Air Date: Week of May 26, 2023

Exxon’s offshore production vessel off the coast of Guyana. ExxonMobil and its partners are expected to produce more than 1 million barrels of oil and gas per day by late 2026. (Image: Courtesy of ExxonMobil)

Guyana has one of the fastest growing economies on the planet as an offshore oil boom gets underway. But a potential spill could wipe out its fishing and ecotourism economy. So, a trial judge recently ruled that a major ExxonMobil crude oil project needs to provide an “unlimited guarantee” to cover the costs of such a spill. Journalist Amy Westervelt of the Critical Frequency podcast joins Host Jenni Doering to explain the ruling and Exxon’s oil development in Guyana.

Transcript

CURWOOD: From PRX and the Jennifer and Ted Stanley Studios at the University of Massachusetts Boston, this is Living on Earth. I’m Steve Curwood.

DOERING: And I’m Jenni Doering.

Since the discovery in Guyana back in 2015 of an estimated 11 billion barrels of oil off its shores in the Caribbean, the South American nation now has one of the fastest if not the fastest growing economy on the planet. The international monetary fund estimates Guyana’s GDP will grow close to 60 percent this year, thanks to Exxon Mobil and its partners pumping more than a million barrels of crude every day. But environmental concerns, spotlighted by the numerous oil spills suffered by its oil-rich next door neighbor Venezuela, prompted two Guyanese citizens to file suit in 2021. They allege the government’s deal with Exxon violates Guyana’s responsibility to protect the right of its citizens to a healthy environment. The trial judge sided with the plaintiffs and ordered Exxon and its local subsidiary to provide a quote “unlimited guarantee” to cover the costs of cleaning up a catastrophic oil spill like the 2010 BP Deepwater Horizon disaster. To learn more about this ruling and Exxon's oil development in Guyana, we’re joined now by Amy Westervelt, an investigative journalist and executive producer of the independent podcast production company Critical Frequency. Welcome to Living on Earth Amy!

WESTERVELT: Thanks for having me. I'm excited to be here.

DOERING: Now, what were these two Guyanese citizens asking for in the lawsuit that they filed against Exxon in 2021?

WESTERVELT: Yeah, so this is a really interesting case. It is one of seven cases filed by one lawyer, who's a Guyanese woman named Melinda Janki. Went to law school, worked for BP as an in-house lawyer in the UK, and then eventually moved home to Guyana and started working on environmental law and is now kind of leading the legal charge trying to stop or at least slow down oil drilling in Guyana. So this case, she was representing two individual citizens who argued that the EPA in Guyana had sort of failed to do its due diligence in requiring certain type of insurance for this project. So they're supposed to have by the permit, they're supposed to have liability insurance from an independent insurance company and what's called an unlimited parent company guarantee. So basically, you know, if something happens, that is so catastrophically bad and so expensive to deal with that Exxon's local subsidiary which is called ESSO Exploration and Production Guyana Limited, which has, you know, maybe 1% of the assets that ExxonMobil has, then ExxonMobil will step in and sort of take care of the rest. So instead of having either of those things, they had an insurance policy that was from Exxon's own wholly owned subsidiary, an insurance firm in the UK and the parent company guarantee was only $2 billion. Which sounds like a lot of money but if you look at it in the context of, you know, say what the Deepwater Horizon spill cost to deal with, which was around $70 billion, you can see there's quite a bit of difference to make up there.

DOERING: Well, the judge, in this case, Sandil Kissoon, sided with the plaintiffs. What did he say about why?

WESTERVELT: Yeah, he wrote a pretty blistering ruling. It's pretty short, it's around 50 pages, but it does not mince any words. He said that there was no reason that the EPA should not have required this guarantee that Exxon and the EPA had used secrecy and shadows to deceive the public. He required that all of this be fixed within the next 30 days, which is pretty quick to get, you know, a policy, this commitment in writing all of that. And he really sort of took the EPA to task for kind of, you know, doing the oil companies bidding rather than protecting the public. He also made a point of emphasizing that these two plaintiffs had standing to bring this case. So this was one of the arguments that the oil companies and the government had made was that, basically, they refer to these two citizens as mettlesome busy bodies and said that they should not have the right to bring a case requiring anything of the government or the oil companies. And the judge really struck that idea down and said that, you know, in fact, especially in the case of environmental issues, it's extremely important to protect the right of citizens to bring cases like this that are in the public interest. So that's a really big precedent.

DOERING: And do you know how important oil is to the Guyanese economy right now?

WESTERVELT: It's huge, but it's very interesting because on paper Guyana is the fastest growing economy on the planet, and their GDP is going up like crazy and there's a lot of talk about how everything is being driven by oil. However, there is not a lot of that that is really making its way to the people and there's a big concern that basically, by the time, oil starts to really pay off for the Guyanese people, there will have been a big oil spill or something that sort of negates that.

DOERING: Well how much pressure is the EPA of Guyana under to be able to cut through the red tape and move projects like this forward, despite the risks?

