Oil-Rich Guyana Is Looking To Build A New Energy Economy
- Guyana became a major holder of oil and gas reserves in 2015 when ExxonMobil found oil in its waters.
- Guyana wants to use the large oil and gas discoveries over the past half-decade to bolster its economy.
- Guyana plans to have a natural gas pipeline built from key developments to the shore for a gas-to-energy project
One of South America’s poorest countries, Guyana, became a major holder of oil and gas reserves in 2015 when ExxonMobil found oil in its waters in what turned out to be a block with resources estimated at 10 billion oil-equivalent barrels and counting.
Now Guyana wants to capitalize on the large oil and gas discoveries over the past half-decade to build up an economy powered by its own energy resources.
The South American nation became a crude oil exporter in early 2020, thanks to Exxon’s huge discoveries offshore Guyana. Over the past two years, the U.S. supermajor and Hess Corp, its partner in the prolific Stabroek Block, have made a dozen more discoveries, while the Liza Phase 1 project is very profitable for the oil corporations and for Guyana.
Liza Phase 1 and 2 developments break even at around $35 a barrel and $25 per barrel Brent, respectively, Hess says. Liza Phase 2 start-up is expected in the middle of 2022 via a floating, production, storage and offloading vessel (FPSO) designed to produce up to 220,000 barrels of oil per day (bpd).
Guyana is looking beyond the oil export revenues from the Exxon-operated projects off its shores. It plans to have a natural gas pipeline built from the Liza 1 and Liza 2 developments to the shore for a gas-to-energy project to generate electricity and feed industries as it aims to capitalize on the huge oil and gas resources to develop its economy.
This summer, the government of Guyana said it was looking for partners to invest in a $900-million gas-to-energy project for a natural gas pipeline from the Liza developments to the shore. The planned 225-kilometer (140 miles) pipeline from the Liza area to the Wales Development Zone (WDZ) is expected to feed a gas processing plant and a natural gas liquids (NGL) facility, capable of producing at least 4,000 barrels per day, including the fractionation of liquefied petroleum gas (LPG). A power plant with a total capacity to generate 300 megawatts (MW) of electricity and an industrial park that could use gas, steam and/or electricity are also part of the gas-to-energy project.
ExxonMobil’s affiliate Esso Exploration and Production Guyana Limited (EEPGL) has guaranteed the government that a minimum of 50 million standard cubic feet of gas per day will be transported from the Liza projects via the pipeline by 2024.
The power plant construction is slated to begin next year, while financing is still being lined up, Peter Ramsaroop, CEO at Guyana’s government agency GoInvest, told Bloomberg in an interview this week.
“Guyana must have the gas and hydropower to be able to bring a competitive economy to the point where we can depend on our own energy to deliver our goods and services,” Ramsaroop told Bloomberg on the sidelines of the Dubai Expo.
During the same event, Guyana’s President Irfaan Ali told potential investors:
“Guyana needs to convert its abundant resources. We need you. We welcome you, and we urge you to remember the name Guyana and to keep the name Guyana in your plans for growth and development, both in country and by businesses and sectors.”
“We will continue to pursue oil production offshore, but onshore we will definitely intensify the decarbonisation of the economy,” Ali added.
Exxon, for its part, “expects to make significant progress over the next few years in cooperation with the Government of Guyana to advance a gas-to-energy project,” the supermajor told Bloomberg in a statement.
Guyana’s government bets on the project, which it expects to come on stream by late 2024, to more than halve its electricity costs, seen by the private sector as prohibitive to investment in the country, the South American nation says.
The government expects the gas-to-energy project to revolutionize and significantly improve the ease of doing business in Guyana, it said in July.
The gas from the recent massive oil discoveries could transform Guyana’s economic fortunes forever.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.