ExxonMobil’s Exit from Suriname Raises Pressure on Guyana Amid Natural Gas Concerns

SEATTLE (Oil Monster): By some estimates, there might be 2.4 billion barrels of oil deep below the waters of the Atlantic ocean off the coast of Suriname, South America’s smallest country.

The problem for multinational oil companies seeking to extract that oil is what’s mixed in with it: trillions of cubic feet of methane, often referred to as natural gas.

In May, the U.S. oil giant ExxonMobil and its partner, the Malaysian oil company Petronas, announced their latest well in Suriname’s waters had struck oil. The find — their third fossil fuel discovery in the region — stirred speculation about the potential for a floating oil production platform off Suriname’s coast, and even the possibility of a floating liquified natural gas (LNG) export project.

ExxonMobil has already established itself in neighbouring Guyana, whereno for the past decade the company has discovered increasing amounts of oil under a partnership with Hess Corp. (pending acquisition by Chevron) and the China National Offshore Oil Corp. (CNOOC) — amid legal challenges from environmental advocates. 

But last month, just six months after announcing its latest discovery in the region, ExxonMobil pulled up its anchors and left Suriname, closing out its only remaining foothold in the nation’s waters. The third — and final — offshore well drilled by the partnership, known as the Fusaea-1 well, had produced more natural gas than expected, oil industry analysts noted in May.

ExxonMobil’s exit is the latest sign that natural gas is causing big headaches for the international oil companies prowling the Guyana-Suriname basin, who are under increasing pressure to stop simply burning off unwanted methane, a polluting and wasteful process known as flaring, or unleashing the powerful greenhouse gas into the atmosphere unburned.

“The development of an offshore gas field is more challenging and complex to explore in technical and economical perspective than an offshore oil field,” Suriname’s state oil company Staatsolie acknowledged in March as it described talks surrounding ExxonMobil’s activities in Block 52. 

ExxonMobil did not immediately respond to a request for comment and has not publicly commented on Suriname since leaving in November. In a corporate plan update released on December 11, the company emphasized that it intends to put 70 percent of its capital expenditures from now to 2030 into what the company described to investors as “advantaged assets — the Permian, Guyana and LNG – where all our plans are well matured.”

“My opinion on ExxonMobil exit is simple,” Erlan Sleur, founder of the grassroots environmental watchdog Protect Our Biodiversity Suriname (ProBioS), told DeSmog. “It doesn’t seem that Suriname has the oil bonanza that was predicted and they want to focus on the exploitation in Guyana with 1 million barrels a day now.”

Over the past few years, Guyana has seen a surge in production fast enough to make the tiny tropical nation, with a total population of roughly 800,000 (about equal to Jacksonville, Florida or Indianapolis, Indiana), into the third-fastest growing oil producer outside of OPEC, according to the U.S. Energy Information Administration. In Guyana, ExxonMobil is partnering with Hess Corp. (pending acquisition by Chevron) and the China National Offshore Oil Corp. (CNOOC), and the trio is on track to transform Guyana into one of the largest oil producers in South and Central America, second only to Brazil.

Handling natural gas off the coast of Suriname and Guyana poses major challenges and involves significant environmental risk, however. Companies have repeatedly been caught breaching pledges to eliminate natural gas flaring and venting in South America’s remote offshore oilfields.

“You know that oil companies in this region are not so happy with natural gas as it costs billions more to exploit, transport, liquefy for transport and deliquefy etc., the gas than it is worth,” Sleur said.

“Oil companies are forbidden in most countries to burn natural gas/flaring,” he added, “but we still see it happening everywhere.”

ExxonMobil’s abrupt exit likely throws a wrench into discussions for an LNG export project in Suriname. 

In March, Staatsolie said it was in talks with ExxonMobil and Petronas for a floating LNG project that Suriname’s government would incentivize with a 10-year tax holiday under the terms of a Letter of Agreement.

“Staatsolie expects Petronas to continue the activities in Block 52 without interruption and is confident in the continuation of the good partnership between the two companies,” Suriname’s state oil company said as it disclosed ExxonMobil’s exit on November 20.

Courtesy: www.desmog.com