Guyana receives $1.7B in flaring fines so far from ExxonMobil

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Flaring on Liza Destiny (Annette Arjoon)

Guyana has so far received payments to the tune of US$8.3 million ($1.7 billion) from ExxonMobil’s local affiliate, Esso Exploration and Production Guyana Limited (EEPGL), for 17 billion cubic feet of gas flared since production started.

In an interview with this publication, Environmental Protection Agency (EPA) Executive Director Kemraj Parsram revealed these figures. Included was the 1.5 billion cubic feet of gas that was flared since the start of this year.

Parsram noted that the oil company has been reinjecting almost 95 per cent of the gas, while using the rest to power the Liza Destiny Floating Production, Storage and Offloading (FPSO) vessel. He also noted that Exxon has been making progress on addressing the flaring issue.

“That was from 2021… when the permit was adjusted to allow for the payment of fees, which started at US$30 [per tonne]. And then we increased it to US$45 per tonne. They’re aiming for July to adjust the flash gas compressor. And hopefully, once everything goes well, they should solve the problem and go to background flaring,” Parsram said.

“Under normal conditions, there will always be some level of flaring. And that is a safety precaution. You always keep it lit, in case there is any emergency. But they’re still reinjecting 95 per cent of the gas.”

Exxon has come under criticism over its increased flaring in recent years with environmentalists up in arms over the harmful effects it has on the environment.

And with the EPA currently reviewing the Environmental Permit for the Liza 1 development in the Stabroek Block offshore Guyana, Parsram has said that they were looking to include some strong measures aimed at preventing any activity that could harm the environment.

The Liza 1 Permit was approved back in 2017 and two years later, ExxonMobil and its co-venturers in the Stabroek Block began oil production with the Liza Destiny FPSO vessel.

Since then, the operators have started production at their second Field Development – Liza 2 with the Liza Unity FPSO.

Last year, the US oil giant had sent the Liza Destiny gas compressor for repairs in Germany after it developed technical issues resulting in increased flaring. But after reinstallation in April, technical issues were still encountered, forcing the company to significantly drop production to as low as 30,000 barrels per day.

By May, production went up and flaring was at approximately 15 million standard cubic feet of gas. Over the following months, Exxon has since brought the compressor online and has been able to cut down its flaring by 96 per cent.

Last year, the company’s Production Manager, Mike Ryan, had explained that there were six operational gas compressors including the flash gas compressor, two main ones and injection gas compressor, and that flaring was reduced to approximately 6 million cubic feet per day.

Exxon has already said that a new redesigned flash gas compressor is being manufactured. This compressor, the company had said, would reduce flaring once it arrived in the country.

Natural Resources Minister Vickram Bharrat had previously said Government had engaged Exxon to ensure that the Liza Unity FPSO that arrived last year, as well as the Prosperity FPSO scheduled for early 2024, did not experience the same issues as the Liza Destiny.

The Minister had pointed out that the adjustment is needed since both Liza Unity and Prosperity are each designed to produce 220,000 barrels of oil per day – almost twice the amount of Liza Destiny.