# Guyana Gas-to-Energy Project: Who Really Benefits?

An episode of [Drilled](https://invisiblenetwork.ai/podcast/1439735906), 9 Oct 2023, 27 min.

Audio: https://podtrac.com/pts/redirect.mp3/tracking.swap.fm/track/SxlTEPDY7xDg35RXkASs/pdrl.fm/3e5572/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/9a7ab5ee-ce11-48ff-a544-b3ec00ea9b1e/fa082635-314c-4de0-870a-b3ec00ef4cf8/audio.mp3?utm_source=Podcast&in_playlist=7f82f371-6316-4ea6-a108-b3ec00ea9b2d

A new report from the Institute for Energy Economics and Financial Analysis (IEEFA) looks at the details of Guyana's planned "Gas to Energy" project and finds mostly benefits for ExxonMobil and more debt for Guyana. Read the full report here. See omnystudio.com/listener for privacy information.

## Transcript

[0:08] Speaker 1: Welcome back to Drilled. I'm Amy Westerveldt. I know we're
[0:11] Speaker 1: in the middle of a new season on the criminalization
[0:14] Speaker 1: of protest that I'm bringing you an update today on
[0:18] Speaker 1: an earlier season, Light Sweet Crude, our season about the
[0:23] Speaker 1: creation and expansion of a new oil and gas industry
[0:27] Speaker 1: in Guyana. When we were working on that season, it
[0:30] Speaker 1: was very hard to get any information at all about
[0:33] Speaker 1: what was being called the Gas to Energy project. This
[0:37] Speaker 1: was a plan to pump excess gas from the oil
[0:40] Speaker 1: drilling offshore onshore to a facility and then use it
[0:45] Speaker 1: either for export or for fuel in Guyana. A new
[0:49] Speaker 1: report has come out from the Institute for Energy and
[0:52] Speaker 1: Economic Analysis AIFA, and Tomsonzillo, the author of that report,
[0:57] Speaker 1: spoke to me about what he has found about this project.
[1:03] Speaker 1: In a nutshell, seems to be a way for Exxon
[1:06] Speaker 1: to turn what was a problem for them access gas
[1:10] Speaker 1: that they couldn't flare without being fined into a new
[1:15] Speaker 1: revenue stream, gas that is technically free for Guyana, but
[1:20] Speaker 1: that they're spending an awful lot of money.
[1:23] Speaker 2: Paying Exxon to get to shore.
[1:25] Speaker 1: And back with more details on that after this quick break.
[1:49] Speaker 2: Okay, tell me what you looked into here.
[1:52] Speaker 3: So what we did is we took a look at
[1:55] Speaker 3: the gas to energy project that's being proposed in Guyana,
[2:02] Speaker 3: and a couple things came out of the study. Maybe
[2:08] Speaker 3: the most important one was that the need for the
[2:13] Speaker 3: project is really questionable. It's kind of a risky bet,
[2:17] Speaker 3: and that's because the grid system in Guyana really doesn't
[2:22] Speaker 3: need something of this size three hundred mega posal. As
[2:27] Speaker 3: we reviewed the documentation and all, what we came up
[2:31] Speaker 3: with was if they build this, given the current capacity
[2:36] Speaker 3: that they have and some other new things that they're
[2:39] Speaker 3: planning to do in addition, that they would wind up
[2:43] Speaker 3: the best way to talk about oversupply is that the
[2:46] Speaker 3: reserve margin would be enormous. And the reserve margin is
[2:50] Speaker 3: effectively whatevery utility has. If you need one hundred megawatch,
[2:55] Speaker 3: you're going to build one hundred and fifteen, because that's
[2:57] Speaker 3: basically how the systems work escially, as a professional standard.
