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Gas to shore project will be limited to electricity production only

Dear Editor,

It took a presentation by Winston Brassington to shed some light on the proposed Wales gas to shore project. His presentation confirms what the opposition, and the general public, has been saying for the last eighteen months – which is, the current gas availability is limited to production of electricity only.

At the official media briefing on April 26, 2021, the country was regaled that this project will not only supply cheap power and LPG, but also fertilizer (Ammonia, Urea and other agro-processing byproducts), solid waste pyrolysis and even a cement plant. In other words, the natural gas to be piped to shore would kick start Guyana’s industrial revolution – a no brainer! These myths were constantly peddled in the public, and even repeated by Govern-ment Ministers in the recent parliamentary debate on the project, where some of the glorified glossing of this project found its way into Budget 2022. Our ever-accommodating private sector, swallowed these tall tales, hook line and sinker and took to the airwaves promoting the project by referencing how much monies will be saved, since we are soon producing our own fertilizers and cement. It appears the government is very comfortable lying to its own citizens, as well as the Parliament, but draws a line when addressing a group of foreigners attending a high-priced conference.

It has now been confirmed that the 50mcf of gas piped to shore will only be sufficient to power the generating sets and a small LPG plant. All the other bells and whistles used to justify this project cannot be done at this initial stage nor in the foreseeable future.

Guyana will be expending over US$1.4B and counting (Exxon – US$900M + GOG US$504M) for primally 250MW generating sets. This is an incredible amount, considering the fact that the current cost for 1MW of generating power is approximately US$1M, that’s correct, 250MW of natural gas-powered generating sets can be procured for approximately US$250M – yet, the Government is paying US$1.4B. The public deserves to be told what the rationale is for paying US$1.15B more under the Wales Gas to Shore project.

Mr. Brassington’s presentation also confirms that the country will be paying Exxon for our own gas. At minimum, one would have expected the government to leverage the fact that they have, despite public reservations, always been very generous and accommodating with Exxon on issues such as the Payara approval, Yellowtail approval (soon to be issued), consistent flaring in violation of their permit, lack of full coverage insurance and wastewater dumping which may be the reason why our fishing industry is on its knees. All of these accommodations place the Government in a strong position to demand a better deal and further, insist that the natural gas be free to Guyana.

The Wales Gas to Shore project will end up like previous PPP mega projects – a white elephant funded by the hard-working people of Guyana with little or no return if changes are not made soon.

Sincerely,

David Patterson

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Using floating vessels for Liquefied Petroleum Gas could be better choice than pipeline

Dear Editor,

I am a concerned Guyanese living in Toronto and I have been following with great interest the discussions and public information around the proposed Gas to Shore (GtS) project in Guyana.

I appreciate that I don’t have all the details surrounding the project but given the scale and complexity of the project, I am not sure anyone does at this time.

This Gas to Shore project is vital for the development of Guyana and I fully support it.

The most important feature is the supply of cheap and reliable energy for citizens and businesses, and the creation of skilled, long-term, high paying jobs locally.

The emphasis seems to have been focused on an undersea pipeline from the Stabroek Block to the former sugar industry at Wales, WBD.

While a Gas Pipeline to Shore may be feasible, it may not be the best option for Guyana at this time.

I would like to provide my thoughts on the subject:

A feasibility study should be conducted to look at all means for bringing Gas to Shore, including the pipeline, Liquefied Petroleum Gas (LPG) using floating vessels and Compressed Natural Gas (LNG) using floating vessels. These options should be investigated by an independent experienced firm to assess technical, financial, social, as well as short and long-term strategic benefits of each option. Note that, while a pipeline could be a long-term plan, there are many benefits to consider, for example, LPG using floating vessels.

Benefits of an LPG project using floating vessels as compared to the pipeline are:

Accelerate the timeline and reduce the risks (costs, technical and schedule) of bring Gas to Shore.

Ability to bring Gas to Shore at onshore terminals located at different parts of the country. For example, there could be LPG terminals in Berbice, Demerara and Essequibo, and even to neighbouring Suriname.

Reduce upfront the cost of implementation of bringing Gas to Shore. The government can focus on developing one or more LPG terminals along the coast in close proximity to existing power generating plants. This will accelerate the implementation of lower-cost power to the citizens of Guyana so they can realize the benefits sooner.

Gas to Shore with floating vessels can take gas from different blocks as they come online rather than a pipeline only to the Stabroek Block. Once the oil from the Stabroek Block is depleted or becomes uneconomical for whatever reason and Exxon and its partners decide to stop or reduce production from that block, then what happens to the Gas to Shore pipeline? We grew up learning that we should not “put all our eggs in one basket” and I think a pipeline to one producing Block is doing just this. 

3. There are essentially three components to the Gas to Shore project, namely 1) bringing the gas to shore; 2) processing and storing of the products from the gas onshore; and 3) power generation using cleaner and cheaper fuel. The government could split these into separate or integrated infrastructure projects with financially strong and reputable counterparties. The focus should be Gas to Power as the driving force, rather than Gas to Shore.

