Gov’t says ‘hamstrung’ in penalising Exxon for flaring

-Vincent Adams disagrees

With flaring offshore estimated to reach 14 billion cubic feet (cu ft) of gas by the time ExxonMobil expects the problem with its compressor is likely to be resolved - hopefully in April of this year - government yesterday said that it is “hamstrung” in instituting penalties since the company has argued that it is within the limit allowed by the Environmental Protection Agency (EPA).

However, former EPA Director Dr Vincent Adams says that he is surprised that the company and government are unaware that the Environmental Impact Assessment (EIA) could not be used since it is not the regulatory document and only helps guide in the crafting of the Permit which is the document which specifies the regulatory operating conditions. The EIA by definition, only serves to assess the ranges, scenarios, alternatives, risks, and mitigative actions associated with a project. This information is used in crafting the permit. “This so-called allowance of 14 billion cu ft was brought up before by Exxon and I told them it was nonsense.”

“Exxon is flaring, using about 16 million to 18 million cubic feet of gas per day. The EPA has worked this out and has said that is about 1.3 kilotonnes of carbon emitted. Most people didn’t understand [that] Exxon submitted an Environmental Impact Assessment for the project,” Vice President Bharrat Jagdeo told a press conference yesterday that was hosted at the Arthur Chung Conference Centre. He also stressed that the level of flaring was “unacceptable”.

“The document was, from what I gather, made public by the EPA that the EIA, which was approved by the EPA at that time and referred to by the Minister in the licence, Exxon was given an allowance to flare or to use 14 billion cu ft of gas. Fourteen Billion! Right now, they have flared 12.5 billion cu ft. At the current rate of flaring, by the end of April, they would have flared the entire 14 billion cu ft,” he added.

ExxonMobil yesterday repeated to this newspaper that it “remains in compliance with all our environmental permits and regulatory requirements and we continue to work with the relevant government agencies to find the right balance for the country while constantly seeking to minimize flaring.”

Jagdeo said that he has asked the EPA to undertake a detailed analysis of all the documents and he will also be doing so.

Knows better

However, former EPA head, Dr Adams, said that he is appalled that the company is disingenuously using the EIA figures as the operations limitations document, when in fact they fully well know that the Permit is the only document that defines the limits for operations.

In addition, Adams said that it was the very same EIA which evaluated the three alternatives for the gas disposal and concluded that flaring will only occur in routine operation, and only in such instances as maintenance, emergencies and startups; so if they claim to be following the EIA, why are they not following this specific guideline. This was the same guideline incorporated into the permit.

Given ExxonMobil’s figures that it is producing at its highest capacity of 120,000bpd (barrels of oil per day), Adams reasoned that they would know that this has to be regarded as normal operations and cannot be counted as an emergency, maintenance, or startup.

“In terms of ExxonMobil being in compliance with the permit, that is absolutely not so. The permit states only under emergency conditions, that is that there should not be flaring under normal conditions. Operating with 120,000 bpd is normal operations,” he told the Stabroek News yesterday, via phone from his United States home.

Further, he added, “Exxon and the government knows better because an EIA is by definition only an assessment. EIA is not the regulatory document. The regulatory document is the permit. The EIA is to identify risk scenarios and mitigative actions needed to take to mitigate those. It does not allow you to do anything. The data there is used to write the permit. I am disappointed that Exxon doesn’t understand that the regulating document is the permit and not the EIA and they don’t understand the difference between the two.”

Emphasising that the document forms the basis of authorization, Adams said that government should check the permit and hold the company to all of its commitments.

And when ExxonMobil said that production remains at 120,000 barrels because it was committed to generating needed revenue for this country, Adams said that he finds it as “very condescending comment to the people” of this country because it would mean that ExxonMobil is “violating the cardinal rule of environmental management in production operations, which is you never compromise the environment health and safety for production.”

On January 29, Exxon issued a brief statement announcing the gas compression problem, resulting in the company having to temporarily increase flaring above pilot levels in order to maintain safe operations. It has since said that it has removed the faulty compressor for repairs in Germany.