[3:02] Speaker 3: If they build in either scenario, we have a lower
[3:05] Speaker 3: I case scenario, the reserve margin will be fifty eight
[3:10] Speaker 3: percent one hundred and ninety six percent for the low load,
[3:14] Speaker 3: which is if it is a sort of a slower
[3:17] Speaker 3: economy and then the high load it would be twenty
[3:21] Speaker 3: four to one hundred and thirty two percent reserve. So
[3:24] Speaker 3: no matter how you look at it, it's significantly oversupplied.
[3:28] Speaker 3: That's unfortunate that they look to build a gas project
[3:33] Speaker 3: or anything. But that wasn't the only thing that we
[3:36] Speaker 3: found in that they historically get this wrong. The estimation
[3:41] Speaker 3: for electricity, and there we basically looked at their past
[3:46] Speaker 3: practice and they were consistently overestimating the amount of electricity
[3:52] Speaker 3: they were going to use. That's pretty significant over like
[3:55] Speaker 3: a ten year period. Would they sort of missed it
[3:57] Speaker 3: every year?
[3:58] Speaker 2: And this is this is the government of Guyana, or this.
[4:01] Speaker 3: Is power and light.
[4:03] Speaker 2: I'm sorry, okay.
[4:06] Speaker 3: That's the utility. And then the other problem that we
[4:10] Speaker 3: that we uncovered is that when they made the announcement,
[4:14] Speaker 3: they were working with one assumption. They then revised the
[4:18] Speaker 3: analysis and then very shortly after that and they revised
[4:21] Speaker 3: it by a significant amount downward. So the stuff that
[4:25] Speaker 3: we're looking at, which is already you know, an over assumption,
[4:29] Speaker 3: they had it much higher that justified the gas plant.
[4:34] Speaker 3: Then they reduced it afterwards, and they didn't reduce any
[4:37] Speaker 3: sense of that they still needed a three hundred megawatt plant.
[4:40] Speaker 3: It's kind of like it's a very awkwardly done resource
[4:45] Speaker 3: plan and they don't have a kind of resource planning
[4:48] Speaker 3: like we have in the US that you might be
[4:50] Speaker 3: familiar with. The other problem they have there, and I'm
[4:52] Speaker 3: going into some length on this because I know they'll
[4:55] Speaker 3: say I don't know. What I'm talking about is that
[4:57] Speaker 3: they have about one hundred megawatts actually off the system
[5:01] Speaker 3: of an entity, mostly industrial and commercial, that are supplying
[5:06] Speaker 3: their own energy right now because the system is so unreliable.
[5:11] Speaker 3: They think that's coming back on when they put up
[5:14] Speaker 3: this new plant, but it probably won't because they're not
[5:17] Speaker 3: planning for any new system upgrades.
[5:19] Speaker 2: Transit, right, That's what I was going to ask you about,
[5:22] Speaker 2: is like, you know, is there any kind of transmission distribution?
[5:25] Speaker 3: No. The problem is is that they don't have a
[5:28] Speaker 3: planning process that gives you that comprehensive sense. But we
[5:31] Speaker 3: went into it and don't see any numbers or any
[5:34] Speaker 3: you know, thought that they are consistently working to improve
[5:39] Speaker 3: their reliability. But it's like in the US averages four
[5:45] Speaker 3: hundred and forty minutes a year of outages. In Guyana,
[5:50] Speaker 3: it's fifty one hundred minutes, so you get a sense
[5:53] Speaker 3: of just how unreliable. And it's a it's a major
[5:55] Speaker 3: item in the newspapers there all the time, and a
[5:58] Speaker 3: major item people's daily existence. So they have a long
[6:02] Speaker 3: way to go on that. And it's unlikely that the
[6:05] Speaker 3: businesses are going to come back in simply because they
[6:07] Speaker 3: buy a gas plant that they don't particularly need. It
[6:10] Speaker 3: doesn't improve the system delivery. Right, Those are those are
[6:14] Speaker 3: the kinds of things we're looking at in terms of necessity.
