Focus on Trinidad’s upstream activities

Jan 11, 2004 01:00 AM

Our annual review of the Trinidad energy sector activity in 2003 commenced with the focus on the downstream segment. We noted in particular the new directions in Government policy and private sector strategy that may augur well for the industry's long-term future. Now we examine whether the same conclusion can be drawn from a review of developments in the upstream arena.
Hydrocarbon exploration and development, particularly natural gas, is market driven. Thus, the rapid growth in the natural gas downstream sector over the last ten years has stimulated a surge in upstream activity, both onshore and offshore.

Earlier, we noted the 38 % annual growth in gas production in 2003. Gas production averaged 2.6 bn cfpd (one trillion/year) with bpTT accounting for 70 % followed by BG with 20 % and EOG Resources 7 %. The skewed distribution of production and sales emphasises the enduring dominant market position of bpTT and the non-competitive market structure.
Oil production exhibited a more moderate 4 % increase from an average of 130, 642 bpd in 2002 to 136,000 bpd in 2003. This was due largely to increases in output of oil and condensate produced in association with natural gas.

BpTT continues to be the leading contributor with some 54 % of the total, followed by Petrotrin (including the Trinmar Business unit) with about 43 %. Condensate production from EOG, Trintomar, Vermilion and others account for the remainder.
The major companies were engaged in a heavy programme of development work in 2003, in order to meet the contractual obligations. BpTT completed the installation of its Cassia B (gas processing) platform hub and tie-in to the 48-inch Bombax pipeline. This major infrastructure improvement will support the development of the Kapok and other fields to satisfy bpTT's contractual commitments with the NGC, Atlantic LNG and joint venture petrochemical interests.

The company also intensified its development drilling on the Immortelle, Amherstia and Mahogany fields and began development drilling on the Kapok platform (Sparrow/Renegade field development). BG continued development drilling on the North Coast Marine Area (NCMA) to satisfy its commitments with Atlantic LNG trains two and three.
EOG Resources installed the Parula platform in preparation for the drilling of two additional wells in the South East while Petrotrin (Trinmar Business Unit) was very active in the South West, accounting for more than 14 development wells in the Soldado field.

Petrotrin's lease operators and farmout acreage were busy on land, with development drilling and recompletion activity in historic fields at Palo Seco, Parrylands, Forest Reserve, and Morne Diablo. In sharp contrast, there was little good news on the exploration front. It is apparent that with the heavy focus on development activity, the majors placed exploration effort on the back burner during 2003.
Neither bpTT nor BG drilled a single exploratory well for the year, falling quite short of the Ministry's expectations. Shell, another international oil major, was unsuccessful in the deepwater acreage as its two exploratory wells, Pepper Sauce 1 and Listzt 1, found no commercial hydrocarbons and were abandoned.

One bright spark in exploration came from BHP, which made a further gas discovery with the Howler 1 well, and proved hydrocarbons in an adjacent block. The emphasis on development activity in 2003, would have contributed to a stabilisation of the reserves picture.
As at January 1 2003, the official data indicated the following reserves distribution:
-- Proved: 20.76 tcf;
-- Probable: 8.28 tcf;
-- Possible: 6.06 tcf.
The data shows that despite the 0.7 tcf of gas produced during 2002, there was a net increase in proven reserves of some 0.41 tcf from 2002. A similar result can be expected for 2003 when the reserves estimate is revised this month.

The pace of activity in both exploration and development is expected to pick up in 2004. All the major companies plan exploration work in 2004. Both bpTT and BG plan to explore the deeper horizons in existing acreage off the east coast, while EOG Resources is reported to have budgeted for exploratory wells in three blocks.
The most significant development activity is likely to be the installation of BHP's Kairi and Canteen platforms which are expected to commence production by the third quarter 2004. These platforms would be the first for which substantial fabrication would have been done in Trinidad and Tobago.

At least three policy initiatives undertaken in 2003 will have significant bearing on the future of the industry. First, is the establishment of a fabrication yard at the La Brea Industrial Estate. This was a deliberate strategy employed in pursuit of Government's goal of increasing local content in oil and gas industry.
As a direct consequence, agreement was reached with BHP to have its offshore platforms fabricated at La Brea. With the prospect of a sustained high level of offshore activity in Trinidad Tobago and Venezuela it is hoped that theLa Brea site can develop into a centre for the fabrication of offshore structures and logistic support.

The second policy initiative is the Memorandum of Understanding signed between Trinidad and Tobago and Venezuela to facilitate the production of hydrocarbon reserves that traverse national boundaries. The agreement signed on 12 August 2003, establishes the procedure for unitisation and fiscalisation of oil and gas reserves in the Plataforma Deltana field and could pave the way for the commercialisation of the Venezuelan reserves onshore Trinidad and Tobago.
It is estimated that the province possesses up to 40 tcf of proven reserves, which is more than Trinidad and Tobago's current 3 Ps estimate. The development of these reserves may well play a significant part in the long-term future of the industry in Trinidad and Tobago.

The third policy initiative with implications for the energy sector is the decision to establish the University of Trinidad and Tobago (UTT).
While details on progress havenot been announced it is anticipated that the new UTT will help to alleviate the yawning gap in quantity and quality of skilled professionals required to deal with the increasing demands of the oil and gas industry.

Source: Trinidad Express
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