2006 Energy Sector Review Disappointing year for
exploration
The Trinidad Guardian
Port
Spain
Petroleumworldtt.com
01 07 07
The past year saw a continuation of the high price
environment for the major commodities produced by
the T&T energy, petro-chemical and heavy industrial
sectors and record natural gas production levels.
Nevertheless the year was also marked by a number
of disappointments and by a major controversy around
the expansion of the downstream sector.
Oil and gas prices and production
Internationally, West Texas Intermediate
crude oil averaged US$ 66.19 in 2006 reaching a
peak of US$ 78 per barrel in July 2006. In the natural
gas market, the price at Henry Hub averaged US$
6.99 for 2006.
With respect to oil prices, after
peaking at US$ 78 in July, prices began to slide,
dipping below $US57 a barrel in October 2006. The
slide of the oil price from its July peak prompted
intervention by OPEC, which resulted in the oil
producer cartel removing some 1.2 million barrels
of oil per day out of the world’s oil supply.
This intervention has thus far had the desired effect
of keeping the oil price just above $60 per barrel.
On the production side of things,
natural gas production in August 2006 averaged 4.1
billion cubic feet per day with 56 per cent of that
gas (2.3 billion cubic feet per day) going to LNG.
Oil production in 2006 averaged
about 150,000 barrels of oil per day. It terms of
production on an equivalency basis, this means that
T&T currently produces more than 800,000 barrels
of oil equivalent per day with gas production now
4.7 times oil production.
Upstream activity
With the increase in demand for
natural gas in T&T, the need to find new supplies
has become critical. The major drilling effort of
2006 was the Ibis Deep well, the deepest well ever
drilled in T&T.
The Ibis Deep also sought to establish
a new production frontier for hydro-carbons, namely
the shallow water/deep horizon. The Ibis Deep was
planned for a total depth of 20,500 feet and was
drilled in a water depth of 250 feet in the South
East Coast Consortium Block.
Drilling was stopped when the well
reached 19,068 feet because of a lack of significant
hydrocarbon bearing structures.
The Ibis Deep well cost approximately
US$80 million to drill and took some four months
of drilling. The disappointment for bpTT with the
Ibis Deep well has led to a reassessment of their
planned drilling campaign over the short-term.
BpTT has, however, stated that it
intends to return to the deep horizons in 2008.
There were also exploration disappointments
for Talisman in the Eastern Block and for Exxon/
Petrotrin in the Soldado field. One bit of good
news was the confirmation by BHP Billiton of the
success of its Ruby-1 well off the East Coast, which
is expected to produce at a rate of 5000 barrels
of oil per day. Earlier in the year it was also
reported that EOG Resources had found natural gas
in block 4a.
There were two bid rounds completed
in late 2006. The on-shore and near-shore bid round
resulted in nine companies making bids for eight
of the 11 blocks offered by the Ministry of Energy;
most companies making the offers were smaller independent
oil and gas production companies rather than the
supermajors.
The Deep Atlantic bid round, however,
was a major disappointment with only one company
making a bid for the available acreage.
The EOG Resources Oilbird platform
was completed in June 2006 and was hailed as a triumph
for local content in Trinidad & Tobago.
The Oilbird is the third such structure
fabricated at Labidco. Another notable event in
the upstream sector in 2006 was the signing of a
strategic long-term partnership between bpTT and
the Neal and Massy Wood Group (NMWG) for the delivery
of all maintenance services for bpTT’s offshore
plant and equipment.
Midstream activity
2006 started auspiciously for the
midstream sub-sector, with the first LNG shipment
from Atlantic LNG’s Train IV facility. In
September, 2006, the Prime Minister announced that
T&T was looking at other markets for its LNG
exports and questioned the value of selling the
majority of our LNG into one market—the United
States. The statement by the Prime Minister was
made at a time when there was a strong contingent
of US Department of Energy officials and technocrats
in T&T.
The increase in the capacity of
LNG production has led to the increase in supply
of natural gas liquids to Phoenix Park Gas Processors
Ltd. (PPGPL).
In the first quarter of 2006, work
was completed on the Fractionation 3 Expansion Unit
to increase capacity from 46,000 barrels per day
to 70,000 barrels per day.
Later in 2006 PPGPL signed a new
gas processing agreement with NGC which increases
it gas processing rights by an additional 600 million
cubic feet of gas. Further processing and storage
capacity will be added at PPGPL to reflect this
increased supply.
In
August 2006, Petrotrin began construction of its
new Isomerisation Complex. This is the first of
five units that will comprise the Gas Optimisation
Programme, aimed at upgrading the quality and quantity
of gasoline that it produces through the refining
process.
The
Trinidad Guardian
Thursday 4th Janurary, 2007
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Trinidad Publishing Company Limited.
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