Flaring fees almost doubled as Environmental Permit for Liza Phase 1 Project renewed

Liza Destiny flaring (Annette Arjoon photo)

The Environmental Protection Agency (EPA) has renewed the Environmental Permit for the Liza Phase 1 Project within the Stabroek Block, offshore Guyana, for another period of five years.

The Liza 1 Permit was approved back in 2017 and two years later, US oil major ExxonMobil and its co-venturers in the Stabroek Block began oil production with the Liza Destiny Floating Production, Storage and Offloading (FPSO) vessel. Since then, the operators have started production at a second Field Development – Liza 2 – with the Liza Unity FPSO.

According to regulations, the oil giant submitted an application to renew the Liza 1 Environmental Permit six months ahead of the May 31 expiry date.

In a release to the media, the EPA stated that the renewal was entirely in keeping with the Environmental Protection Act Chapter 20:05, and came following the EPA’s careful consideration of the compliance of Esso Exploration and Production Guyana Limited (EEPGL) compliance with the first iteration of the Environmental Permit for the Liza Phase 1 Project.

The Liza Phase 1 Project was the first petroleum development project to have been approved in the Stabroek Block. Progressing from the knowledge and experience gained during the course of this project, the renewed permit specifies further conditions and standards which will ensure that all environmental and social safeguards are taken for the protection of human health and the environment.

The Permit strictly prohibits routine flaring and venting, and specifies that flaring is only permissible during commissioning, start-up, and special circumstances.

“The Permit also goes further to require the Permit Holder to pay US$50 per tonne of carbon dioxide equivalents (CO2e) emitted as a result of flaring in excess of permitted periods. This marks the highest sum to be levied in the event flaring is above stipulated limits and payable in these circumstances, progressing from US$30 under the first Environmental Permit (modified) for the Liza Phase 1 Project,” the EPA said.

Further, among the notable conditions, the Permit ensures that EEPGL is held liable for all costs associated with clean-up, restoration, and compensation for any pollution damage which may occur as a consequence of the project, and keeps indemnified the EPA and the Government of Guyana in the event EEPGL and its co-venturers fail to meet their environmental obligations under the Permit.

Further, the financial assurance provided must be guided by an estimate of the sum of the reasonably credible costs.
In addition, the EPA added that the Permit provides for the targeted monitoring of the effects of effluent discharges from the project within the Area of Influence.

“The effluent streams to be monitored include, but are not limited to produced water, bilge water, cooling water, and greywater. The Permit requires the submission of the effects of these discharges every six months. Further, EEPGL is required to submit safety case information, including a Risk Assessment prior to the drilling and development of wells.”

Finally, it stated that EEPGL was also enjoined to establish and maintain a grievance mechanism in keeping with the World Bank’s Approach to Grievance Redress in projects, to ensure that complaints from individuals and communities who may be affected by the project are received and addressed.
There is a requirement for reporting the same and what actions were taken to address the grievances to the EPA.

A few days ago, EPA Executive Director Kemraj Parsram had related that they were looking to include some strong measures aimed at preventing any activity that could harm the environment.

“The Yellowtail [Exxon’s fourth Development Project in the Stabroek Block which was approved in January] Permit that was recently issued, there are some stronger measures in there and so we just expect to put those similar measures into this Liza 1 Permit as well,” he had explained.

Further, the EPA Head had outlined that they were also looking at other key preventative measures that were not included in the initial Liza 1 Permit including flaring, insurance, and other aspects.

The Liza Destiny FPSO began production in December 2019 with a 120,000 barrels of oil per day (bpd) capacity. However, the US oil major said it was now delivering at better-than-designed capacity.

This was after the Liza Unity FPSO came on stream earlier this year, adding another 220,000 bpd to Guyana’s output.
ExxonMobil’s operationalisation of the two FPSO vessels comes about seven years after it first discovered oil offshore Guyana in May 2015.

The Stabroek Block’s recoverable resource base is currently estimated at more than 11 billion oil-equivalent barrels and has the potential to support up to 10 projects.