WESTERVELT: A lot of pressure. Whenever you kind of hear them talking, either the EPA officials or the vice president or the president of the country, they really seem to be worried that if they require too much of Exxon that it will mean, you know, that Exxon might leave or that Guyana won't end up making money off of the oil project. So in part, because of the way that the contract is structured between Exxon and Guyana, the government is sort of incentivized to try to move things along more quickly because the more barrels they produce, the more barrels they can sell, the faster they can sort of pay Exxon back for all of their expenses and get to a place where they are actually getting their kind of fifty-fifty revenue share that they're supposed to get. And then yeah, they're also concerned that if they place too many requirements on Exxon that, you know, either they might leave or other oil companies might not be interested. They are planning to auction off more offshore blocks and have said that they would like to get other oil companies operating there as well. So I think that's part of it too, that they want to remain kind of an attractive place for oil companies and part of how they do that is by minimizing red tape and oversight and regulations. And then on top of that 90% of Guyana's population lives on this very narrow sliver of coast and in addition to, you know, being potentially impacted by an oil spill, they are also looking at pretty intense sea level rise at the moment. So that stretch of coast in Guyana, is predicted to be underwater by 2030, not 2050, 2030!

DOERING: Less than in 10 years, oh my God.

WESTERVELT: Yes, so in this really, you know, kind of horrifying way, the government officials talk a lot about how they need this oil money to pay for climate adaptation.

DOERING: Well, I am curious, you know, what has Guyana said about its commitments to the Paris Climate Agreement and what sort of future is it looking towards?

WESTERVELT: Yeah, it's very interesting because they are still, you know, committed to the Paris accord and they are still a carbon sink and they have done some calculations and are claiming that even if they get, you know, five more of these production vessels going they will still be a carbon sink. Those calculations only take into account the emissions created by the sort of exploration and development of fossil fuel resources, they don't take scope three emissions into account, so the emissions created when people actually use the oil and gas, which makes it a little bit hard to take seriously. But you know, they make this argument that like, look, we have historically emitted, hardly anything, our people have very, very low emissions, very small footprints and we feel like we should be able to be in the oil business for a little bit to get some money for development. And if people are worried about climate change, then they should be focused on the big historical polluters and shutting down their oil and gas businesses. And they also kind of talk about it as something that they're doing as a short term thing, which is really interesting, like this idea that they can just be in the oil and gas business for 10, maybe 20 years, and then get out.

DOERING: Given that Guyana has these huge oil reserves and it is this light, sweet crude that gets a pretty high price, but also given the climate consequences of drilling and burning that oil, to what extent are they looking at other opportunities for growing their economy maybe with green energy or something else sustainable?

WESTERVELT: Yeah, not really at all, unfortunately. I mean there is an effort right now to commodify its carbon sink services. But it's just kind of such an absurd situation because in December of 2022, Guyana actually sold $750 million worth of carbon credits to Hess Corporation, which is one of Exxon's partners in the oil project to offset the emissions associated with the oil drilling. This is like a great example of where offsets go wrong I think because, you know, if you want to negate the impact of the oil and gas development there, the only real way to do that is to drill for less oil and gas. There is no universe in which, you know, paying for some of Guyana's forests, which were already going to be conserved, you know, those trees, where not going to be cut down anyway, that does not really cancel out the oil and gas development. This whole carbon credit thing came about because Guyana is actually the first participant in the UN's carbon trading scheme, which is called TREES. It's basically, you know, similar to its REDD+ scheme, where developed countries or high polluting countries pay less polluting countries to preserve trees or to sequester carbon. But as far as renewable energy, they're really not moving on that at all. There's a few small projects, but it just has not been a big area of investment in for them.

DOERING: Amy, what kind of impact do you think this ruling might have on other offshore oil drilling projects in Guyana and elsewhere?

WESTERVELT: I think it could potentially be really huge in either direction. You know, if the ruling holds, then I think that you could potentially see lawyers in multiple other countries that are dealing with similar situations, both in the Caribbean and also in Africa, kind of filing similar cases. If the ruling is overturned, the plaintiffs can still appeal to the Caribbean Court of Justice, which is sort of equivalent to the Supreme Court here in the US as the last step, and that could be an even bigger deal. This part of Latin America and the Caribbean is a big hot spot for oil majors right now. So I think the whole industry is going to be watching what happens with this case.

DOERING: Amy Westervelt is an investigative journalist and executive producer of the independent podcast production company Critical Frequency. Thank you so much, Amy.

WESTERVELT: Thank you. Thanks for having me.

DOERING: We reached out to ExxonMobil for comment but did not hear back in time for broadcast. In a published statement, they said in part “ExxonMobil Guyana and our co-venturers have adequate and appropriate insurance and proposed guarantees in an amount that exceeds industry precedents and an estimate of potential liability.”

 

Links

Read the ruling by Guyana’s High Court Justice Sandil Kissoon

Learn more about Amy Westervelt

Reuters | “Exxon-Led Group Earned Nearly $6 Billion In Guyana Last Year”

Bloomberg | “Exxon Breached Guyana Environmental Permit, High Court Rules”

The Guardian | “Could Guyana’s Exxon Ruling Scare Big Oil Off Risky Exploration?”