Feasibility study required for large capital projects – API Economist
Gas to shore …
Kaieteur News – Since taking over responsibility for overseeing the oil sector, the Vice President, Dr. Bharrat Jagdeo, has been at the forefront of promoting the need for major initiatives like the gas project ashore, noting in particular that it would bring cheap electricity to everyone.
Chief API Economist, Dr. Dean Foreman
But his commentary over the last few months on reduced electricity costs has failed to obscure the need for the Government to answer the most crucial question at hand – is the gas-to-shore project viable?
Despite growing criticism, Jagdeo has been adamant that a feasibility study is not needed. Based on his calculations, the Vice President has argued that the project is economic and therefore, the country should proceed with the environmental studies.
Vice President, Dr. Bharrat Jagdeo
However, several concerned Guyanese have challenged Jagdeo’s approach, saying that no major capital project in the world, especially those run by transparent and accountable governments, is pursued without a feasibility study.
In line with the need to take such a fundamental step for the gas project the Chief Economist is attached to the American Petroleum Institute (API), Dr. Dean Foreman.
In an invited comment on the onshore gas project, Foreman categorically stated, “Any major capital project needs a feasibility study that should cover supply, infrastructure, processing, transportation, marketing and stakeholder relations under different scenarios, including including timing, pricing and financing. ”
If Guyana and its industry executives are to successfully develop a onshore gas project, Dr. Foreman, they would need to align their views on all the above issues.
Furthermore, without further information (i.e. studies or commentary outside of what has already been reported on nausea by the Vice President and other government officials), Dr. Foreman that it would be impossible for an API to determine the cost and feasibility of the project. from Guyana’s onshore gas project.
The Chief Economist stated that determining the same would depend not only on the volume of gas but the depth and configuration of a project’s drilling unit, processing needs, and the distance for transportation.
Dr. Foreman, “Time also equates to money, so if a project like this moves forward it would be important for Guyana to synchronize its domestic gas market development to monetise the gas efficiently.”
He added, “If the Guyana project is implemented to high standards in accordance with the API Recommended Practice for the Design, Construction, Operation and Maintenance of Offshore Hydrocarbon Pipelines (State Limited Design), the integrity of operations should be strong.”
Overall, the Chief Economist noted that natural gas, when used to generate power, has benefited the environment as a cleaner, lower carbon resource, replacing fuel and liquid fuel in many emerging economies. ‘ r obvious.
In terms of the kind of expertise the country would need to manage a gas project, the API Chief Economist said veteran industry experience in offshore gas developments would be key as well as a detailed technical understanding of the potential compromises of different infrastructure configurations . He also said that after coordinating risk management to ensure all above and below ground issues were addressed along with the financial and gas market acumen, it was in Guyana’s best interests.
If Guyana found itself in a situation where it would bring more gas to shore than it needs to, Dr. Foreman said the country could find itself doing a number of things, which include having to build additional gas treatment capacity and find additional markets for the gas, re-injecting the gas or limiting oil production.
In general, Dr.’s general perspective. Foreman is that Guyana should be guided by international best practices, and at the very least, a feasibility study so that it can determine the way forward on the onshore gas project.