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Guyana’s Gas-to-Energy Project: Progress, Collaboration, and Challenges

by guyanabusinessjournal
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ExxonMobil is on track to deliver natural gas from its offshore Guyana operations to the mainland by the end of 2024. This Gas-to-Energy (GtE) Project aims to construct an Integrated Natural Gas Liquid (NGL) plant and a 300-megawatt (MW) combined cycle power plant at Wales, West Bank Demerara (WBD). The project will utilize natural gas from the Stabroek Block’s Liza Phase 1 and 2 Projects.

During the company’s first-quarter 2024 earnings presentation, ExxonMobil Chairman and CEO Darren Woods highlighted the benefits of this project, describing it as a “win-win proposition,” particularly for the people of Guyana. ExxonMobil is responsible for laying the pipeline to transport associated gas from offshore to onshore gas-processing facilities. At the same time, the Government of Guyana oversees the power station’s construction and modernization of the power distribution system.

Woods noted that this collaboration exemplifies how ExxonMobil intends to operate in other countries. It aligns with Guyana’s goal of providing its population with cleaner, cheaper, and more reliable energy by 2025. ExxonMobil’s Gas-to-Energy (GtE) Project is set to bring significant benefits to Guyana in terms of cleaner energy and reduced energy costs for consumers. This translates into lower operating expenses for businesses and more disposable income for families.

The pipeline, which is 12 inches wide, will cover approximately 200 kilometers from offshore to onshore facilities. It is expected to transport about 50 million standard cubic feet per day (mscfpd) of dry gas, with a maximum capacity of 120 mscfpd. ExxonMobil Guyana President Alistair Routledge reported earlier this year that the onshore portion of the pipeline was 40% completed, while the offshore component was 55% completed. The remaining work involves installing risers on the Liza Destiny and the Liza Unity Floating Production, Storage, and Offloading (FPSO) vessels, completing deepwater pipelaying, and connecting the pipeline to the power plant.

Despite delays in constructing the power plant, which has been postponed by at least six months due to disagreements between the Guyana Government and the contractor, Lindsayca CH4 Guyana Inc (LNDCH4), ExxonMobil remains confident that the pipeline will be completed by the end of 2024, laying the groundwork for the power plant’s completion. This new power plant has the potential to meet much of Guyana’s energy needs, significantly reducing reliance on less environmentally friendly energy sources.

LNDCH4, awarded a US$759 million contract in November 2022, claims delays from other project components overseen by ExxonMobil have impacted its delivery timelines, leading to additional financial claims amounting to US$50 million. The Guyana Government rejected this claim, resulting in a dispute resolution process with a three-member board to mediate. While the project’s deadline has been extended, the contractor seeks additional time to meet its obligations.

The contract dispute between the Guyana Government and the contractor has led to some delays, but it underscores both parties’ commitment to finding solutions for the benefit of the Guyanese people. ExxonMobil remains steadfast in its commitment to delivering the pipeline by year-end. Vice President Bharrat Jagdeo confirmed that the pipeline would undergo testing and be ready for use by early 2025. Despite the challenges, this collaborative effort between ExxonMobil and the Guyana Government represents a significant step towards improving Guyana’s energy infrastructure and achieving cleaner energy solutions.

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