As an increasing number of developments come on stream offshore Guyana, large amounts of associated gas will be produced alongside high volumes of oil.
Following the already producing Liza phase 1 project is phase 2, targeting 220,000 barrels of oil per day (bpd) with startup expected in 2022. A third project at Payara, also producing around 220,000 bpd, will come on stream by 2024. Multiple additional developments will also come online this decade pushing Guyana’s total output beyond 1 million barrels per day.
Experts have said a plan for utilizing the growing volumes of associated gas being produced will therefore become increasingly important, thereby making a pipeline to shore even more feasible.
“Initially, all of the gas will be reinjected to improve oil recovery,” consultancy group Wood Mackenzie said. “However, once reinjected gas begins to be recycled, gas-to-oil ratios will grow, and eventually, FPSO topside processing capacity could be exceeded.”
ExxonMobil has said more than 20 percent of the oil discovered to date is associated gas. Recoverable resources now exceed 9 billion barrels of oil equivalent, and this will further increase as more discoveries are made.
“A longer-term solution for gas will be needed,” WoodMac pointed out. “In addition, we view Pluma and Haimara as gas and condensate discoveries, unlikely to be developed if there is no gas solution.”
Supplying the domestic market is an alternative to gas commercialization and the Guyana government is now moving full steam ahead in this direction. It estimates that the project will cost around US$900M with part of it being funded by cost oil.
OilNOW understands that the country is expected to clear off the estimated cost for the offshore pipeline and riser within a four-year period.
The government has said while independent studies are expected to be completed in 18-months to ensure that the project is properly executed, several studies conducted pre-2020 point to the immense benefits the pipeline will bring. Chief among these is the generation of cheaper power.
“If you go around Guyana as much as I have been around Guyana, and you ask businessmen what the number one obstacle is to doing business in Guyana, they will tell you electricity; both from the point of view of reliability and from the point of view of the price of electricity,” said Kevin Ramnarine, former Trinidad and Tobago energy minister. “The current government of Guyana have quite rightly identified electricity power generation as a high priority.”
Power generation in Guyana currently relies on expensive and inefficient diesel generators. “Generation of cheaper and cleaner energy is one of the primary goals for Guyana’s development, and gas could fulfil this role,” WoodMac said.