Executive Director of the Environmental Protection Agency (EPA), Kemraj Parsram has confirmed that the Liza Phase 1 Permit which comes to an end on May 31, 2022, with another to be issued by June 1, 2022 with a five-year life span, will follow the new and improved standards set out by the Yellowtail Environmental Permit.
Parsram explained that the new Liza Phase 1 Permit will have a strengthened standard 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.
He said too that there will be key transfers from the Yellowtail document that include ensuring there is a capping stack in country. This 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 the event of a loss of well control, and failure of the blowout preventer (BOP).
“So, the permit will see a focus on preventing pollution, preventing any accident, preventing any oil spill. This will be done in a comprehensive way even as we ensure there is a safety case,” he said. “Now in the case of preventing oil spill and responding, we will be checking as part of this review process, to see if they have audited their Oil Spill Response Plan and updated it in line with key and current trends. If not, we will stipulate that they do so within the first month or two.”
He continued, “And as part of that review process, we will ensure that they have their First Response Technology (FRT), so in the event of a blowout, they must have the blowout preventer, you must have the equipment to remove the debris, it must be in Guyana ready to respond at the shortest possible time and you must have a capping stack. They will also have to retain subscription for redundancy.”
Like the Yellowtail Permit, Parsram said stronger provisions will be included to address insurance and parent guarantee. He recalled that the Yellowtail Permit contains an improved standard which states that EEPGL is required to have financial assurance which includes a combination of insurance to “cover well control, and/or clean up and third-party liability on terms that are market standard for the type of coverage.”
It is also required to have a Parent Company/Affiliate Guarantee Agreement which keeps indemnified, the EPA and the Government of Guyana in the event [Esso Exploration and Production Guyana Limited] EEPGL and its Co-Venturers fail to meet their environmental obligations under the Permit. Further, the EPA said 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.
The official said discussions about this are going for the Liza Permit, particularly as it pertains to the estimate for a worst-case scenario in the Stabroek Block.
He said the company is in the process of securing an independent consultant who has expertise in this area.
“Once that is done, we will be involved with that consultant so that we make sure we know what they are doing and the methodology is sound and whatever value comes up, we are all in agreement with that and it is a true reflection of what would be the actual cost for cleanup and well control. So, we will put that back in the Liza permit just to maintain consistency,” the EPA Head said.
The parent guarantee, he reminded, is proposed to be as much as US$2B. However, for each oil production project led by EEPGL offshore Guyana, there is a ‘per occurrence’ insurance coverage of US$600M related to oil spills.
Parsram said Exxon has a maximum of three months within which to have the estimate ready. “They said the actual work would not take more than a month, but the procurement process takes some time.”