ExxonMobil faces increased fine for flaring

Last Updated on Wednesday, 1 June 2022, 7:24 by Writer

The ExxonMobil-led Esso Exploration and Production Guyana Limited (EEPGL) will have to be pay a higher fine of US$50 per tonne of carbon monoxide, up from US$30, if it breaches the flaring rules under its Environmental Protection Agency’s (EPA)-renewed five-year permit for the Liza 1 project in the Stabroek Block. 

“The permit also goes further to require the Permit Holder to pay US$50 per tonne of carbon dioxide equivalents (CO2e) emitted as a result of flaring in excess of permitted periods,” the EPA said in a statement.

According to that entity, that sum marks the highest amount to be levied in the event flaring is above stipulated limits  and payable in these circumstances, progressing from US$30 under the first environmental permit for the Liza Phase 1 Project. For several months, EEPGL had flared natural gas into the atmosphere due to the repeated breakdown of the flash gas compressor aboard the floating production, storage and offloading (FPSO) vessel.

EEPGL is required to provide insurance and financial assurance for any environmental disaster. “The financial assurance provided must be guided by an estimate of the sum of the reasonably credible costs, expenses, and liabilities that may arise from any breaches of this permit. Liabilities are considered to include costs associated with responding to an incident, clean-up and remediation and monitoring,” EPA said.

The permit ensures that EEPGL is held liable for all costs associated with clean up, restoration and compensation for any pollution damage which may occur as a consequence of the project. EEPGL is also required to have financial assurance which includes a combination of Insurance which must “cover well control, and/or clean up and third-party liability on terms that are market standard for the type of coverage”, and a Parent Company/Affiliate Guarantee Agreement which indemnifies and keeps indemnified the EPA and the Government of Guyana in the event EEPGL and its co-venturers fail to meet their environmental obligations under the permit.

The EPA’s five-year renewal of the environmental permit for the Liza Phase 1 is in keeping with that agency’s Act Cap 20:05, and comes following careful consideration of EPGL compliance with the first iteration of the environmental permit for the Liza Phase 1 Project.

The Liza Phase 1 Project was the first petroleum development project to have been permitted in the Stabroek Block. Progressing from the knowledge and experience gained during the course of this project, the renewed permit specifies further conditions and standards which will ensure that all environmental and social safeguards are taken for the protection of human health and the environment.

The EPA said the permit makes provision for the targeted monitoring of the effects of effluent discharges from the Project within the Area of Influence. The effluent streams to be monitored include, but are not limited to produced water, bilge water, cooling water and grey water. The permit requires the submission of the effects of these discharges every six (6) months. Further, EEPGL is required to submit safety case information, including a risk assessment prior to the drilling and development of wells.

Further, the permit states that  EEPGL is also enjoined to establish and maintain a Grievance Mechanism in keeping with the World Bank’s Approach to Grievance Redress in projects, to ensure that complaints from individuals and communities who may be affected by the project are received and addressed. “There is a requirement for reporting the same and what actions were taken to address the grievances to the EPA.”