– Gas allocation, industrial development and institutional coordination now matter as much as the size of the resource
By Anthony E. Paul
Senior Energy Governance, Policy & Strategy Advisor; formerly Director of Geology and Geophysics, Trinidad and Tobago Ministry of Energy; Amoco Trinidad and BPTT Manager responsible for Exploration and Appraisal / Gas Field Development / Oil Production
(Kaieteur News) – Part I argued that before Guyana decides how large its next gas pipeline should be, or where it should land, the country needs an independently understood picture of what gas will become available, from which reservoirs, when it can be produced and under what constraints. That is only half of the problem. Once gas becomes available, Guyana has to decide what it wants those molecules to do.
The urgency is increasing. Government is reviewing the Field Development Plan and production-licence application for Longtail, described as the Stabroek Block’s first development centred heavily on gas production. Unlike the Wales Gas-to-Energy project, which uses associated gas already being produced with oil from the Liza developments, Longtail could mark a new phase in which gas itself becomes a principal development objective.
T&T Energy expert, Anthony Paul
The prospective market is also expanding. Government says the existing 12-inch Wales pipeline can transport up to 120 million cubic feet per day and is expected eventually to support 600 MW of power generation, alongside fertiliser, data-centre and other developments. A second, considerably larger pipeline is planned for Berbice, where petrochemicals, Natural Gas Liquids, power generation and other industrial activities are being considered.
Guyana is therefore moving from the question of whether it can use gas towards a more difficult one: which uses create the greatest and most sustainable national value?
Gas demand is not simply a volume
Different users create different kinds of value and make different demands on the gas system. A fertiliser plant uses gas primarily as feedstock; a power station burns it as fuel; petrochemical developments may create pathways into further manufacturing; while a data centre primarily consumes electricity rather than gas itself. A million cubic feet committed to one use is no longer available for another.
Some industries create substantial employment or domestic supply chains; others are highly capital-intensive. Some substitute imports or earn foreign exchange, while others consume large gas volumes but employ relatively few people. Reliability requirements also differ, and a large fertiliser or petrochemical facility may depend on predictable feedstock for twenty or thirty years.
The policy question should therefore not be simply how much gas an investor wants, but what Guyana receives in return for committing part of a finite resource and the infrastructure required to deliver it. Revenue matters, but so do electricity cost, employment, foreign exchange, import substitution, domestic-company and supply-chain development, technological capability and opportunities for further downstream activity.
Gas allocation is therefore development policy, not merely a commercial contracting exercise.
- Trinidad’s lesson is both success and warning
Trinidad and Tobago’s experience is useful here, although Guyana should not reproduce the T&T model mechanically. Natural gas supported electricity generation and became feedstock for ammonia, fertiliser and methanol; it helped underpin steel and other manufacturing; and ports, industrial estates, pipelines and supporting infrastructure developed around the gas economy. Local engineering, construction and operating capabilities expanded, while firms entered supply chains and later carried expertise into other countries. LNG eventually became another major outlet.
The significance was not simply the industries selected, but the attempt to extract several forms of national value from the same resource. Trinidad also provides the warning: industries built around expectations of abundant gas become vulnerable when the upstream resource can no longer sustain accumulated demand. Falling production then appears not merely as reduced upstream revenue, but as curtailed factories, idle capacity, weaker exports, employment pressure and underused infrastructure.
Guyana’s lesson is therefore not to be timid about industrialisation, but to keep industrial ambition grounded in a credible and continuously updated understanding of the resource base. The objective should not be to consume as much gas as possible, but to maximise sustainable national value from the gas available.
Who sees the whole system?
That leads to an institutional question which becomes more important with every additional project. The upstream authorities, including GGMC and MNR, concentrate on exploration, reservoirs and field development. The electricity sector focuses on generating capacity, reliability and tariffs; industrial policymakers seek investment and jobs; Finance considers expenditure and fiscal exposure; environmental agencies have their own responsibilities; and each private investor evaluates its own project.
Every institution can perform its mandate competently and the national gas system can still become misaligned.
Guyana therefore needs a continuing coordinating capability with access to the technical, commercial and economic information required to see the whole system, and the capacity to use it effectively. Capability means the knowledge, skills, judgement, experience and authority needed to make sound decisions. Capacity means having the organisational resources to apply that capability reliably and at the required pace: enough people and time, appropriate support staff, technology and data, and systems and procedures that turn individual expertise into repeatable institutional performance.
Governments sometimes confuse the two. A ministry may employ excellent professionals and still lack capacity if the same small group is reviewing field development plans, negotiating agreements, assessing infrastructure and handling routine regulatory demands. Effective capacity also depends on standard operating procedures, quality-control and review processes, internal risk-management and escalation systems, and retaining institutional knowledge rather than relying on a few individuals.
Nor does every surge in workload justify permanent recruitment. Some expertise must reside continuously within the State; other needs are episodic. A strong permanent core should be able to draw quickly on independent specialists and consultants when workload or expertise requires it, much as multinational operators routinely supplement their own teams.
At any point, somebody acting for the resource owner should know how much gas is available, how much is committed, what future supply is sufficiently assured to justify investment, how much pipeline capacity exists and how much prospective demand is contracted rather than merely proposed. The same institutional system must test what happens when reality departs from the plan. This requires more than an occasional inter-ministerial committee or a Gas Master Plan produced every few years; it requires enduring capability, sufficient operating capacity, reliable systems and flexible access to specialist expertise.
As the number of projects and institutional interfaces grows, that coordinating capability will increasingly need to operate as an owner-side programme-management function, giving Government a continuous view across schedules, risks, commitments and dependencies rather than relying on each project or agency to manage only its own part.
A gas master plan must be able to change
Guyana needs more than a catalogue of proposed projects. It needs a living national gas-development programme connecting subsurface resource assurance, field-development schedules, pipeline capacity, electricity demand, industrial development, gas pricing, financing and national capability.
Such a programme must be scenario-based. It should test what happens if associated gas remains necessary for reinjection longer than expected, if Longtail or another development produces more or less gas than forecast, if industrial projects proceed more slowly than planned, or if another discovery creates options that do not presently exist.
The purpose is not to predict the future perfectly. It is to avoid making long-lived infrastructure and contractual decisions as though only one future were possible. That matters before a second pipeline is committed, because Guyana is moving towards multiple sources of gas, competing users and infrastructure decisions that will shape industrial development for decades.
The question is therefore no longer simply whether another pipeline can be built to Berbice. It is whether it forms part of a coherent architecture in which the resource base, reservoir stewardship, power generation, industrial demand, pricing, infrastructure investment and national value have been considered together.
Guyana’s oil development has moved with remarkable speed, and gas development need not be made artificially slow. But speed and planning are not opposites. Good preparation allows a country to move quickly without repeatedly reopening fundamental decisions after infrastructure and contracts have already fixed the available choices.
The first pipeline asked whether Guyana could bring gas ashore. The next phase asks something more important: what does Guyana want the gas to do once it gets there, and who is responsible for keeping the whole system aligned?
Even with a good answer, another problem remains. Projects do not always arrive together, contracts distribute the consequences of delays, and governments may change direction after investments have been committed. That is where the next article begins: “When Gas Projects Fall Out of Step: Who Pays?”
Source: Kaieteur News