[6:17] Speaker 2: Can I ask you, like if this has any impact
[6:21] Speaker 2: on because I know one of the big promises that
[6:23] Speaker 2: the government and Exon has made is that like this
[6:26] Speaker 2: project is going to make electricity cheaper for people in Guyana.
[6:30] Speaker 3: Well, the only way it's going to do that, I
[6:32] Speaker 3: was going to get to that next is that it
[6:33] Speaker 3: is essentially a system that's unaffordable and not necessarily to
[6:38] Speaker 3: the rate payer, but to the taxpayer. What they've decided
[6:42] Speaker 3: to do is there's no rate information in any of this. Incidentally,
[6:46] Speaker 3: and we're going to be calling for the Commission to
[6:49] Speaker 3: do their job. But the plan is that they're going
[6:55] Speaker 3: to provide a fifty percent subsidy for rates after this
[6:59] Speaker 3: is done, and that'll be obviously an annual disbursement from
[7:04] Speaker 3: the Guyanese government to GPL to offset the rate that'll
[7:09] Speaker 3: be out of profit oil future profit oil essentially going
[7:13] Speaker 3: to get to a shot in a minute which explains this.
[7:16] Speaker 3: And so the affordability issue may be minimal to the ratepayer,
[7:21] Speaker 3: but it's going to be a significant burden on the
[7:24] Speaker 3: budget every year, so you know you have an issue
[7:29] Speaker 3: there as to whether or not it's affordable for the taxpayer.
[7:33] Speaker 3: The other thing that, as I said to you, the
[7:37] Speaker 3: system remains unreliable. And then what they're proposing in terms
[7:42] Speaker 3: of money being spent in the grid system is when
[7:46] Speaker 3: you build a gas plant, particularly when you're going to
[7:49] Speaker 3: borrow to build a gas plant, you are you're going
[7:52] Speaker 3: to be first of all using foreign labor for the
[7:55] Speaker 3: most part, because you're going to have all of these
[7:57] Speaker 3: professional engineers and construction coming in. The money is going
[8:02] Speaker 3: to come from Exon lending as well as the ExM Bank,
[8:06] Speaker 3: and so you're going to have a lot of the
[8:08] Speaker 3: money in paying debt off that's not going to stay
[8:11] Speaker 3: in the Guyana. And then there may be and I
[8:15] Speaker 3: we'll get into that in a minute. There may be
[8:17] Speaker 3: that the government has to pay for the gas. That's
[8:20] Speaker 3: a contented matter right now. And if they do, then
[8:23] Speaker 3: the fuel cost, of course gets paid to Exon, which
[8:27] Speaker 3: is not money in Guyana. When you do solar, you're
[8:31] Speaker 3: going to be employing, because what we're proposing is a
[8:34] Speaker 3: solar investment of significant nature. When you do solar, you're
[8:38] Speaker 3: going to be hiring local people. They're going to be
[8:41] Speaker 3: building things in the neighborhoods, in the communities, in the
[8:45] Speaker 3: towns and villages and the rural areas, and people will
[8:50] Speaker 3: see that construction going on and it will be an
[8:53] Speaker 3: economic benefit to each family who gets the panels, and
[8:58] Speaker 3: we're trying to cover everybody, and then that will lower
[9:01] Speaker 3: utility costs, which allows them, of course, some extra money
[9:05] Speaker 3: in their pocket. So you have here a series of
[9:08] Speaker 3: direct benefits to the Guinese people, and frankly, the Guinees
[9:14] Speaker 3: people haven't seen much benefit at all from this oil
[9:16] Speaker 3: money yet. They see some construction projects and all, but
[9:19] Speaker 3: as for specific benefits, there really haven't been any like this.
[9:24] Speaker 3: You know, Alaska, for instance, gives out cash to every
[9:28] Speaker 3: citizen in Alaska because of their oil surpluses. Here they're
[9:32] Speaker 3: doing you know, they're doing more generalized so called benefits.
