Minister of Natural Resources Vickram Bharrat (second from right) and ExxonMobil Guyana President Alistair Routledge (second from left) with the licence. (Ministry of Natural Resources photo)
April 2, 2022
ExxonMobil was yesterday cleared for its fourth well offshore after the government issued a production licence two days after the EPA granted a stoutly contested environmental permit for what will be the largest oil extraction operation yet in Guyana’s waters.
The speed with which the production licence followed the environmental clearance will underline concerns here that the government and ExxonMobil are moving to extract oil at breakneck speed no matter the environmental and climate concerns that persist.
In its statement yesterday, the Environmental Protection Agency (EPA) said “The approval comes after the EPA considered public inputs during all statutory periods for public consultations and review. The EPA also 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 EIS (Environmental Impact Study) acceptable and provided recommendations for EPA’s approval as part of the environmental permit.”
It argued that the permit comprehensively address-ed all environmental and social safeguards that are reasonably necessary to protect human health and the environment; including implied conditions as provided for in section 13 of the EPA Act.
The permit strictly prohibits routine flaring and venting and specifies that flaring is only permissible during commissioning, start-up and special circumstances. It stipulates that flaring should not exceed a cumulative 60 days during the startup phase. ExxonMobil’s subsidiary Esso Exploration and Production Guyana Limited (EEPGL) is mandated to notify the EPA of the expected duration and flaring volumes expected during the start-up and commission phases at least six months before commencement.
The Permit also goes further to maintain payments in instances where flaring is conducted beyond permitted durations.
“The Permit Holder shall pay US$45 per tonne of carbon dioxide equivalents (CO2e) emitted as a result of flaring in excess of the periods of flaring expressly stipulated…,” the permit stated.
It added, “Nothing contained herein shall be interpreted to mean that the Agency rescinds its authority to revise the rate of US$45 per tonne established by Condition 3.13 for the emission of CO2e for any period of continuous flaring beyond sixty (60) days, to order the cessation of all flaring, or take any other course of action provided by the Environmental Protection Act Cap 20:05.”
The Permit requires EEPGL to procure a Capping Stack to be maintained, tested, and stored in Guyana. A capping stack is a large well closure device that connects to the top of the blowout preventer (BOP) and is capable of sealing off a well. It is a form of modern technology (available post the Gulf of Mexico, Macondo incident) to cap a well in event of a loss of well control, and failure of the blowout preventer (BOP).
Additionally, EEPGL must maintain access to at least one (1) overseas subscription service, to allow mobilization of a Capping Stack to the project location. This serves to fortify safety and emergency response efforts since wells would be swiftly capped in the event of a well blow-out.
The permit also addresses financial liability in the event of an oil spill – something that has been contentious between government and critics. It stipulates that EEPGL must comply with the polluter pays principle. It adds that EEPGL shall bear all costs of the restoration, rehabilitation and compensation required as a result of damage owing to an oil spill.
“The Permit Holder shall provide and/or declare within reasonable time upon signing of this permit a combination of the following forms of financial assurance to cover all its legitimate liabilities under this permit. These shall include: (a) insurance in accordance with Condition 14.5 and shall cover well control, and/or clean up and third-party liability on terms that are market standard for this type of coverage; (b) a Parent Company/Affiliate (of operator and Co-Venturers (CoVs)) undertaking that provides indemnification for liabilities under this Permit.”
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.
EEPGL is required to submit, to the EPA, copies of its environmental liability insurance policies; a summary of the environmental liability insurance policies detailing the insurer, type of insurance, amount of coverage, key terms, types of environmental damage the policies fail to cover and duration of each policy; evidence that the insurer is authorized to operate in Guyana among other evidence relating to the insurer’s capabilities to execute the policies.
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 also requires EEPGL to submit safety case information, including a risk assessment prior to drilling and development of wells.
EEPGL is also enjoined to establish and maintain 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.
In a statement issued a few hours after the EPA’s announcement of its approval of the environmental permit, the Ministry of Natural Resources said that the government and EEPGL signed the Petroleum Production Licence (PPL) for the Yellowtail offshore development in the Stabroek Block yesterday.
