Modifications were according to legislation, int’l industry practice – EPA

Exxon’s Liza-1 Environmental Permit

The Environmental Protection Agency (EPA) has defended recent modifications done to the Environmental Permit for the Liza-1 Development Project in the Stabroek Block offshore Guyana, saying that it was done in accordance with local legislation and international industry practices.

Last week, the EPA and ExxonMobil Guyana’s local affiliate Esso Exploration and Production Guyana Limited (EEPGL) signed a modified Environmental Permit which was updated to include, among other things, a fine of US$30 per tonne of excess carbon emissions that is flared in the future.
However, there have since been several “misconceptions and inaccuracies being peddled by persons, particularly select political, legal and technical pundits” on the modifications, thus prompting a response from the Agency.
In a statement issued on Thursday, the EPA clarified that the modification to the Liza-1 Environmental Permit were pursued in strict accordance with the legislation as a result of the intermittent periods of flaring conducted by EEPGL due to technical issues offshore Guyana.
“Prior to its modification, the Permit prohibited ‘Routine Flaring’; however, process upsets, equipment failures and maintenance events are not considered ‘Routine Flaring’ in the Oil and Gas Industry. Such events were not specifically addressed or regulated in any way by the original Permit,” the Agency explained.
It further noted that the original permit, issued under the previous APNU+AFC Administration, required EEPGL only to notify the EPA For flaring sustaining a volume of at least 10 million cubic feet of gas per day (MMCFD) and lasting at least five days. However, the modified Permit now includes specific timelines for detailed instances of flaring, and notification and approval processes, during which the company must justify its reason(s) for flaring, and the EPA reserves the right to reject this request if unjustified, the missive detailed.
The changes in the modified Permit 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.
According to the EPA, “The timelines prescribed by the Modified Permit are consistent with the US Code for Federal Regulations, which establishes that flaring may not exceed 48 hours without seeking approval. Further, international benchmarking shows that the initial start-up period averages approximately 90 days. However, the modified permit specifies a more conservative start-up period of 60 days, below the average international benchmark.”
This, the Agency pointed out in the missive, is also consistent with the recently issued Payara Environmental Permit, which includes similar provisions for flaring.

Fines for carbon emissions
In the modified Liza-1 Environmental Permit, any flaring in excess of the timelines outlined requires the company to pay for the emission of Carbon Dioxide equivalent (CO2e) at the rate of US$30 per tonne of CO2e.
The EPA explained that this figure was determined based on guidance from the Polluter Pays Principle, which was prescribed by the Environmental Protection Act in 1996, but has served as a universal principle of environmental management even prior to this, and has continuously developed in its interpretation and applicability as a result of national and international jurisprudence, customary law, and international environmental laws and conventions.
“Consequently, the EPA utilised carbon pricing benchmarking to determine this payment, so that the monies acquired from the pollution events could be used for supplemental environmental projects (SEPs). Moreover, the determination of US$30 per tonne of CO2e was a result of rigorous research, and is consistent with introductory prices for CO2e implemented by developed countries such as Canada,” the Agency posited.

Further, it noted that in determining the volume of CO2e emitted, Condition 3.10 of the modified Permit specifically prescribes multiple methodologies, including but not limited to: American Petroleum Institute’s (API) Compendium of Greenhouse Gas Emissions, Methodologies for the Oil and Gas Industry; and Intergovernmental Panel on Climate Change (IPCC) Guidelines for National Greenhouse Gas Inventory.
“The EPA categorically rejects and opposes all unfounded and baseless remarks about the capabilities of its staff to utilise and apply these methodologies,” it stated.
Meanwhile, the Agency further addressed discussions surrounding the recoverability of the payments for CO2e emissions.
“While the EPA, in its role as an environmental regulator, does not typically concern itself with the contractual arrangements between the Ministry of Natural Resources and EEPGL, during discussions with the company regarding the modifications, it was indicated that any such payments would not be recoverable against the Government of Guyana,” it added.
To this end, the EPA contended that the modification will not create any additional adverse effects, but will serve “as a means of implementing more specific flare management conditions that are consistent with industry practice, in order to regulate and/or deter periods of flaring.”
Nevertheless, the Agency outlined that some amount of flaring is to be expected for maintenance events, process upsets, and equipment failures, given the complexities of oil and gas production in the offshore environment. But it noted that the modification was pursued to ensure that there are environmental safeguards and deterrent mechanisms to address any prolonged periods of flaring which may pose risks to the environment.
“The EPA wishes to assure that it will continue to work assiduously toward national standards which specifically address flaring, and following this modification, the EPA has commenced the process of developing specific flaring targets for the upcoming renewal of the Liza 1 Environmental Permit (June 01, 2022) as well as other upcoming EPEGL projects offshore Guyana.”
The EPA, and by extension the Guyana Government, had come under heavy pressure to clamp down on the US oil major over its increasing flaring activities in the past year, which exceeded the estimated amount of 14 billion standard cubic feet (Bcf) of gas when production began.
But 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.