[9:36] Speaker 3: So those economic issues are also very important. So we
[9:40] Speaker 3: summarize it as being unnecessary, unaffordable, unreliable and uneconomic. And
[9:46] Speaker 3: so we propose a solar plan, which would be probably cheaper.
[9:51] Speaker 3: We're looking to get for the first part of this
[9:53] Speaker 3: one hundred percent of the residents in Guyana with solar panels.
[9:59] Speaker 3: I think that can be done probably by twenty forty.
[10:02] Speaker 3: We find it to be probably around the same course,
[10:04] Speaker 3: but probably cheaper. Obviously it's a more predictable energy supply.
[10:10] Speaker 3: If you do it with batteries, which we're building into
[10:13] Speaker 3: the system, you could probably have twenty four to seven service. Again,
[10:16] Speaker 3: direct benefits with low electricity bills and the greater likelihood
[10:20] Speaker 3: of employment and greater likelihood of activity and local stores
[10:25] Speaker 3: and what have you when you do the when you
[10:28] Speaker 3: do a solar investment.
[10:29] Speaker 2: I wanted to ask you one thing about the press
[10:32] Speaker 2: release before we get into the chart, which is this
[10:35] Speaker 2: line that says Exonmobile would profit the most from the
[10:38] Speaker 2: gast entergy.
[10:39] Speaker 3: Well, yeah's talk about So what you see in the
[10:45] Speaker 3: left hand side of the chart is financial lender. Exon
[10:49] Speaker 3: will be one of the lenders. They will be lending
[10:54] Speaker 3: the money to Guyana, I believe for the pipeline, although
[10:58] Speaker 3: this is unspecified, but Exon has acknowledged that this. They
[11:02] Speaker 3: will be making an investment and it will have to
[11:04] Speaker 3: be paid back. That's about the sum of it that
[11:07] Speaker 3: I can see. Then they are going to build the pipeline,
[11:11] Speaker 3: second source of profit for them. Then what we have
[11:16] Speaker 3: here is two other things that aren't necessarily on the chart,
[11:20] Speaker 3: but I want to give you the idea. There is
[11:22] Speaker 3: a contention. Jack Deo, the vice president, has said that
[11:27] Speaker 3: the gas is free and that they will not be
[11:31] Speaker 3: charged for it. Right so, and if you read the
[11:35] Speaker 3: contract then we go into some length in the report
[11:38] Speaker 3: on this. If you read the contract, there's specific way
[11:42] Speaker 3: in which Guyana would get free gas, and no matter
[11:46] Speaker 3: how we look at it, that would be a very
[11:48] Speaker 3: limited amount, if any. And what Exxon is saying is
[11:53] Speaker 3: that they are going to be winding up selling the
[11:56] Speaker 3: gas to Guyana and they will also be producing so
[12:00] Speaker 3: plus gas. And I don't know how that's going to
[12:02] Speaker 3: be settled because there's no no public plan put out,
[12:05] Speaker 3: no contracts put out, So there's a disagreement. You know,
[12:08] Speaker 3: Guyana seems to be saying it's free and Exon says no, no, no,
[12:12] Speaker 3: we're selling it to Guyana. So where if you assume
[12:17] Speaker 3: that they pay for the gas, then you're going to
[12:20] Speaker 3: have and that dotted line that says debt bail out
[12:23] Speaker 3: you should probably put in there. And I'm thinking of
[12:26] Speaker 3: doing this when I at least the report debt bailout
[12:29] Speaker 3: and potential gas sale. Each of them are likely, but
[12:33] Speaker 3: they're not certain. And we're trying to separate those things
[12:37] Speaker 3: through that that you when you settle, when you look
[12:39] Speaker 3: at risk, you sort of look at the levels of it. Right,
[12:42] Speaker 3: So this looks like Exceon would benefit if there was
[12:46] Speaker 3: a gas sale. That would be three forms of profit.
