil Country Manager posited.
For Paul who has been tracking Guyana’s oil development since 2015, he insists that local authorities should have a working knowledge of the gas resource before taking any step further. Along with having a full picture of the total gas discovered, Paul asserted that Guyanese authorities must know exactly what they want with the gas. This is something that Trinidad did early on, and very well, he said, adding “We made it very clear that oil and gas has to be done in a way that maximizes the benefits for national development.”
Trinidad and Tobago’s vision entailed strategies to get the most gas out of the ground. The Energy Strategist pointed out that getting “the right fiscal regime” in place along with securing jobs and adding value to resources through downstream gas processing are all critical.
While Trinidad had the right outlook, and for the most part, an effective execution plan, everything went off track when authorities got hungry for more revenues.
“Trinidad decided let’s go fast and get more money out of the ground,” shared Paul as he noted that this marked the establishment of four Liquified Natural Gas (LNG) trains. Paul explained that this project materialized despite technical advice that the CARICOM member state did not have adequate reserves to support all four LNG trains sustainably.
“The government didn’t listen because it saw that it was getting money faster and what happened is that the gas ran out and we have plants that are built to last for 50 years but have had to shut down after 20 years,” Paul said. He warned that this is the danger Guyana faces if it does not manage gas production well.
Paul said Guyana could avoid some of the major pitfalls with gas management by expanding its Gas Monetization Strategy into a more holistic Gas Master Plan. To ensure the government follows this plan, he said it must become embedded in law and overseen by an independent regulator.
“It all means nothing if your legislative and governance systems are not formulated in a manner that demands transparency and accountability,” Paul declared.
Pandora’s Box
While Guyanese government officials and industry stakeholders hold firm that Guyana’s pursuit of gas could be potentially transformative, Attorney-at-Law, Melinda Janki urges against its extraction, much less use for multiple industries. Contrary to the government’s belief that gas brings extraordinary value while serving to be part of the nation’s energy transition goal, as outlined in the Low Carbon Development Strategy 2030, Janki asserts, “It’s complete nonsense!”
Janki who was also instrumental in drafting Guyana’s 1996 Environmental Law labels gas as another type of “polluting fossil fuel”. This she said emits greenhouse gasses when produced and used. Janki insists that Guyana should move straight to renewables instead of using gas.
“By locking Guyana into gas, the government is actually… preventing Guyana from investing in renewable energy,” Janki pointed out.
Further, Janki said the move to gas cannot be considered part of a “development strategy.” She explained that development entails, in this context, moving forward in a sustainable manner. She said investment in gas is not only a backward approach but also serves the interest of foreign entities such as ExxonMobil and its partners in the Stabroek Block, Hess Corporation and CNOOC Petroleum Guyana Limited.
Janki’s position is also shared by two Guyanese women who are not only concerned about the absence of a feasibility study for components of the gas-to-energy project, but the overall implementation of it by the government. It is on this premise that activists Vanda Radzik and Elizabeth Deane-Hughes had filed a lawsuit in March 2023 to quash the Gas-to-Energy Environmental Permit granted to ExxonMobil and partners for pipeline installation. They had argued that Exxon lacked permission to operate on lands designated for the pipeline route.
Despite their efforts, Justice Priya Sewnarine-Beharry rejected the case in October 2023 as she deemed the activists not “personally aggrieved” by the EPA’s decision and found no clear evidence of a public wrong. The court further emphasized the substantial fiscal investment in the project and concluded that halting it would disproportionately harm Exxon and the State.
Janki considers this case a critical one as it sought to ensure that the Environmental Protection Agency, a statutory body, does its job. More importantly, the Lawyer feels that citizens have every right to hold the executive power to account, adding, “We want to know what you’re doing because you are accountable to us. You are our servants. You are not bosses…”
While the court case did not succeed, both activists have written to the US Exim Bank asking the Bank not approve Guyana’s application for a US$660M loan to support the gas-to-energy project. The duo has also asked the bank to consider environmental concerns about the project.
Environmental Implications
Guyana’s Environmental Protection Agency had notified the public on January 6, 2023 that the government’s planned 300 MW natural gas power plant would not require an Environmental Impact Assessment (EIA). No EIA was required for the NGL plant too. According to the regulator, ExxonMobil Guyana on behalf of its partners had conducted an EIA for the portion of works it is required to handle for the project, and in so doing, delivered a comprehensive document that included a Cumulative Impact Assessment (CIA). The CIA concluded that there will be no significant impacts from the combined activities of the pipeline structure, the 300MW power plant and the NGL facility.
In the EIA however, it was noted that there are a number of unplanned events which were considered. The document states for example that if an unplanned release of gas from damaged subsea pipelines occurs, a gas plume would rise from the seafloor to the sea surface. It was noted that fire or explosion accidents can occur when the released gas disperses into the atmosphere and encounters ignition sources, which could have an adverse impact on human life and environment in the immediate vicinity of the fire.
To reduce the likelihood of such a release, the EIA states that the offshore pipeline design and installation will vary depending on the pipeline depth. At a minimum, the pipeline will be laid in a trench, with sections closer to the nearshore area buried, which will reduce the likelihood of an external impact causing a release. As for onshore pipeline integrity failures, the EIA states that these are rare, especially on such relatively short lengths of pipeline as in the case of the project. If a loss of integrity were to occur, the EIA states that the most likely causes would be a third party striking the line or corrosion of the pipe that ultimately led to a pipe wall failure. The document notes that there are a number of embedded controls to reduce the likelihood of a third-party line strike.
A series of potential scenarios involving a hydrocarbon release from the NGL Plant facilities were also screened. The EIA noted however that there will be numerous layers of protection to prevent a release of natural gas from the NGL Plant.
Conclusion
When it comes to the Gas-to-Energy Project, the stakes are high. On one hand, local authorities are hard pressed to deliver on an electoral promise that many before them have failed to fulfill. With the right oversight and careful implementation of other key moving parts such as the infrastructural overhaul at GPL, the gas-to-energy project could very well provide over 300,000 persons on the nation’s coast with cheaper, more reliable power, and even set a precedent for other such projects to come. On the other hand, if this project caves under the weight of its promise, it could be one of the most costly mistakes for the State.
As the government continues to walk this tightrope, the hopes of many ordinary folk like Sandra Craig, and the future of the country by extension, hang in the proverbial balance. In the years following the commissioning of this venture, Guyanese will come to know if the pursuit of gas by its leaders was a pathway to prosperity or pandora’s box.
This story is supported by the Guyana Press Association Energy Reporting Grant funded by the Open Society Foundation.