Trinidad’s natural gas beyond 2019

Mar 05, 2008 01:00 AM

by Juhel Browne

Ryder Scott's senior international vice president Herman Acuna says the Houston-based firm's audit of the nation's gas reserves last year was not a doomsday scenario pointing to a depletion of gas reserves in 12 years.
"We never made that statement. We calculated the volumes that you can classify as reserves based on the international standards. That doesn't mean you're running out of gas because you do have tremendous exploration potential," Acuna said.

And while the Prime Minister Patrick Manning administration is on a thrust to get more gas, it is still facing criticism from the upstream companies in the extraction business such as BG and BHP Billiton that there are not enough fiscal incentives to encourage them to do so.
Yet, the Ryder Scott report, which reviewed the gas reserves position as of the end of 2006, recommended to the Government that a high level of exploration activity is now an imperative.

Gas not running out but....
Last November, whenthen Energy Minister Dr Lenny Saith announced that the Ryder Scott audit stated that were only enough of the nation's bread and butter gas reserves to last until 2019, he launched widespread concern and a national debate on the issue.
The concerns came from those within and outside of the energy sector even though Saith said the Ryder Scott report stated there was an estimated 37 tcf of gas yet to be explored.

Acuna, who has been charge of the Ryder Scott gas audits in this country since 2000, said the firm's report was not meant to create any panic.
Of the 12 year gas reserves prediction first announced by Saith, Acuna said, "Somebody took the ratio of reserve volumes divided by production but it's not to be interpreted as a doomsday scenario. It's just interpreted as you need to start bringing in some more of the exploration, creating the right environment to follow you vision."

He elaborated at the end of the two-day Trinidad and Tobago Petroleum Conference at the Hilton Trinidad Hotel and Conference Centre, St Ann's where had participated in a panel discussion on the gas reserves issue. The panel discussion was entitled: "Does Trinidad and Tobago need a target reserve to production ratio and if so what should it be?"
"It's not time to panic but the purpose of the (Ryder Scott) report is just to give you a snap-shot so you understand the environment you are within to make the decisions. You know, the decisions of where to expand, how to expand," Acuna told. "And if you don't like that risk profile, I said in my presentation, then you create the proper environment to incentivate more exploration, pull out more reserves and then start making those decisions."

Saith had said last November, that the demand on gas was 3.9 bn cfpd and the Government had allocated an additional 0.6 bn cf for future projects. He also said the total amount of proven, possible and probable reserves of gas either now being used or known to be in existence classified as unrisked reserves had dropped from 34.87 tcf as of January 1, 2005 to 31.04 tcf as of January 1, 2007.
Data provided by the Energy Ministry last November showed that in 2006, proven gas reserves fell to 17.05 tcf from 18.77 tcf in 2004.

A time to talk and a time to act
In his address during the opening ceremony of the conference, Energy Minister Conrad Enill said the new bid rounds for natural gas exploration are scheduled to take place later this year, in keeping with recommendations from last year's Ryder Scott gas audit.
Enill said those recommendations were:
-- A greater emphasis needs to be placed on the country's exploration resources, now estimated at 37.1 tcf;
-- A high level of exploration activity leading to drilling of exploration prospects is now an imperative to build the probable and possible reserves base.

Acuna said that such recommendations were the ultimate purpose of the Ryder Scott report.
"It's just a tool to understand the risk under which you are making those decisions and then make the necessary adjustments to modify that risk and then move forward with the vision," he said.

Damned if you don't?
During the Petroleum Conference, Petrotrin production operations general manager Caesar Mitchell said the State-owned enterprise that owns the nation's only oil refinery at this time is seeking to increase its exploration activities over the next two years.
Petrotrin chairman Malcom Jones had said last year that Petrotrin would spend " probably about TT$ 7 bn ($ 1.2 bn) over the next five years, consisting mainly of exploration, seismic work, development drilling."

Another State-owned energy enterprise, the National Gas Company, also announced major projects for 2008 as an indication of its optimism that not only gas but oil is out there and will be found as a private consultant is scheduled to conduct an oil reserves audit later this year.
While gas reserves have been on the decline, oil production has also slowed since 1990.

"Once you start drilling, yes, most likely you'll get oil coming with the gas, yeah. Now the thing is there are some rich gas fields with more gas than oil, yes," NGC vice president Stephen Julien said. "So at the end of the day what we are saying is that with the new discoveries that we are seeing, we are basically seeing a way forward for even improving that 17 proven tcf that we have seen," Julien also said.
And, although, upstreamers like BG and BHP Billiton have expressed optimism that the gas is out there, they continue to call on the Government to provide more fiscal encouragement to carry out the much needed and highly risky deepwater exploration.

Deepwater is a class by itself
BHP Billiton president Vincent Pereira and BG Trinidad and Tobago deputy asset general manager Jon Harris highlighted the new Production Sharing Contracts (PSCs) as creating less, not more, encouragement for deepwater exploration.
"Unlike the shallow water environment, the deepwater continues to have significant commercial risk due to projects commonly being under-appraised at the time of sanction due to prohibitive upside outcomes to properly compensate the investor to offset this risk," Pereira said. "Under the new PSC terms, there are insufficient upside outcomes to properly compensate the investor to offset this risk," he also said.

Harris said that in addition to reconsidering the fiscal terms of the new PSCs, for both shallow and deep water blocks, "the Government also needs to look at fiscal terms in existing PSCs."
Enill reiterated the Manning's announcement in the 2007/2008 Budget presentation last August that the Government is reviewing the existing energy tax regime to address the concerns raised by the upstreamers.

Acuna said he is satisfied that the Government has been doing its best to increase exploration activity.
"I believe that they are doing that in earnest and you can see some of the fruits of that effort. We've seen PetroCanada, Canadian Superior showing some good results in exploration and a lot of that you need to look at the entire resources, not just the reserves when you're planning ahead," he said.

In noting this nation's exploration potential, Acuna said, "It just means that you have to start moving those opportunities forward into the reserve category."
He said that would be the proper interpretation of the Ryder Scott report. The next Ryder Scott audit will review the gas reserves position as of the end of 2007.

Source / Trinidad Express
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