[12:50] Speaker 3: The fourth form of profit. They currently are in court
[12:55] Speaker 3: still on the permit case on the flaring, and the
[13:01] Speaker 3: essence of that case is Exon had permit requirements to
[13:06] Speaker 3: do zero flaring. They failed to meet that. They've been
[13:10] Speaker 3: fined already, but we have it in court. And what
[13:14] Speaker 3: this does is it gets rid of that problem for
[13:17] Speaker 3: Exon because there's not going to be flaring anymore. They're
[13:19] Speaker 3: flaring because they're burning excess gas. If they're going to
[13:23] Speaker 3: be moving the gas into Guyana, then the flaring problem
[13:27] Speaker 3: is no longer an issue and is no longer any
[13:29] Speaker 3: costs associated with attempts to comply with that permit term,
[13:35] Speaker 3: and so they benefit that way. So we see at
[13:38] Speaker 3: least four forms of profit for Exon, and we're not
[13:43] Speaker 3: seeing a whole lot of gain obviously for the taxpayers ratepayers,
[13:49] Speaker 3: because what will happen is they're going to have to
[13:51] Speaker 3: pay it back, and the way the government has said
[13:53] Speaker 3: they want to pay it back is with power subsidies.
[13:56] Speaker 3: Now that would be and that's the line that goes
[13:59] Speaker 3: from the Guinese government up to over by the rate pays.
[14:02] Speaker 3: That's a subsidy that would be annually, and we don't
[14:05] Speaker 3: know they say fifty percent that potential subsidy. And then
[14:10] Speaker 3: the Utility Commission has warned GPL the inn of Power
[14:15] Speaker 3: Life that they're borrowing too much. We agree. And the
[14:19] Speaker 3: likelihood when they start adding on the debt that we're
[14:22] Speaker 3: thinking about for this particular project, you're looking at a
[14:27] Speaker 3: very serious financial situation, and the likelihood, again it's a
[14:32] Speaker 3: risk matter, there is a likelihood of a need for
[14:36] Speaker 3: a debt bailout of some kind, in which case that
[14:38] Speaker 3: would benefit Excell again because they would get paid immediately
[14:42] Speaker 3: and in advance for the money that they've lent to
[14:45] Speaker 3: the project. So we're looking at that and saying, well,
[14:49] Speaker 3: this is sort of another way they get it coming
[14:51] Speaker 3: and going. But the government is going to have a
[14:55] Speaker 3: problem having to stand behind this deal because if you
[14:59] Speaker 3: over build on your power and you're unlikely to use
[15:03] Speaker 3: the facility at one hundred percent or ninety five percent
[15:06] Speaker 3: capacity because you're going to have other things, other assets
[15:09] Speaker 3: that you're going to be using. So as we look
[15:12] Speaker 3: at it, we say, well, how are they going to
[15:14] Speaker 3: you know, how's this going to work? And the answer is,
[15:17] Speaker 3: you know, they may wind up with a stranded asset
[15:20] Speaker 3: where they're not able to really use it beyond the
[15:23] Speaker 3: sixty percent sixty five percent capacity. And so we're saying
[15:27] Speaker 3: to ourselves, well, you know that's another problem for that's
[15:33] Speaker 3: you know, power subsidy, because that that'll be more that'll
[15:36] Speaker 3: make it more expensive if they run it less. So
[15:39] Speaker 3: you have a real set up here for a high
[15:43] Speaker 3: risk venture that is likely to you know, be a problem.
[15:48] Speaker 3: And what happens then is a lot of the oil
[15:51] Speaker 3: profits then have to go back into something that they
[15:54] Speaker 3: don't need in the first place. Right whereas if you
[15:58] Speaker 3: take the oil profits and the gain these government and
[16:02] Speaker 3: you invest that and you provide solar panels to families,
[16:06] Speaker 3: you have a correct benefit. You don't have the borrowing.
