Govt greenlights ExxonMobil’s Yellowtail Production Licence
– approved Environmental Permit includes guarantees for oil spill response, routine flaring fees
– 250,000 bpd production on stream for 2025
United States oil giant, ExxonMobil has secured approval from the Guyana Government for its fourth development in the Stabroek Block offshore Guyana – the Yellowtail Development Project, paving the way for production activities to come on stream by 2025.
On Friday, Natural Resources Minister Vickram Bharrat signed the Petroleum Production Licence (PPL) for the Yellowtail offshore development with Exxon’s local affiliate, Esso Exploration and Production Guyana Limited (EEPGL).
It was noted that the Yellowtail project was approved following extensive reviews done by local and international experts. These include British firm, Bayphase Oil and Gas Consultants, and Canada-based Redford Group headed by Alison Redford and a team of technical experts who reviewed the Yellowtail Development Plan in keeping with internationally recognised standards within the oil and gas industry.
“Most importantly, the team of technical experts assessed the project to ensure that all relevant regulations are complied with and that they can be enforced. This included environmental standards and reservoir management for the sustainable and responsible operation of the project, in conformity with the best international standards and environmental safeguards associated with a project of such magnitude,” a statement from the Guyana Government on Friday detailed.
According to Minister Bharrat, the Government and its regulatory agencies are satisfied with all the reviews and long hours invested by both local and international experts to finally have a licensing agreement for the Yellowtail Project, which will benefit all Guyanese realising the “One Guyana” vision.
Additionally, this project will build on the recently sanctioned local content legislation for each stage of the project as it relates to workforce development, supplier development, and overall strategic investment.
“The Government of Guyana remains committed to managing and extracting Guyana’s oil and gas resources sustainably in keeping with internationally recognised acceptable environmental standards and transparency,” the missive further stated.
Meanwhile, the Environmental Protection Agency (EPA) had earlier on Friday announced that it has granted an Environmental Permit for the Yellowtail Development to EEPGL for a period of five years to undertake the construction and operation of production facilities in the Stabroek Block.
It was noted that approval of the permit was in keeping with the Environmental Protection Act Cap 20:05 and was granted after the consideration of public inputs during all statutory periods for public consultations and review.
The EPA said it took into consideration the technical review and recommendations from a team of independent international experts, and the Environmental Assessment Board (EAB). The EAB reviewed and declared the revised Environmental Impact Statement (EIS) acceptable and provided recommendations for EPA’s approval as part of the environmental permit.
Moreover, the agency said the permit comprehensively addressed all environmental and social safeguards that are reasonably necessary to protect human health and the environment.
Among the key provisions outlined in the permit is the prohibition of routine flaring and venting activities. It specifies that flaring is only permissible during commissioning, start-up and special circumstances, while payments are in place for flaring conducted beyond permitted durations.
In May 2021, the People’s Progressive Party/Civic Government introduced fines for flaring activities and has since collected some $930 million (US$4.5 million) from Exxon for excessive flaring last year.
The approved Environmental Permit also has provisions for oil spill response and financial assurance. This requires EEPGL to procure a Capping Stack (a closure device used to seal off a well in the event of loss of control) and have it maintained, tested, and stored in Guyana. The company will also have to maintain access to at least one overseas subscription service to allow mobilisation of a Capping Stack to the project location to enable swift capping in the event of a well blow-out.
Meanwhile, the Permit also 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.
“Further, the financial assurance provided must be guided by an estimate of the sum of the reasonably credible costs, expenses, and liabilities that may arise from any breaches of this permit. Liabilities are considered to include costs associated with responding to an incident, clean-up and remediation and monitoring,” the EPA added.
Other safeguards included in the Environmental Permit include monitoring to ensure EEPGL meets its obligations to prevent and mitigate environmental harm. The permit imposes comprehensive requirements for monitoring and management of any impacts affecting biological, physical, and socio-economic resources within the Area of Influence of the project, including targeted and updated environmental baseline studies. The Permit further requires EEPGL to submit safety case information, including a risk assessment prior to drilling and development of wells.
The Permit also provides for the establishment of 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 same and what actions were taken to address the grievances to the EPA.
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 Floating Production Storage and Offloading (FPSO) vessel and 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 this is now the largest single investment in the history of Guyana.
ExxonMobil has said it anticipates at least six projects offshore Guyana in the Stabroek Block, which contains a recoverable resource estimate of over 10 billion barrels of oil-equivalent.
The US oil major started production in December 2019 at its first Development – Liza Phase One site, where Guyana has earned US$607.6 million from a total of nine oil lifts by the end of 2021 and another US$95 million from its first lift this year from the Liza Destiny FPSO.
Meanwhile, with the Liza Unity FPSO at the Liza Phase Two Development commencing production in February, oil lifts from the Stabroek Block are expected to increase.
In addition to these two projects, Exxon is also on track with its third development, Payara, for a 2024 start-up.
ExxonMobil is the majority operator in the Stabroek with co-venturers, Hess Guyana Exploration Ltd and CNOOC Petroleum Guyana Ltd.
Meanwhile, President of the Guyana Oil & Gas Energy Chamber (GOGEC), Manniram Prashad commended the Dr Irfaan Ali-led Government for the swift approval of the Yellowtail Production Licence.
“GOGEC fully supports the Government’s objective to accelerate the country’s oil and gas production as quickly as practicably possible so as to cash in on the relatively high oil prices into the foreseeable future. In doing so, this would aid greatly in advancing Guyana’s rapid economic transformation and development for the benefit of the people and the country at large – that is to say, for both the current and future generations to enjoy these anticipated benefits,” Prashad said.