The company on Monday revealed, via an online briefing on the issue, that it was the mechanical seal that failed, which made the operator realise that there was an issue with the gas compressor.

“The mechanical seal, that’s what we had an issue with and which was the originating cause of the machine being shut down [because it was] not sealing. We knew that mechanical seal was not sealing and we had not opened the machine fully so we know that based on our initial assessment we need to send it to the experts to do a full assessment of the seal and the third stage [FGC] itself,” Production Manager Michael Ryan had explained.

‘Design parameters’

While stating that at the time of the issue, production was at 130,000 barrels per day, President of ExxonMobil Guyana Alistair Routledge maintained that this was not in any way linked to the malfunction.

“Everything that we have been doing with the FPSO is within its design parameters and at no time have we done anything that is outside the overall parameters of the equipment and so this failure is not linked to any higher capacity test that we have been doing but nevertheless in order to minimize flaring we have cut back from some of those higher production test levels,” he said.

Alistair Routledge

Routledge acknowledged the issues encountered last year, which saw the company flaring over two billion cubic feet of associated gas, and said it was beginning to look at steady and reliable operations in 2021 when the compressor failed.

“I can assure you that we take this incredibly seriously. We are working 24/7. Mike and team are working hard to minimise the flaring as much as possible every day but just to put [it] in context, the Kingston power plant has higher emissions than the flare,” he said before adding that the amount of flaring occurring is not extreme. He further noted that in oil and gas operations, flaring is necessary but Exxon does not want flaring of any significance to continue.

Routledge said that getting

Dr Vincent Adams the FGC repaired and reinstated so normal operations can resume is the company’s top priority while assuring that updates will be provided every two days.

They currently don’t have a timeline as to when the issue will be resolved as a full assessment of the equipment has not been done but Routledge said they have estimated that it will take at least eight weeks to do repairs and upgrades. Additionally, it was stated that a new FGC was ordered but this will not be available until the end of the year.

‘Existing warranties’

Exxon was asked by Stabroek News if with its number of FPSOs of the current type with similar

types of compressor equipment operating across the globe, if the prolonged compressor issue was ever experienced. They did not respond to the question.

Questions were also posed on what assurances it has gotten from the manufacturer of the equipment that this will not be a recurring problem.

In response, the company said, “Comprehensive root cause analyses of the issues are being conducted and we will be taking significant steps to incorporate lessons learned for the FPSOs of future projects, including Liza Phase 2 and Payara. The repairs to the equipment are covered under existing warrantees with SBM Offshore, the owner and operator of the vessel.”

Asked if this country will have to stand the cost for the repairs under Cost

Oil, the company said no. “Cost of these repairs will not be part of the cost recovery arrangement under the Stabroek Block PSA.”

‘Perspective’

And when the ExxonMobil President on Monday compared flaring emissions by the company with the Guyana Power and Light Kingston plant, saying that the latter has more carbon emissions, it was not done to justify its large volume of flaring but to reference a study it had undertaken.

“An ExxonMobil Guyana commissioned study on Guyana’s emissions, which was conducted by an internationally renowned, third party environmental consultancy firm found that the current level of flaring at the Liza Destiny, is comparable to emissions from Guyana Power and Light and in fact less than emissions from either the transportation sector or the agriculture sector in Guyana,” ExxonMobil yesterday said.

“While, this in no way justifies the ongoing events at the Liza Destiny, it is important to put this into perspective, which is what Mr. Routledge did yesterday. He also stressed how disappointing the developments were and that the company is working diligently with the vessel’s owner SBM Offshore and the equipment manufacturer MAN Turbo to have this issue rectified as quickly as possible,” it added.

Adams said that the company’s promises should not be all that it gives at this time since they knew since last year that the compressor was faulty and should have had on hand necessary spares to address this if it recurred and other critical machines.

“The permit says that they have to have spare parts. The intent is that there be critical spares that can be readily available and these seals should have been there. And, they should have learned that these would be needed [and] are critical and thus should have been kept on the FPSO. Any capable engineer would have identified the seals as critical given the problems it has been given them over a year now,” he said.