Extensive reviews
“The Yellowtail project approval was a result of extensive reviews done by local and international experts. Prior to the appro-val, the Government of Guyana contracted Bay-phase Oil and Gas Consul-tants and the Redford Group headed by Ms Alison Redford and a team of technical experts to review the Yellowtail Development Plan in keeping with internationally recognised standards within the oil and gas industry,” the statement informed.
Redford is a controversial former Canadian politician. She served as the former premier of the province of Alberta and subsequently stepped down in 2014 after two and a half years following a series of questions about her leadership and controversy over expenditure on plane tickets.
She had also worked with the PPP/C government on the review of the Payara oil field. Questions were raised about her technical qualifications to conduct the review which had prompted the government to later defend her hiring stating that she would be leading a team of experts.
In its statement yesterday, the ministry said that 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.
“Natural Resources Minister, Hon. Vickram Bharrat M.P. stated that 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 realizing 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 recognized acceptable environmental standards and transparency,” the statement said.
According to the government, the project is expected to produce up to 250,000 barrels of oil per day after startup in late 2025, using the ‘One Guyana’ floating production, storage and offloading (FPSO) vessel. 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. The name `One Guyana’ is drawn from President Irfaan Ali’s campaign for national unity.
Twenty-year duration
The Yellowtail project is ExxonMobil’s and its partners’ fourth development in the Stabroek Block and is considered the largest undertaking since Guyana became an oil-producing nation in December 2019. As part of the Yellowtail Project, ExxonMobil plans to drill between 45 and 67 wells for the 20-year duration of the investment. It is intended to be the largest of the four developments with over 250,000 barrels of oil per day targeted once production commences. Based on the schedule, once approval is granted, engineering commences this year and production in the latter part of 2025.
Exxon, through its consultant – Environmental Resource Management (ERM), applied to the EPA for an environmental permit to operate in the Stabroek Block offshore Guyana. It has since submitted the Environmental Impact Assessment (EIA) and other ancillary documents as part of the process and held public consultations. The statutory period for the public to submit objections expired in December last year and saw a number of environmentalists and other stakeholders objecting to the project as well as questioning the ERM’s independence.
At the end of February, Executive Director of the EPA Kemraj Parsram had told Stabroek News that the agency advised ERM to present a revised EIA following an independent review.
Just on Tuesday, Chairperson of the Environmental Assessment Board (EAB) – which adjudicates appeals of EPA decisions – Pradeepa Bholanath told Stabroek News that ERM had submitted its revised EIA approximately two weeks ago. However, she could not say whether the revised document addressed the issues raised by the EPA as well as the other stakeholders.
Nevertheless, the EPA apparently approved the EIA and granted ExxonMobil and its affiliates the environmental permit less than 24 hours after Bholanath had said that EAB was yet to make a decision on the revised environmental study.
Though the environmental permit for the Yellowtail development was granted on March 30, 2022, and signed by Parsram and ExxonMobil Guyana’s President Alistair Routledge, the EPA kept mum on the approval and only released the information yesterday afternoon – 2 days after granting the permit.
In fact, the EPA released the revised EIA, a public notice informing of the approval of the permit and the actual environmental permit granted to EEPGL on its website yesterday afternoon.
In its public notice, the EPA said “The Environmental Protection Agency (EPA) hereby notifies the general public that the Yellowtail Development Project, Stabroek Block, Offshore Guyana has been approved pursuant to section 12 of the Environmental Protection Act, Cap. 20:05, based on the following grounds:
“1. The Environmental Assessment Board has considered the Environmental Impact Statement and Environmental Impact Assessment related to this project, acceptable in accordance with section 11(13) of the Environmental Protection Act, Cap. 20:05. 2. The EPA has taken all relevant considerations into account, including the views expressed by members of the public during consultations done in accordance with section 11(9) of the Environmental Protection Act, Cap. 20:05.”
The EPA’s notice indicates that the three-member Environmental Assessment Board met sometime after 5 pm on Tuesday (March 29) and gave its approval of the revised impact study. There is no time stamp as to when the permit was issued just the date of March 30, 2022, is stated.
Observers have previously pointed out that the EAB members are all employees of the government. Bholanath is the Senior Director for Climate and REDD+ (Reducing Emissions from Deforestation and forest Degradation) in the Ministry of Natural Resources while Joslyn McKenzie is the Permanent Secretary of the same ministry. Dr Garvin Cummings is the Agriculture Ministry’s Chief Hydrometeorological Officer. The government has been pressing for swift approvals for all of these oil wells.
