GUYANA: Under coalition the gas-to-energy project was US$400M but now its US$900M – Patterson

David Patterson

Sep 03, 2021 – Kaieteur News – As the PPP/C Government rushes ahead with plans to bring the controversial gas-to-energy project onboard by 2024, Opposition Member, David Patterson, has aired some reservations about the cost of the initiative to the nation.

In his most recent Facebook post on the matter, Patterson said, “My records indicate that in 2017, Exxon proposed to construct a pipeline for between US$400M – US$500M inclusive of onshore processing and an LPG (Liquefied petroleum gas) plant.”

He added, “Without any explanation, justification, or further studies, the cost for the exact same project by the exact same company has risen to US$900M.” Patterson expressed alarm that the project is already suffering from massive cost overruns even before a single piece of work or study is completed for same.       

However, Patterson is not the first to express such concerns on this front. 

Just recently, International Energy Analyst and Co-Director of Americas Market Intelligence (AMI), Arthur Deakin, posited that the massive gap in costs under the two administrations is already a cause for concern while adding that there needs to be consensus on such a crucial matter before any work commences.

Echoing similar sentiments was independent United States think tank, the Centre for Public Integrity (CPI). In the cases the global watchdog examined, it found that cost overruns on Natural gas projects “are the norm rather than the exception, often by 45% or more.”

In one of its analytical papers on this subject, CPI noted that initial estimates of capital costs for large petroleum projects are almost never correct. It said this has happened in Australia, Mozambique, Papua New Guinea and Angola.

Taking the cases it examined into account, the American think-tank urged countries, particularly new producers like Guyana to be wary of the costs for such projects as the evidence shows they are often times inflated.

In Guyana, the government says that the planned gas-to-energy project is expected to cost US$900M. But there is no guarantee that this would be the final cost. The requisite geophysical and economic studies are still being done for the project. Be that as it may, Vice President, Dr. Bharrat Jagdeo, previously gave assurances that the project costs would not exceed US$1B.

Kaieteur News had previously reported that the gas-to-energy project is being designed to provide 250MW of power to the national grid, following its estimated operationalisation in late 2024. It is also estimated to create about 775 jobs. About 700 of these will be aggregate to the construction phase, while the remaining 75 are for the other aspects of the project’s life cycle.

The proposed project would bring associated gas from two ExxonMobil Guyana-operated projects offshore being the Liza Phase One and Two operations via pipelines to onshore gas processing facilities. The pipeline would transport up to 50 million standard cubic feet per day of Natural gas to the facilities. The maximum flow of the pipeline is approximately 120 million standard cubic feet of gas per day.

All of the gas will be transported to the Wales Development Site. It should be noted that ExxonMobil in collaboration with the government, is moving ahead with this project at a time when the world is moving away from fossil fuel-based projects.

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