Construction of the pipeline for government’s gas to shore project will begin by the end of this year as a final investment plan will be made then, Project Lead, Winston Brassington, yesterday announced.
“Completion of commercial agreements and Final Investment Deci-sion… and the start of construction of pipeline by Q4, 2022,” Brassington yesterday told the International Energy Conference at the Marriott Hotel as he gave an update on the project.
Speaking to potential investors, Brassington gave both an overview and update on the project, although he stayed clear of saying how much government expected it would cost.
He restated that the location of the termination of the gas-to-shore pipeline will be at Wales after it was “determined to be the optimal site after taking into account various factors, including economic, and ability to develop an Industrial Park as part of a larger development to revitalize the Wales area.”
“The selection of the location was critical to start the detailed studies such as the ESIA and the Geophysical and Geotechnical Studies (G&G) at a specific location versus 20 locations,” he added.
After four months in office, at the end of December key decisions made included that the minimum commitment of gas be moved from 30 million cubic feet per day (MMSCFD) to 50 MMSCFD.
An agreement on a timetable to complete the project by 2024, with approximately the first 18 months to complete studies, complete engineering, and conduct a competitive tender for the construction of the pipeline was also determined.
Brassington said that government knew then also that “Broad agreement on the key financial considerations included, estimated capital cost of the project, that funding of the pipeline by ExxonMobil would be out of Cost Oil, and competitive cost of power using gas such that the generation cost per kWH would be less than 7 cents/KWH at the generation plant”.
Since that time, he said that the size of pipeline was fixed at 12 inches with 50 MMSCFD of rich gas guaranteed initially and its capacity would mostly likely be around 120 MMSCFD.
He noted that while there are queries about excess gas for sale, the current amount will be just enough for this country at capacity.
Repeating announcements made in Parliament by Minister of Finance, Dr Ashni Singh that ongoing geotechnical and geophysical works for both offshore and onshore operations are advancing with portions already completed, Brassington gave further updates on what has been done.
“The ESIA [Environmental and Social Impact Assessment] process is underway, following a public scoping exercise on Terms of Reference for ESIA,” he said while noting that a draft ESIA is expected to be submitted at start of the second of this year to the Environmental Protection Agency.
Technical Studies being conducted by ExxonMobil, according to Brassington are also underway.
Noted too is that the onshore pipeline route has been selected and the final location of power plant and NGL (natural gas to liquid) plant determined.
Brassington said that a decision has been made to proceed with a power plant at 300 MW (net 250) using Combined Cycle technology with the initial requirement of it being approximately 42 MMSCFD.
“An initial train of NGL’s will deliver no less than 3700 barrels of NGL’s per day; this will allow complete replacement of all LPG imported into the country by five times with opportunity for local value added and export,” he added.
Strong interest
Turning his attention to Expressions of Interest (EOI) that had been issued in July of last year, Brassington said that it “resulted in strong interest with over 30 different companies submitting EOIs by Sept. 2021.”
“Responses allowed selection of size and type of power plant, provided options for NGL’s and showed significant interest in value-added production such as ammonia, urea, protein, glass,” he said.
Further, the “Pre-Qualification process issued in December 2021 resulted in 21 companies seeking to be pre-qualified for the combined EPC [Engineering, Procurement and Construction] of the power plant and NGL [natural gas liquids] facilities.”
That pre-qualification selection is currently underway with a selection expected by end of next month. A RFP [request for proposal] will then be issued to the pre-qualified companies “with priority for power plant being delivered by end of 2024 using rich gas.”
Brassington emphasised that the NGL facilities are expected to be online in 2025 and will replace all imported LPG [liquefied petroleum gas] and deliver dry gas to the power plant constructed, as targets that must be reached include that the commercial startup of the place be by the end of 2024 and all “remaining facilities including NGL plant by 2025.”
Discussing what he called “power plant economics,” Brassington said that GPL’s selling price per kWH is now above 30 US cents with generation costs using HFO [heavy fuel oil] at 15 cents per KWH and rising with oil prices, given its volatility.
However, “generation costs from gas-powered plant is expected to be less than 7 cents including the cost of gas,” he said.
Government will cover the capital cost of the power plant and this year it had made an initial commitment of $20.8 billion which was covered in the 2022 annual budget.
The benefits of the project, Brassington said, is one where “reduction of generation cost expected to be at least 50%.”
“Gas will have a significantly lower carbon footprint than oil per KWH produced,” he also noted.
The estimated so far US$900 million gas-to-energy project entails the construction and operation of a 12-inch pipeline, approximately 220 kilometres long, from the Liza Phase 1 and Liza Phase 2 Floating, Production, Storage, and Offloading (FPSO) vessels in the offshore Stabroek Block, to an onshore natural gas liquids (NGL) and natural gas processing plant (NGL Plant) located at Wales, West Bank Demerara. Government also has plans for a development zone in the area, which once accommodated a thriving sugar plantation and factory.
Minister of Finance Dr. Ashni Singh has defended the project saying that it was the Irfaan Ali-led government’s aim to advance this country’s transition to cleaner sources of energy, “while ensuring that we meet the growing demand for electricity and reduce the cost of electricity by 50 percent over the next 5 years.”