4. Guyana should focus on building out its electrical generation and distribution infrastructure using power generated by cleaner and cheaper gas and other more environmental means. The pipeline is a long-term, very expensive approach which can be considered down the road as Guyana develops as a nation with the skills, expertise and infrastructure to utilize the volume of gas from a pipeline. The world is changing rapidly to electrification of important energy consuming activities such as transportation, industrial and residential uses (like cooking), so getting Gas to Power as soon as possible is vital for the development of Guyana and for citizens to see the benefits immediately. There is no need to start building out gas distribution infrastructure, but rather to enhance and upgrade the existing electrical power infrastructure and supported by cleaner/cheaper power generation using Gas to Power.

Note that I have no personal or vested interest in this project or any related to projects but I do have knowledge and experience in infrastructure project development. I understand some of the risks related to large infrastructure projects and allocation of risks and benefits. I would be happy to provide any support and advice as needed.

As for my background, I am a Guyana Scholar (Queen’s College 1984) with 30 years of international engineering and management experience, and Chemical Engineering degrees from University of Cambridge (UK) and University of Toronto.   

Yours sincerely,

Deo Phagoo, P.Eng.

Toronto, Canada

Django
@seignet posted:

The PPP has blindfolds on, the country do not need Amalia at this time. It needs power but not that costly.

2 hours of sunshine can power Guyana for 1 year — GEA’s Dr. Sharma

…as country spends US$150M importing fuel for electricity

By Gary Eleazar

Kaieteur News – Inviting conference delegates to embrace a transition towards renewable sources of energy in the future such as solar and literally “drive on sunshine”, Head of the Guyana Energy Agency (GEA), Dr. Mahender Sharma has indicated that Guyana currently receives enough sunshine every two hours, to power the country’s present electricity demands for an entire year.
Dr. Sharma was at the time addressing delegates at the first ever Energy Conference and Expo, on Thursday last, organised by Chairman Anthony White and Chief Executive Officer (CEO) Angenie Abel, along with coordinators and venued at the Marriott International Hotel. The event wrapped up on Friday.

He was, at the time, tasked with providing delegates and other stakeholders with an update from GEA on renewable energy projects in Guyana and noted as example, the fact that using the solar panels installed at that government agency’s offices, he is able to charge his electric car on weekends that proves sufficient for his transportation needs during the course of the weeks.
Prefacing his update on Guyana’s renewable energy projects, he noted that the country last year imported some 20,300 barrels of oil daily spending about US$150M to meet electricity generation demands.

He noted importantly that the power supplied by the Guyana Power and Light (GPL) Incorporated, through the Demerara Berbice Interconnected System (DBIS) only caters for about 78 percent of the citizenry.
The GEA head in his presentation used the import figures to illustrate, “we are still fairly dependent on fossil fuel; our expenditure for those fossil fuel imports for the electricity sector amounted to US$150M in 2021.”
According to Dr. Sharma, DBIS, “the grid that is providing much of the electricity, accounts for about 78 percent of that total cost.”

TRIPLING DEMAND


With this in mind, Dr. Sharma indicated that capacity is needed to meet the growing demand for electricity, a situation compounded by the removal of aging power generation sets.
Dr. Sharma too, in his presentation referenced the assertion promulgated by government officials at the conference that Guyana’s electricity demands will triple in the next five years.
As such, he posited, “if we are to remain on the business as usual direction, we would be faced with high consumer cost, tripling of greenhouse gas emissions and a steady increase thereafter.”
In terms of making Guyana the energy capital of the Region, as adumbrated by Head-of-State, President Irfaan Ali when he took Office, Dr. Sharma noted that the new energy mix is intended to include the use of solar photovoltaic systems, in addition to hydro and wind.
The objectives, he said, are built around the expanded Low Carbon Development Strategy (LCDS), “looking at expanding renewable energy across the country, decoupling economic growth from the use of fossil fuel and approaching a low carbon direction.”
The GEA head noted that natural gas is only meant to be used in the short term, providing the capacity needed at a lower generation cost, compared to the Heavy Fuel Oil (HFO) presently used by GPL.
With regard present initiatives, delegates were provided with an update on solar farms already constructed, under construction or to be constructed.
These include a solar farm in Mabaruma, another at Lethem in Region Nine, and one at the Caricom Secretariat, the GEA building and at Bartica, among other locations including 290 government buildings.
According to Dr. Sharma, “the installed capacity for the solar farms alone represents 39MW over the next few years.”

