Liza Field Development Plan: Further 10-year extension being contemplated to ensure gas supply – VP

…will only apply to gas-producing wells, not entire block

Earlier this year, ExxonMobil’s amended Liza Field Development Plan (FDP) was reviewed by the Government. The plan was amended to allow for the gas-to-energy project, and according to Vice President Bharrat Jagdeo, extending the life of the project by a further 10 years is being considered.
During his most recent press conference, Jagdeo spoke about the extension of the Liza Phase One project and clarified that it is in Guyana’s best interest to ensure the project cycle is extended, since this is where the gas is coming from to power the gas-to-energy project.
“There is one extension that we’re contemplating. It is to extend the life of the project by 10 years. There’s a simple reason for that. Whether you do technical or financial analysis, there is a necessity to move this project to supply the gas to over 20 years. The project cycle is a 20 years cycle. It would be longer,” Jagdeo said.
“Right now, when the project is completed in 2025 or so, they will only have 12 more years on the permit. So that means 12 more years for Liza to operate, to supply gas. We need that well to supply gas for 20 years at a minimum. So, we have an interest in extending that, not just Exxon. So that’s all that’s happening now.”
During a press conference, Opposition Leader Aubrey Norton had been critical of the Government’s decision to allow the postponement of Exxon’s relinquishment of 20 per cent of the Stabroek Block until next year.
But Jagdeo questioned whether the Opposition really understood the factors that led to this, since the Force Majeure clause in the 2016 Production Sharing Agreement (PSA) dictated Exxon be granted an extension due to the COVID-19 pandemic.
“I don’t think they understand. That’s the problem with Norton. He thinks we’re extending the overall permit for the Stabroek Block. We’re not extending the entire Stabroek Block permit. We’re extending only the permit for the well that is producing, that FPSO that’s producing the gas for the Wales project.”

“Now, because we’re not extending the Stabroek Block, they have certain relinquishment provisions that will kick in. So that is what will happen next year. Next year, they have to relinquish 20 per cent of the Stabroek Block, as per our law,” Jagdeo explained.
Back in April, Jagdeo had said that the review of the FDP for the Liza project had been completed, thus allowing for an extension of the Liza licence. The gas-to-energy project is set to come on stream by 2024, but the Liza permit will expire in 2037. Since the gas project has a 20-year lifespan, the Liza licence needs to be extended to at least 2044.
United Kingdom-based Bayphase had assisted Guyana with Exxon’s proposed amendments to the Liza FDP in order to facilitate the gas-to-energy project. While work has already started for the project, Exxon, which is investing over US$1 billion to build out the pipeline and assorted infrastructure, has not yet made its Final Investment Decision (FID).
President of ExxonMobil Guyana, Alistair Routledge had said in May that the drafting of the FID requires formalizing all the detailed documents, such as the FDP and revisions for the Liza fields – both Phase One and Two – thus making sure that all of the commercial agreements are in place, as well as ensuring that there is sufficient length of the project life to provide the gas to support the project.
The scope of the much-anticipated project features the construction of 225 kilometres of pipeline from the Liza field in the Stabroek Block offshore Guyana, where Exxon and its partners are currently producing oil. The pipeline would be 12 inches wide and is expected to transport per day some 50 million standard cubic feet (mscfpd) of dry gas to the NGL plant, but it has the capacity to push as much as 120 mscfpd. Based on studies conducted, Exxon would be able to produce up to 50 million cubic feet of gas per day for this initiative without impacting oil production activities offshore.
The multibillion-dollar transformational project, being piloted by the People’s Progressive Party/Civic Government (PPP/C), also includes the construction of an integrated Natural Gas Liquid (NGL) plant and a 300-megawatt (MW) combined cycle power plant at Wales, West Bank Demerara (WBD). (G3)