Downstream
Energy Explosion: Are we ready?
By
Energy Correspondent
Trinidad
Express
Port
Spain
Petroleumworld.com
07 30 06
It is difficult not to be impressed when one hears
Prime Minister Patrick Manning recite what I call
the "Litany of the Plants". The term refers
to the plethora of the downstream investments, approved
and planned, for the energy sector over the next
three to five years. This rapid expansion of the
sector is pregnant with new opportunity for local
businesses particularly in supplying goods and services
to these plants. But it also raises a number of
issues which are not publicly addressed by the investors
or the Government. These include the availability
of gas supplies, the quality and quantity of human
resources, the need for more national equity, the
adequacy of the social and physical infrastructure
and the environmental and psychological impact on
the host communities. I am not clear who, if anyone,
is taking a long-term view and recommending proactive
initiatives to address these issues.
Table
1 provides a listing of new approved investments
scheduled to start construction over the next three
years. In summary, there are seven in the petrochemical
sector, three in the metals sector and the refinery
upgrade. In terms of geographic distribution, the
majority of the new plants (seven) are planned for
the La Brea Industrial Estate, while three would
be set up at Point Lisas. Alcoa's "Smelter
in the Park" is the anchor project for the
new Cap-de-Ville/Chatham Industrial Estate. Aggregate
capital investment in new plants, over the period
2006-08, is estimated at over US$12 billion, easily
the highest in any successive three-year period
of our history. Of course, Government approval does
not necessarily mean that a
project
will be implemented. Overcoming financing and environmental
hurdles can be challenging. Most times, the final
acid test is convincing the bankers to support the
project.
Several
projects on the current slate are still in the pre-financing
stage. If all goes according to plan, however, these
projects are expected to provide about 4000 permanent
direct jobs on completion and over 29,000 jobs during
construction, though not all will be employed at
the same time.
The
sufficiency of gas reserves has become a hotly debated
issue particularly after the coming on-stream of
ALNG Train 4, (800 mmscfd) easily the largest single
gas consumer. These projects will consume additional
natural gas at a rate of more than one billion cubic
feet per day. This would push aggregate gas consumption
near to five billion cubic feet per day (bcf/d)
by 2008, compared with current consumption levels
of around 3.8 bcfd. Given the published reserves
figures, there is good cause for concern about our
declining Reserves to Production Ratio (RTP). However,
there are two sources of comfort. The first is that
in the gas business, the existence of a vibrant
market is the most powerful driver for new exploration
and production activity. The growth of T&T gas
reserves over the last decade proves the point.
An upsurge in exploration and development activity
can be expected over the next few years. Secondly,
we can rest assured that private investors do not
commit hundreds of millions of dollars to projects
without some confidence about the availability of
feedstock or energy supplies. There are strong commercial
incentives for the contracting parties to deal with
these matters. It seems to me, therefore that greater
attention needs to be paid to other issues raised
above.
It
was a forecast of an acute shortage of skilled resources
to satisfy jobs growth in the downstream energy
sector that led to the expansion of the National
Energy Skills Centre to the Trinidad and Tobago
Institute of Technology (TTIT) in the mid 90s. TTIT
has since been absorbed into the University of Trinidad
and Tobago which is expected to meet the skills
gap. The problem today is that the rate of expansion
is faster than ever envisaged. The prospect of 4000
new skilled jobs in less than three years is a daunting
one. A shortage of skilled manpower seems inevitable.
It is likely to lead to poaching of experienced
staff among competing companies and to escalating
wages among those who are already among the highest
paid in the country. The answer seems to lie in
a return to in-house apprenticeship programmes and
or company scholarships. Another important aspect
of this is to ensure that youths from all over the
country are aware of the opportunities opening up
in the energy sector. How does the young bright
science student in Roxborough Composite or Malick,
for that matter have any idea of the opportunities
available in the energy sector? The Ministry of
Education in conjunction with the companies need
to increase awareness across the country about the
emerging job and career opportunities and various
avenues for training. Next week's column will look
at the implications of rapid expansion for the host
communities, in particular La Brea as well as the
question of equity participation. (Continued next
week)
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Trinidad Express
Wednesday, July 26th 2006
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