[16:10] Speaker 3: You know, you have a local economic activity, you have
[16:14] Speaker 3: lower costs over time, you don't have to worry about
[16:19] Speaker 3: GPL turning the lights on and off. You know, you
[16:22] Speaker 3: have definitely a better improvement here that's more efficient and
[16:26] Speaker 3: stable financially for Guyana. It's money that they can invest
[16:32] Speaker 3: in Guyana and it stays in Guyana, so instead of
[16:35] Speaker 3: the two billion or whatever it is. That's another thing
[16:38] Speaker 3: that's a problem that we point down the report. There's
[16:40] Speaker 3: really no clear estimate of what it's going to cost.
[16:42] Speaker 3: Some are saying two billion.
[16:43] Speaker 2: And right. I know that Keana, our reporter in Guyana,
[16:48] Speaker 2: was saying it like they've been asking over and over
[16:51] Speaker 2: for some kind of transparency around the cost of this
[16:54] Speaker 2: project and it's just not coming, not coming.
[16:58] Speaker 3: It's there's a lot of things in that hear that
[17:01] Speaker 3: lack transparency. I mean, that's our ongoing problem. So what
[17:05] Speaker 3: we were able to do here, I think, and if
[17:07] Speaker 3: you look at it from that angle, is we kind
[17:10] Speaker 3: of piece together a really poor disclosure system on the
[17:16] Speaker 3: utility system and an even worse disclosure system on the
[17:21] Speaker 3: capital part of the pipeline, and then that weak disclosure
[17:27] Speaker 3: of the utility makes it very hard to do a
[17:29] Speaker 3: solar power analysis, although we did our best with some
[17:33] Speaker 3: I level numbers, and we are starting to see other
[17:37] Speaker 3: places invest heavily in solar and so we have a
[17:40] Speaker 3: little feel for what a system of this size would
[17:43] Speaker 3: actually cost. And you know, we're just seeing it in
[17:47] Speaker 3: a very sort of different light. And we think that
[17:49] Speaker 3: if they also, if they do this gas project the
[17:53] Speaker 3: way they're talking about, given what they have, they don't
[17:55] Speaker 3: need to solar then and so it's going to be
[17:58] Speaker 3: unlikely that people are going to be you know, using
[18:03] Speaker 3: it in any great numbers, you know, particularly you're going
[18:06] Speaker 3: to have a subsidy in there, so the rates will
[18:09] Speaker 3: be you know, might be reasonable to the households, but
[18:12] Speaker 3: the government and will have a lot of problems. So
[18:16] Speaker 3: that's really kind of what we're looking at. And we see,
[18:19] Speaker 3: as I said, you know, we don't see a whole
[18:21] Speaker 3: lot of benefit for the public, but we do see
[18:23] Speaker 3: very clear articulated benefits for Excellon and it seems to
[18:29] Speaker 3: be at a recurring theme.
[18:32] Speaker 2: Yeah, I would imagine that that the renewables thing would
[18:36] Speaker 2: would also have a like a workforce training component too, right,
[18:40] Speaker 2: that there would be some kind of local training and
[18:43] Speaker 2: jobs and all that stuff as well.
[18:46] Speaker 3: Where we've where I've seen them try to do these
[18:49] Speaker 3: mass renewable stuff, renewable projects. That is what happens. I
[18:55] Speaker 3: live in Upstate New York, and a number of years
[18:58] Speaker 3: ago the state government put place a program for solar
[19:03] Speaker 3: installations and energy efficiency for houses, and the local contractors,
[19:09] Speaker 3: many of them, took a risk in doing it, and
[19:11] Speaker 3: one of the things they did was they put together
[19:13] Speaker 3: a little group schools and that training center was put
[19:18] Speaker 3: together by the merchants, by the contractors. So I think
[19:21] Speaker 3: you are pretty confident that if you did that in Guyana,
[19:24] Speaker 3: you would have some form of training that would go on,
[19:28] Speaker 3: and you know, and all the work is done locally.
