Guyana grants environmental permit for Exxon’s fifth deep water project Uaru

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Guyana’s Environmental Protection Agency (EPA) moments ago approved ExxonMobil’s fifth Stabroek Block development, Uaru. This will take production above one million barrels per day.

The new permit has these key updates as noted in the EPA’s release:

Flaring

Like its predecessors, the Uaru Permit strictly prohibits routine flaring and venting and specifies that flaring is only permissible during commissioning, start-up and special circumstances. The Permit also maintains payments in instances where flaring is conducted beyond permitted durations.

Produced water

The Permit requires the Permit Holder to ensure that the oil content specification of produced water to be discharged does not exceed 42 mg/L on a daily basis or 29 mg/L on a monthly average. Further, the Permit requires the Permit Holder to examine and develop a plan for a phased reduction of oil content specification of produced water to levels lower than the above standards and in keeping with Good International Petroleum Industry Practices.

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Liabilities

Among the conditions in the Permit which cater for liability are: The Permit Holder shall bear all costs of the restoration, rehabilitation and compensation required as a result of damage incurred due to an oil spill or other emergency resulting from the execution of the Project. The costs herein referred to shall be independently assessed and evaluated by a third party determined by the Agency. Nothing contained herein shall prejudice the right of public and private actors to pursue criminal and/or civil action against the Permit Holder. The Permit Holder is liable for all costs associated with clean-up, restoration and compensation for any damages caused by any discharge of any contaminant, including the cost of all investigations into pollution incidents or discharge of contaminants, conducted at the instance of the Agency.

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The Permit Holder shall compensate any person who suffers any loss or damage as a result of any contravention of section 19(1), in accordance with section 19(3)(e) of the Environmental Protection Act Cap. 20:05, Laws of Guyana.

The Permit Holder, his Servants and/or Agents shall be liable for any material or serious environmental harm caused by their pollution of the environment in accordance with section 39 (2) and (4) of the Environmental Protection Act, Cap. 20:05, Laws of Guyana.

The Permit Holder, his Servants and/or Agents shall be jointly and severally liable for any negligence or willful misconduct which causes harm to the environment, biodiversity, protected species and natural habitat.

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The Permit Holder, his Servants and/or Agents shall be liable jointly and/or severally for any gross negligence or willful misconduct to the marine environment, biodiversity, protected species and natural habitat with respect to any release or discharge, spill, contaminant fluids, oil or lubricants any facilities permitted under this project.

The Permit Holder, his Servants and/or Agents shall be liable jointly and/or severally for environmental damage due to pollution from its activities within Guyana, its territorial waters, contiguous zones, continental margins continental shelf, and Exclusive Economic Zone, inclusive of damage to the marine environment, biodiversity, protected species and natural habitat with respect to any release or discharge, spill, or contamination which is attributable to the Permit Holder and his agents or contractors. This is in accordance with Section 49 (1) of the Maritime Zones Act 2010 and is subject to any other existing or forthcoming laws, regulations and standards governing the protection of the marine environment.

Financial assurance

The Permit covers Financial Assurance as follows:

The Permit Holder shall provide to the State, within a reasonable time of signing of this Permit, a combination of the following forms of Financial Assurance to cover all its legitimate environmental liabilities under this Permit. These shall include: Insurance in accordance with Condition 14.4, and shall cover Well control, and/or clean up and third-party liability on terms and inadequate amounts of coverage that are market standard for the type of Insurance; The Permit Holder shall, each year, provide a written declaration of EEPGL’s and its Co-Venturers’ financial capability to fulfill all liabilities (including remediation, compensation, loss or damage etc.), as required by the Environmental Protection Act Cap 20:05 and this Permit. The required declaration shall be accompanied by EEPGL’s and each Co-Venturers’ statement of financial position for the preceding year indicating each Companies’ assets, liabilities, equity, and such further financial information, as may be necessary.

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The Permit Holder shall provide one or more guarantee agreement(s) in which the Parent Company or Affiliate Companies of Permit Holder and its Co-Venturers (“Affiliates”) shall undertake to promptly and within thirty (30) days, upon notice of default, provide adequate financial resources for the Permit Holder and its Co-Venturers to pay or satisfy their respective environmental obligations regarding the Stabroek Block, if the Permit Holder and/or its Co-Venturers fail to do so, and to so indemnify and keep indemnified the Agency and the Government of Guyana, against all such environmental obligations regarding the Stabroek Block.

One key condition for approval was the conclusion of negotiations on the Parent /Affiliate Company Guarantee referenced above. This is expected to be executed shortly with the signature of the guarantor and beneficiary.

Environmental Effects Monitoring

In seeking 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. The Permit also requires EEPGL to submit safety case information, including a risk assessment prior to drilling and development of wells.

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