Fire juggling in the energy sector: Part 1

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Dr Lorraine Sobers has 18 years of experience in the energy sector. She is a Reservoir Engineer and lecturer at the University of the West Indies, St. Augustine. She is also the Project Coordinator for CO2 Emission Reduction Mobilisation Project and a Junior Fellow of the Caribbean Policy Consortium.

By Dr Lorraine Sobers

The intensity of the fire juggling act being performed by the oil and gas sector has been increasing in complexity year on year. For the novice, catching a single fire club is daunting. However, professional fire jugglers are capable of performing a mesmerizing, thrilling combination of speed, agility, skill, rhythm and focus with several clubs in the air. Similarly, the Guyanese energy sector has entered as a novice but is required to juggle the demands for clean energy, fossil fuel production and its socio-economic development.

The international energy sector is going through a transition that calls for generation of affordable, clean energy and a measured approach to downsizing and decarbonizing the fossil fuel market. Guyana’s major oil and gas finds have materialized when everything is changing. These changes bring into question the market size and long-term demand for the 11 billion barrels of oil found in the Stabroek Block and the sustainability of producing near 1 million barrels of oil per day from 2027 onwards.

Not too long ago there was a rush of international oil and gas companies rebranding themselves as “energy” companies to reflect their commitment to advancing renewable energy. In the past, the branding for oil and gas companies and their products focused on safety, reliability and technological advances. These objectives remain but the demands, the fire clubs, are being tossed higher and faster.

The current backdrop of geopolitical upheaval between Russia and Ukraine brings further complexity and opportunity as buyers consider the role of national trade partners in international conflict. Some have called for major oil importers — the US, Europe and Asia — to bypass authoritarian states in favour of democratic states, like Guyana, as preferred suppliers of oil.

Additionally, unlike 20 years ago, there is intense heat on the energy sector to reduce carbon dioxide emissions (CO2) and mitigate the impact of climate change by the middle of the century.

The Trinidad and Tobago Energy Chamber Conference, dubbed the “premier energy conference in the Caribbean, has been the temperature gauge for big issues in the regional energy sector. Its latest conference was held under the theme “Leveraging the industry’s strength for the energy transition” which speaks to renewable and low carbon energy taking the forefront. Climate change policy and initiatives dominated speeches from the government and private sector leaders.

Previous conference themes: “Powering Development and Ensuring Stability” in 2015, “Building Competitiveness” in 2017,“ Maximising Value through Collaboration” in 2018  spoke to business as usual. However, this year the focus on corporate and government clean energy policy was ubiquitous. What will the focus be 10 years from now and how will this affect Guyana’s development? If one looks to the discussions at the “Premier Energy Conference in the Caribbean” the consensus is that Caribbean states need to plan together and work together.

Regional integration of energy services

Throughout the Caribbean there are plans and projects underway for renewable energy integration into the energy mix. The two major considerations for each country is supply of labour and cost of equipment.

The CARICOM single market can either facilitate or hinder trade, cross-border investment, movement of skills and equipment. Energy sector workers are included in 12 categories that qualify for free movement of labour. Guyana is challenged, as I discussed in an earlier column, to have enough people with the skills needed for rapid development. Lars Mangal, chairman and chief executive officer, TOTALTEC, Guyana, highlighted the need to build capacity from the ground up to meet demands for skills in the construction and energy sector.

Joseph Cox, assistant secretary-general, CARICOM, urged a regional response to costly renewable energy equipment imports. He suggested that subsidies and tax exemptions be reconsidered on equipment that can be manufactured within the region. While sun, wave and wind are free and renewable sources of energy importing solar panels, batteries, wind turbines and their components will be a hefty bill to CARICOM countries. Often the post-colonial mindset is too willing to look to developed countries to provide solutions and products for regional needs. The green revolution is an opportunity for CARICOM countries to make inroads in the manufacturing sector.

On a broader scale, the National Gas Company of Trinidad and Tobago (NGC), has launched CARIGREEN, an online “portal that provides information on available opportunities, financing, planning, energy markets and technology developments within the clean energy space for the Caribbean region”. This project follows the lead of the Caribbean Climate-Smart Accelerator (CCSA) in promoting unified efforts toward a low carbon future. In the next decade, Guyana can reduce spending and risk by collaborating with CARICOM neighbours to execute projects, build capacity and identify opportunities for funding and business development.

Natural Gas for Caribbean energy demands

Guyana intends to include natural gas in its energy mix to satisfy local power demands alongside hydropower, solar and wind energy. Natural gas is a cleaner burner fuel than fuel oil used by most Caribbean nations and forecasts by the Gas Exporting Countries Forum (GECF) show that natural gas will maintain a solid demand throughout the energy transition and beyond.

Should Guyana decide to begin gas exports within the next decade, early discussions with CARICOM neighbours can be advantageous. Technical expertise and internationally recognized training programmes found in Suriname, Trinidad and Tobago and Venezuela can fill the current skills gap in Guyana while growing local capacity for critical roles. This is an important step in Guyana establishing its leadership in the region eventually becoming a hub for a new wave of energy expertise. The alternative course leads toward a vicious cycle, blindly funneling billions of dollars to back to developed countries instead of creating opportunities for local and regional development and self-sufficiency.

These two trends represent a juggling act of renewable energy on one hand and natural gas development on the other. Guyana’s Low Carbon Development Strategy (LCDS) speaks to this but a much stronger consideration for a regional outlook is needed to prevent slip-ups and burns.

Next week, I will review two additional hot topics: 1) Environment, Social and Governance (ESG) criteria and 2), Decarbonizing of heavy industry and petrochemicals, which can impact plans and strategies in the energy sector.

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