[19:31] Speaker 3: If you're looking at it, you know, if this is
[19:33] Speaker 3: a ten or fifteen year undertaking, if you do that,
[19:36] Speaker 3: you might even get some kind of production, if not
[19:39] Speaker 3: in Guyana, at least you know, in closer proximity than
[19:42] Speaker 3: in the US mainland or China. Nevertheless, the parts and
[19:47] Speaker 3: what have you are all serviceable locally, so you have
[19:52] Speaker 3: a real you have a local economic benefit here that
[19:55] Speaker 3: does not compare with what happens when you put in
[19:58] Speaker 3: a gas plant.
[20:00] Speaker 2: Wasn't one of the things that jackdo promised about this
[20:04] Speaker 2: partnership with Exxon was that basically the oil money was
[20:07] Speaker 2: going to fund climate adaptation.
[20:11] Speaker 3: Yeah, you know, in terms of the oil profits, there's
[20:14] Speaker 3: non observable or publicly available capital plan that is laying
[20:21] Speaker 3: out how they're going to do this. It looks to
[20:24] Speaker 3: me like they have it the money. They're highly liquid,
[20:28] Speaker 3: as in it's just sitting in an account and it's
[20:32] Speaker 3: like in the billions now, which is another question that
[20:34] Speaker 3: you and I some day should talk about. And then
[20:37] Speaker 3: they're able to use that in any given budget year
[20:40] Speaker 3: for whatever amount of money they want to pull out
[20:43] Speaker 3: of it, you know, and they've been doing that, you know,
[20:46] Speaker 3: since twenty nineteen. So you don't have a plan as
[20:50] Speaker 3: to how the money is going to be used. And
[20:52] Speaker 3: so I don't see any evidence of adaptation plans. You know,
[20:56] Speaker 3: we see roads. I guess you could argue that it
[20:59] Speaker 3: fast they get off of the game if there's climate events,
[21:03] Speaker 3: and it's not. It's not an articulated use of the money.
[21:08] Speaker 3: It seems to be more of a budget matter, and
[21:10] Speaker 3: it's used as oil revenue for the annual budget, and
[21:14] Speaker 3: it's enhancing those expenditures pretty handsomely in the last couple
[21:19] Speaker 3: of years.
[21:20] Speaker 2: Mm hmmm hm. Is there any concern that, I mean,
[21:25] Speaker 2: I know what we've seen in other places in the
[21:28] Speaker 2: world when there is excess gas that's not being used
[21:31] Speaker 2: for energy, that the next step is building petrochemical facilities.
[21:37] Speaker 2: So is there a sense that that might happen here?
[21:41] Speaker 3: Well, you know, you hear little things as to what,
[21:45] Speaker 3: you know, what might be next in terms of new building.
[21:49] Speaker 3: Let's tossed around that there's going to be opportunities for
[21:53] Speaker 3: additional industrial activity, and nothing's been articulated yet, but that
[21:59] Speaker 3: seems used to be a very you know, logical possibility.
[22:03] Speaker 3: The pet CAEM markets. I guess if they started now
[22:09] Speaker 3: and they're going to build six or seven years from now,
[22:12] Speaker 3: there's a potential that there would be some market. Right now,
[22:16] Speaker 3: all the markets in single use plastics are over oversupplied,
[22:21] Speaker 3: and that's going to be likely till pretty much twenty
[22:25] Speaker 3: twenty nine, and then I hope, you know, hopefully we
[22:28] Speaker 3: have some broader intervention into the economy so that it's
[22:33] Speaker 3: more sternly regulated in that natural gas is not the
[22:37] Speaker 3: only go to for the petrochemical business. You might, you know,
[22:41] Speaker 3: there's a lot of emphasis in Europe, for instance, on
[22:44] Speaker 3: moving fossil fuels out of petrochemicals and looking to replace
[22:50] Speaker 3: it with biofuels and other kind of recyclables and what
[22:55] Speaker 3: have you. There should be some ability to curb demand
[23:00] Speaker 3: for gas, you know, in six or seven years, and
[23:03] Speaker 3: so you may not have the kind of demand the
[23:06] Speaker 3: model that we're currently using. So that's a very very
[23:10] Speaker 3: risky proposition to think that this gas will be deployed
[23:13] Speaker 3: and it will be significant. I think maybe we're saying
[23:17] Speaker 3: fifty to sixty percent of the gas would be used
[23:23] Speaker 3: by this plant that maximum, and we're probably not going
[23:26] Speaker 3: to be at maximum, and then the rest of the
[23:28] Speaker 3: guess they have to figure out what to do with
[23:30] Speaker 3: it now. Currently I guess it could be sold into
[23:33] Speaker 3: the market. The way I read it, the current contract
[23:36] Speaker 3: might actually be applying, which case, you know, Gayana once
[23:40] Speaker 3: again gets short change. But if there's going to be
[23:43] Speaker 3: a new contract for the sale of that gas, that
[23:47] Speaker 3: will be another potential revenue stream for Guyana. What you get.
