Exxon’s oil spill insurance guarantee not limited to US$2B – Routledge

– capping stack purchased, to be delivered to Guyana soon

An example of a capping stack

While ExxonMobil Guyana has agreed with the government to provide a US$2 billion insurance guarantee in the event of an oil spill, the company’s President, Alistair Routledge, has made it clear that it is not limited by that figure.
During a press conference on Tuesday, Routledge was questioned about Exxon’s obligations in the event of an oil spill. While the company has lodged a US$2 billion insurance guarantee with the authorities, Routledge clarified that they are not limited by this.
“We’re not limited by any particular number. We’re not limited by a guarantee. But it is a guarantee that is based upon a good deal of technical work that has been done,” the oil executive said.
“We said we’ll take care of the obligations that we have, should such an incident happen. So, first of all, make sure it doesn’t happen, that’s a priority. If something should happen, then it’s all about mitigating that so there’s a minimum impact possible. And then we would take care of whatever needed to be taken care of. We made that commitment clear.”
Providing further assurances, Routledge pointed out that when one looks at the assets of the Stabroek block partners, there is more than enough money to take care of any oil spill.
Exxon’s Stabroek block partners comprise of CNOOC and Hess Corporation, who recently agreed to sell their shares in the block to Chevron. That sale is before an arbitration panel.
Meanwhile, Routledge also revealed that the company has purchased a capping stack, an integral piece of equipment for stopping well blowouts and mitigating spills. This, according to Routledge, will be a further assurance of Exxon’s seriousness about protecting the environment.
It is also in keeping with the permit for Exxon’s fourth development, Yellowtail, which requires EEPGL to procure a capping stack to be maintained, tested and stored in Guyana, ensuring that operators are in a state of readiness to cap any well in the event of a disaster.
“You will recall that as part of the Yellowtail project, we committed to invest in what’s called a capping stack. So, this is the technology that we already have access to. With multiple of these capping stacks around the world, we can mobilise them within days to get to Guyana. Should there ever be an issue with good control?”
“We did commit to purchase one. That will be arriving in Guyana in the next few weeks. A lot of people may have googled and looked up pictures and have an idea of what it looks like. But we’ll have it onshore here in Guyana and we’ll provide an opportunity for some people to come around and see one firsthand.”
The Yellowtail Development Project is set to commence production in 2025 using the “One Guyana” Floating Production, Storage and Offloading (FPSO) vessel, which will yield the largest target of 250,000 barrels of oil per day (bpd) during a 20-year period that will generate at least 1300 direct jobs.
Yellowtail, which will be located 126 miles offshore Guyana, includes up to three drill ships drilling up to 67 wells, the FPSO vessel and the SURF production system, with tankers taking the oil to global markets.
The US$10 billion development project will target an estimated resource base of about 900 million oil-equivalent barrels and would be the largest single investment in the history of Guyana’s petroleum sector.
Following a 2023 court ruling, Exxon lodged a US$2 billion affiliate insurance guarantee with the Environmental Protection Agency (EPA). The High Court had ruled that ExxonMobil must provide unlimited insurance for its offshore oil operations in the Stabroek Block.
Both the EPA and Exxon have since appealed this decision and it is now before the Court of Appeal. Additionally, the state has moved to the Caribbean Court of Justice (CCJ) to be added as a party.
Last year, Routledge had made it clear that Exxon had set up a “long line of defences” to prevent oil spills from occurring. These include applying new technologies to the design of the wells, training personnel, and strict safety practices.