GUYANA: AFC issues `white elephant’ warning over gas to shore project

In a statement today, the AFC noted that the government was relying on studies which had been developed during the last administration in which the AFC was a coalition partner of APNU.       

Former Min. David Patterson

Delivering a statement at an AFC press conference, former Minister of Public Infrastructure David Patterson said that the government had culled selectively from the reports and importantly Wales, West Bank Demerara had been rejected in the consideration of the possible sites. The PPP/C government has been adamant that it will site the gas to shore project at Wales.

The statement made by Patterson follows:

The AFC notes with satisfaction that the PPP has acknowledged the depth and quality of the studies undertaken during the Coalition’s stewardship of the Oil and Gas sector and had to begrudgingly confess that they have based their decision to bring gas to shore, solely on the studies undertaken during the coalition administration. However, we noted that they have deliberately only highlighted the sections of these studies that lent support to their unilaterally selected site, while ignoring other relevant and critical aspects of these studies. Irrespective of the basis, this decision to locate the gas site at Wales, is premature, incomplete, and requires additional detailed studies.
Importantly, none of the studies commissioned under the coalition administration recommends the site selected by the PPP, nor even supports the costs the PPP are now associating with the gas to shore project. As a matter of fact, it is important to note that Wales was considered among 10 sites but rejected in the studies. A Value for Money audit should be undertaken to determine the viability of the proposed costs of constructing an onshore pipeline for US$80M – US$100M as opposed to selecting a site closer to the coastline, and using these sums to do site clearance, protection, and filling. Conservative estimates indicate that such an approach will be far more cost effective.

The PPP claims that urea will be a byproduct at the stated volume of gas (50mfd). This claim is not supported by any of the studies. In fact, the studies state that for urea production, a minimum excess amount gas of 74mfd will be required. The projected excess amount of gas after utilization for power production is calculated at 15mfd – which makes it uneconomical and impracticable – yet the PPP has used this promise as one of their justifications for moving ahead with the gas to shore project. We reiterate that more studies are needed on this project concept!

The PPP has presented a proposal to install a Liquefied Natural Gas (LNG) plant which it is claimed will produce approximately 3,400 barrels per day. Noting that in 2020, Guyana’s total Liquefied Petroleum Gas (LPG) usage was approximately only 2,000 barrels per day, they have decided on a plant without the provision of any plans for utilization of the excess volumes. The studies clearly state that exporting this small amount is not economically viable. Under the Coalition government, studies had commenced to assess the possibilities of powering our revised public transportation system with excess gas. Unless such studies are completed, any decisions on the gas to shore project remain premature and incomplete.

The projected costs of US$900M is exclusive of costs for power generating plants as well as transmission of the power to GPL power distribution stations. The studies utilized by the PPP listed the costs for the power plants and transmission lines to be US$240M and US$85M respectively – which would make the total project cost approximately – US$1.225B. This astonishing sum will be added to Exxon’s cost recovery total during the next four years, thus further delaying the opportunity for our country’s citizens to benefit from our natural resources.

What should be of great interest to the Guyanese public, is that using these same studies, the Coalition government planned to deliver a project that produced 188MW of power plus 2,200 barrels of LNG daily for a price tag of under US$600M – half the amount that the PPP is demanding, and they have shown no additional value as a justification for these huge increases in expenditure – other than the typical “Money for the Boys”.

Further, based on the studies, the quantity of gas (50mfd) being proposed to be utilized by the PPP will only be guaranteed available for 11 years, while the 30mfd will be fully available for 18 years. The Coalition based our decision to utilize the lower quantity of 30mfd, not only because of cost but more so, because of our commitment to transition the country to one hundred percent renewables by 2040.  The Power Generation Study completed by the Coalition, provided a roadmap to this transition, with the introduction of a mid-scale hydro plant project by 2030. The decision to expend an additional US$600M at the expense of six years guaranteed gas supply is quite frankly – “voodoo economics”.

The AFC supports a gas to shore project, however the project proposed by the PPP is not economically or environmentally sound or sustainable. We therefore demand that further detailed studies be conducted before the country is saddled with its largest ever PPP white elephant.

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Comments

  • Dennis Albert  On 05/01/2021 at 5:00 pm

    The oil money didn’t reach the hands of the people, yet the plans to build more hotels, gas pipelines and gated communities at inflated prices is a symptom of the current government mindset.

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