[23:52] Speaker 3: You know, well, I forgot if you're going to do this,
[23:54] Speaker 3: and I don't advocate it, they'd be better off if
[23:58] Speaker 3: they're going to sell gas to little and use the
[24:01] Speaker 3: profits for a longer term, more stable component to their economy,
[24:06] Speaker 3: which is solar. I don't think anybody would disagree with that.
[24:10] Speaker 3: If you're looking at building the economics for the future, it.
[24:14] Speaker 2: Sounds like this project is more about Exxon dealing with
[24:20] Speaker 2: a gas problem than Guyana looking for a way to
[24:26] Speaker 2: fix its its electricity.
[24:31] Speaker 3: Yeah. Yeah, I think in terms of what the choices
[24:33] Speaker 3: are the choices for the electricity system, I mean, they're
[24:39] Speaker 3: claiming there's going to be a massive increase in the
[24:42] Speaker 3: amount of electricity used in Guyana, and we just can't
[24:46] Speaker 3: see that. We're not seeing any particular need for this,
[24:50] Speaker 3: And I mean, so that's kind of how we're just
[24:52] Speaker 3: looking at the whole thing.
[24:54] Speaker 2: Are they basing that on like the idea that you know,
[24:57] Speaker 2: business is booming in Guyana and.
[24:59] Speaker 3: You know, hear they're basic in on a GDP formula,
[25:03] Speaker 3: which I don't think they have that right either, but
[25:06] Speaker 3: and they're saying that because of course the GDP is expanding,
[25:09] Speaker 3: you know, with the gas. But they're claiming that there's
[25:12] Speaker 3: going to be a commensurate you know, increase in the
[25:16] Speaker 3: in the electricity usage. And there may be, and we've
[25:20] Speaker 3: accounted for our Our view is that it's going to
[25:24] Speaker 3: be somewhere between their low model and the high model,
[25:30] Speaker 3: and it's not going to be as high as I say.
[25:32] Speaker 3: So you're going to have some increase in demand, and
[25:36] Speaker 3: we're looking at about a oh, I don't know, five
[25:39] Speaker 3: to six percent increase in demand. They're looking at a
[25:42] Speaker 3: fourteen or fifteen percent increase, and you know, the consultants
[25:46] Speaker 3: even told them that it's three to five percent, you know,
[25:49] Speaker 3: going forward, even with everything. So you know, I could,
[25:55] Speaker 3: you know, if it really took off. I'm still not
[25:58] Speaker 3: sure that they would need a gas plant, but I
[26:01] Speaker 3: guess they could then shut down a lot of their
[26:04] Speaker 3: current capacity, which of course would be just lost assets
[26:09] Speaker 3: there in order to make this thing a go. So
[26:12] Speaker 3: the planning is poor and the transparency is zero, and
[26:17] Speaker 3: so whereas normally you would have hearings and what have you,
[26:22] Speaker 3: you don't have any of that. It's not mandated by law.

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