ExxonMobil must now pay fines to Guyana for excess flaring – EPA

Having flared millions of cubic feet of gas per day over the past year, US oil giant ExxonMobil will now have to pay fines for flaring excess gas outside of stipulated timelines set out in its Environmental Permit.
This is according to the Environmental Protection Agency (EPA), which has modified the Environmental Permit for the Liza-1 Development Project offshore Guyana to include, among other things, a fine of US$30 per tonne of carbon emissions going forward.

In a statement on Thursday, the EPA said the Liza-1 Environmental Permit “was recalled and modified to include specific regulatory requirements for flaring of associated gas offshore Guyana, in accordance with the EPA’s legislation”.
These were missing from the original permit that was issued under the previous A Partnership for National Unity/Alliance For Change (APNU/AFC) Administration.
Due to recurring technical issues onboard the Liza Destiny Floating, Production, Storage and Offloading (FPSO) vessel, the oil company recently resumed flaring. This follows intermittent periods of flaring since December 2019.
The oil major was projected to exceed the 14 Billion Standard Cubic Feet (Bcf) of gas estimated to be flared by the Environmental Impact Assessment (EIA) for the project on May 13, 2021. The Government has been under heavy pressure to clamp down on Exxon over its excessive flaring.
Against this background, the EPA said it has been engaging Exxon’s local subsidiary – Esso Exploration and Production Guyana Limited (EEPGL) – in discussions concerning the technical and legal issues regarding modifications to address flaring.
On Thursday, the two parties signed the Modified Permit. Among the changes are revised terms and conditions relating to emissions reporting requirements, technical considerations for flaring, timelines for flaring events and an obligation on the company to pay for the emission of Carbon Dioxide equivalent (CO2e) as a result of flaring in excess of these timelines.
The oil company is now required to pay US$30 per tonne of carbon emissions.
Exxon has come under fire for its increased flaring activities in recent years, with environmentalists up in arms over environmental and safety concerns.
Earlier this year, the company sent its gas compressor for repairs in Germany after it developed technical issues resulting in increased flaring. However, after it was reinstalled in April, technical issues were still encountered, forcing the company to significantly drop production.
It was reported that ExxonMobil’s local oil production plummeted to 30,000 barrels per day (bpd) of oil in mid-April, as the gas compressor that had been in Germany for much of February being repaired once again failed.
The oil giant had explained that other problems in the discharge silencer were detected during the final testing phase of the reinstalled flash gas compressor on board the Liza Destiny FPSO vessel.
It was explained that a team from SBM Offshore, MAN Energy Solutions and ExxonMobil was on site to assess repairs, supported by engineering experts in Europe and the United States.
Nevertheless, in a subsequent update on April 21, Exxon had said production was back up to 100,000- 110,000 bpd accompanied by a flare level of no more than 15 million cubic square feet of gas per day.
“These operating parameters were defined after careful consideration of safety, environmental, technical and economic factors as well as discussions with the relevant Government agencies on the best path forward while repairs and upgrades are ongoing,” Exxon’s Advisor, Janelle Persaud had said.
Further, the US oil major had expressed its disappointment with the design issues and continued underperformance of the compressor unit, saying it was below its global expectations for reliability.

Meanwhile, Natural Resources Minister Vickram Bharrat said earlier this month EEPGL would switch the manufacturer of the compressor equipment, to ensure there was no flaring during future projects.
“This now has forced us to enter into engagements with Exxon to ensure that the Unity FPSO that is coming later in this year, and then Prosperity in early 2024, that we don’t have this issue with those FPSOs… So, we have gotten that assurance that General Electric will be used as the manufacturer to ensure that the compressor, there is not a recurring problem on those FPSOs with the gas compressor,” Bharrat told reporters on the side-lines of an event last week.
General Electric is a renowned US multinational company.
The Minister said the adjustment needed to be made since both the Liza Destiny and Prosperity are each designed to produce 220,000 bpd – almost twice the amount the Liza Destiny was designed to produce.
In the meantime, Bharrat said the Government has been in contact with Exxon daily to ensure that a swift resolution was reached for the challenges on the Liza Destiny.
“It is not something that the Government of Guyana wants. It is not something that we will tolerate. It is not something, I believe, that Exxon-EEPGL wants either, because it is affecting production and worse yet, it is causing damage to the environment by the flaring of gas,” the Natural Resources Minister stated.
ExxonMobil has given a timeframe of two-three months to fix the recurring issues on the Liza Destiny FPSO.