In Management Themes (Part 4), we completed our discussion on exploration and discovery. Through the provisions of the Petroleum Activities Act 17 of 2023 (the ‘PAA’) we noted that a discovery can be (i) of no potential commercial interest to the Licence Holder, (ii) retained if it’s likely to be of potential commercial interest; and (iii) a commercial discovery. We also began our review of matters related to the grant of a petroleum production licence (‘PPL’), beginning with the Licence Holder’s application. We saw that both development and production activities must be carried out under a PPL, and that if the Licence Holder fails to apply for a PPL, the Minister may direct that the petroleum exploration licence shall no longer apply to the discovery area. In this publication we will continue our review of the provisions related to the grant of a PPL under the Management Theme – Maximising Access to Petroleum Resources.
Management Theme – Maximising Access to Petroleum Resources (cont’d)
Development and Production
Matters pertaining to the development and production of a discovery are addressed in Part IV, sections 32 to 40 of the PAA.
The Petroleum Production Licence
- Application
In a case where an exploration area in which a discovery has been made has been surrendered by the Licence Holder, section 32 of the PAA also allows the Minister to solicit applications for a PPL through a competitive tender or a direct negotiation process.
- The Field Development Plan (‘FDP’)
However, section 32 also provides that in all cases an application for a PPL shall include a field development plan (FDP) detailing the construction, establishment and operation of all facilities and services for the development, production, processing, storage and transportation and transportation of petroleum from the proposed production area. The FDP must also include details of any matter incidental to the proposed development and production activities.
In addition to the above, the PAA defines and describes the FDP as also…giving an account of resource related, reservoir engineering, development concept, production facilities, socio-economic, technical, environmental and safety related aspects of the development, and any other requirement under the Act (section 2)
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Regulation 15 of the Petroleum Regulations, 1986 (saved under section 98 of the PAA), provides further details in relation to the contents of an FDP, as summarised below. The FDP shall –
- identify the form of petroleum that is intended to be produced. Here we should note that ‘petroleum’ may be any naturally occurring – (i) hydrocarbons in a gaseous, liquid or solid state (ii) mixture of hydrocarbons in a gaseous, liquid or solid state or (iii) mixture of one or more hydrocarbons in a gaseous, liquid or solid state, and any other substance (PAA definition of petroleum, section 2).
- give a comprehensive report of the petroleum accumulation. This report shall include a description of the petroleum reservoir or accumulation, the form of the petroleum and an estimate of the petroleum reserves.
- include in a specified format, information relating to geological interpretation, reservoir evaluation and reservoir model/reserve estimates.
- give details of the area applied for, illustrated by an approved plan.
- give details of all buildings, platforms and facilities, sources of power and fuel, and operating systems, including well design, safety valves, operating practices, and reservoir management practices.
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- contain a proposed programme of production and processing operations which shall include intended production commencement date, production capacity and scale of operations, estimated timing and overall recovery of petroleum and by-products, the form and nature of the petroleum and by-products, and the marketing arrangements made for the sale of the petroleum and by-products.
- proposals for the prevention of pollution, the treatment of wastes, the safeguarding of natural resources, the progressive reclamation and rehabilitation of lands disturbed by petroleum extraction and for the minimization of the effects on neighbouring lands.
- a statement of any significant adverse effect which would be likely in relation to the environment, and proposals for controlling or eliminating that effect.
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- give a detailed forecast of the capital investment, operating costs and sales revenues, and the anticipated type and source of financing, including economic models, alternative development scenarios and a full range of financial options.
- contain proposals with respect to the employment and training of Guyanese citizens.
- give a report of the goods and services required for the production and processing operations – which can be obtained in Guyana – and the applicant’s intention in relation to those goods and services.
- give details of expected infrastructure requirements, and
- set out any other matter that the applicant wishes the Minister to consider.
In our next publication, we will continue our review of the FDP requirements and other key legislative provisions relating to the development and production of a discovery under the Management Theme – Maximising Access to Petroleum Resources.
DISCLAIMER: This series is not intended to serve as a replacement for the Petroleum Activities Act 17 of 2023, nor is it a substitute for legal or other professional advice in any manner whatsoever.