LETHEM 100% RENEWABLE


He elucidated saying, this would be coming from 13 solar farms and 28 solar mini-grids.This is in addition to the installation of some 30,000 solar home units, among other initiatives.
He noted too that the administration was looking to install two small hydro plants in Lethem, Region Nine that would be complemented by a solar farm, so “on that singular mountain range alone, you have the Moco Moco, Kumu (small hydro power plants) and a solar farm providing 100 percent renewable energy for Lethem.”
Having outlined some of the initiatives, Dr. Sharma indicated to those in attendance that, “we (Guyana) get quite a bit of energy from the sun, every two hours, we get about 430 quintillion joules.”
As such, he concluded that in “one hour and 20 minutes, we receive the same amount of energy that we consume for an entire year, only from the sun.”
With this in mind, he told the delegates “the potential for solar is huge.”
He said that by 2030, based on domestic projections, 30 percent of our energy is going to come from renewable energy and by 2040 that goes up to 70 percent with a combination of hydro, wind and solar.
Dr. Sharma did note, however, that in order to achieve the outlined objectives, there needs to be additional investments into activities such as grid modernisation and qualified his position saying, “it’s important, to get the grid to perform the way we need it, the outages (blackouts) sometimes are driven by those issues.”
According to Dr. Sharma, “a significant amount of investment is needed to get to that point.”
He noted that it is the expectation that government would in future press to utilise solar more and more with the improvements in battery and hydrogen technology, “to get to the point where we can utilise more of this (solar).”

Django

Oil and Gas Pipeline Construction Costs

Source -- https://www.gem.wiki/Oil_and_G...e_Construction_Costs

Summary

The following are ranges for pipeline cost estimates. For further discussion, see below:

  • Oil & Gas Journal 2015-2016: $4.75 million/km (US onshore gas)
  • Oil & Gas Journal 2014-2015: $3.23 million/km (US onshore gas)
  • American Petroleum Institute 2017: $3.32 million/km (US onshore gas, national average)
  • Global Fossil Infrastructure Tracker median for 64 onshore and offshore projects: $2.34 million/km (date unspecified, worldwide)

Background

There are four categories of pipeline construction costs; material, labor, miscellaneous, and right-of-way (ROW). The cost per category, expressed as a percentage of total construction costs, tends to vary by both location and year. Materials may include line pipe, pipe coating, and cathodic protection. Miscellaneous costs generally cover surveying, engineering, supervision, contingencies, telecommunications equipment, freight, taxes, allowances for funds used during construction (AFUDC), administration and overheads, and regulatory filing fees. ROW costs include obtaining rights-of-way and allowing for damages.[1]

Current Trends

Pipelines built in 2015 and 2016 were historically expensive, as determined by the costs for new projects as filed by operators with FERC, according to an Oil & Gas Journal analysis. For proposed onshore US gas pipeline projects in 2015-16, the average cost was $7.65 million/mile ($4.75 million/km), up from both the 2014-15 average cost of $5.2 million/mile ($3.23 million/km) and the 2013-14 average cost of $6.6 million/mile ($4.10 million/km). In 2012-13 the average cost was $4.1 million/mile ($2.55 million/km) as compared with $3.1 million/mile ($1.93 million/km) in 2011-12; $4.4 million/mile ($2.73 million/km) in 2010-11; $5.1 million/mile ($3.17 million/km) in 2009-10; and $3.7 million/mile ($2.30 million/km) in 2008-09.[1]

For the 33 land spreads filed for in 2015-16, cost-per-mile projections rose in all categories except material. In 2011 miscellaneous charges passed material to become the second most expensive cost category and they retained this position through 2016. Material-$992,991/mile, down from $1,012,698/mile 2014-15. Labor-$3,603,334/mile, up from $1,977,938/mile for 2014-15. Miscellaneous-$2,615,028/mile, up from $1,867,393/mile for 2014-15. ROW and damages-$441,548/mile, up from $378,255/mile for 2014-15. The continued rise in miscellaneous costs is driven by companies increasing the amount set aside for contingencies in their estimates.[1]

Labor spiked as a portion of land construction costs, reinforcing its place as the single most expensive category. Labor's portion of estimated costs for land pipelines jumped to 47.08% in 2016 from 37.77% in 2015, 42.36% in 2014, 38.84% in 2013, 44.61% in 2012, 44.27% in 2011, and 44.61% in 2010. Material costs for land pipelines, meanwhile, eased to 12.98% from 19.34% in 2015, 13.6% in 2014, 23.2% in 2013, 15.99% in 2012, and 14.54% in 2011.[1]

Average Pipeline Size

Pipeline cost is often estimated per inch-mile. According to NaturalGas.org, the average diameter of an interstate pipeline is between 24 inches and 36 inches, or an average of 30 inches.[2]

Offshore versus Onshore

According to USAID, offshore costs per mile for pipelines were about 1.96 times as high as costs per mile for onshore pipelines in 2000-2001, in 1995-1996 the cost ratio was 1.79.[3]

Source & rest of article -- https://www.gem.wiki/Oil_and_G...e_Construction_Costs

FM

Whatever the initial estimate you can be sure that it will go up significantly as the project progresses.  This is always the case.  So, don't be surprised if $1.4 billion becomes $14 billion before the project is completed. 

T

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