Petroleum Production Licence
In January, the government through the Ministry of Natural Resources invited proposals for companies to review the Yellowtail Project. In February, the government had announced that United Kingdom-headquartered oil and gas consultancy, Bayphase Ltd was contracted to conduct the review of the Yellowtail Development Plan. Bayphase also conducted the review of the Liza-1, Liza-2 and Payara projects in the Stabroek Block.
They were paid US$423,360 for the execution of the contract and it is unclear when the review was concluded but yesterday, the government announced that the Yellowtail project has been approved “with enhanced environmental safeguards and operator regulation by local and international experts.”
Permit
According to the environmental permit issued by the EPA, Exxon and its affiliates submitted their application on April 1, 2021, while its national oil spill contingency plan, the revised EIA, Environmental and Socioeconomic Management Plan – which includes the revised oil spill response plan and wildlife response plan were all dated March 29, 2022.
That means that those critical documents were submitted mere hours before the five-year environmental permit was issued. In the case of the Payara Development Project, the application was submitted on December 04, 2018, and the other supporting documents on July 22, 2020. That permit was granted on September 24, 2020.
Questions
The EPA did not release the issues it found with the first EIA submitted for the project. It is also unclear whether any of the objections raised by the various stakeholders at public hearing were addressed. The revised EIA was never released to the public for scrutiny until the permit had already been approved.
During the public comments phase on the study, the EPA held a series of consultations as well as invited written submissions on the study. The public consultation process saw ERM attempt to answer questions and clarify aspects of the EIA for stakeholders but it also saw them failing to treat with certain questions.
During the final public consultation in November last year, a number of environmentalists and activists railed at ERM for its failure to treat certain aspects of the environmental impact of offshore activities. For instance, Jamaican environmentalist Diana McCaulay had called for the EPA to hold off on approving the project until it shares the EIA findings with other territories. Her Trinidadian counterpart Gary Aboud, of the Fishermen and Friends of the Sea (FFOS) threatened legal action against Guyana if it fails to address certain aspects of the findings of the EIA.
A number of environmentalists and groups submitted objections to the EIA noting that the company failed to address a number of impacts on the environment. Also, questions were raised about ERM’s ties to Exxon since it is the same company that did all of Exxon’s EIAs. They had also issued calls for the scrapping of the EIA.
Environmentalist Simone Mangal-Joly, in a December 15, 2021 letter the EAB Chairman Omkar Lochan, on behalf of the Caribbean Coastal Area Management (C-CAM) Foundation, The Jamaica Fish Sanctuary Network, the Jamaica Environment Trust, the Institute for Small Islands, Fishermen and Friends of the Sea, and Freedom Imaginaries, argued that the EIA is “significantly deficient” as it fails to establish a baseline economic value of the coastal areas of the Caribbean, including Guyana.
“We, therefore, call on the EPA to reject the EIA until minimum guarantees are established in Guyana,” the letter had said.
Yesterday, Mangal-Joly told Stabroek News that the 60-days comment period for the EIA was not honoured by the EPA because it never disclosed the Terms of Reference for the ERM study.
“This was chief among our complaints to the EAB. That release was made just as the 60-day expired. We are waiting for the EAB to instruct the EPA to trigger the 60-day comment and expect that whatever additional studies were done would be part of the public disclosure for comment,” she said prior to the announcement of the granting of the permit.
She argued that the revised study ought to be part of the public register and that it is procedurally unfair to not give the public sight of it before a decision is made.
“Also, the EAB still has not addressed many of the issues raised, including the fact that ERM was not shortlisted as a firm to do an EIA in accordance with the procedures set out in the law. EPA Act has a clear process requirement,” she said.
Following the announcement of the granting of the permit, Mangal-Joly said that she will reserve any further comment until she has had the chance to scrutinize the documents.
A scan of the revised EIA revealed that very little has been noticeably changed and efforts to contact the EPA head to determine some of the changes that ERM has made were unsuccessful. Volume I of the initial EIA was 1382 pages while the revised one has increased to 1426 pages. There are no keys to which sections have been modified or where new information has been added.