Nagging GAS ache
By
Linda Hutchinson-Jafar
TT Newsday
Port Spain
Petroleumworldtt.com
02 18 07
As much as the Government would
want to wish away concerns over gas reserves, that
nagging question continues unabated. And Energy
Minister Dr Lenny Saith clearly indicated his discomfort
over questioning of the country’s gas reserves
when he described Rampersad Motilal, President of
the South Trinidad Chamber of Industry and Commerce
as a politician.
But Motilal, during the opening
of the Chamber’s energy conference last week,
was only echoing what everybody in the industry
has been saying for sometime, inside and outside
the boardroom.
To answer any concerns about the
hunt for oil and gas, Dr Saith told the conference
that energy companies plan to spend US$400M over
the next two years in exploration programmes.
“As many as 11 wells including
two onshore are to be drilled this year at a total
budgeted cost of US$234M. In 2008, six wells are
to be drilled at a total cost of US$164M.
“These activities are intended
to ensure that adequate supplies of natural gas
are available to meet both increasing domestic demand
for new industrial activities and for export,”
he said.
Responding to concerns about the
possible unavailability of natural gas for the country’s
booming gas-based sector, the Energy Minister assured
that there will be adequate gas to meet existing
commitments. He noted that the state-owned National
Gas Company concluded negotiations with three gas
producers last December.
As a result of the negotiations,
BHP Billiton, EOG Resources and BG Trinidad and
Tobago have agreed to supply 560 million standard
cubic feet of gas per day beginning 2009 for a period
of 12-15 years.
“We expect sometime to announce
what BP Trinidad and Tobago is going to do, “
Dr. Saith added.
The Ministry of Energy is also evaluating
proposals for 14 bids received for onshore and near
shore blocks and the one bid for a deep-water block.
In parallel with the bid activities, American consultants
Ryder Scott are finalising an audit of the country’s
petroleum reserves and results are expected to be
announced by the third quarter of the year.
Dr Saith, however, was not present
during the second day of the energy conference or
he would have heard even more worrying news from
Energy Economist Gregory McGuire.
Stating up-front that he did not
like to deal with natural gas reserves, preferring
to leave it to the Minister of Energy, McGuire who
lectures at the St Augustine Campus of the University
of the West Indies, said he had seen disturbing
figures from the Government in an international
publication last year.
“It shows a steady decline
in proved reserves,” said McGuire.
A slide accompanying his presentation,
showed a steady decline of ten percent in proved
natural gas reserves since the end of 2004. In 2004,
proved reserves were put at 18.81 tcf. By 2005,
it declined to 18.77 tcf and by 2006, went down
to 17.30 tcf.
“Whatever else the rest of
the numbers show at the end of the day, when one
is dealing with the business, people want to be
comfortable with what they see as reserves and they
won’t be comfortable that there are reserves
to last for some point in time down the road,”
said McGuire.
“Well, in 14 or 15 years at
current production rates that we do have remaining
is in fact serious cause for concern,” he
said. He noted that up to ten years ago, the country
was increasing its reserves and exploration activity
was taking place.
“Certainly those ten years
proved, that the upstream went to prove out new
gas and they did prove up new gas and these were
the results. Since 2004, we certainly have not been
that successful, partly because of the rapid rate
of exploitation,” he added.
McGuire also referred to the relatively
poor exploration success by energy companies last
year in finding any significant quantity of hydrocarbon
resources.
On Day one of the conference, Motilal
who has been involved in the energy industry over
the past 20 years in various senior managerial positions
said in 2006, gas utilisation in the country increased
by 25 percent moving from three bcf per day to four
bcd per day resulting in a current annual consumption
of 1.4 tcf per day.
“At this time, we are unclear
whether there have been sufficient new discoveries
to offset this consumption, as no update on the
audited reserves beyond January 1, 2005 has been
reported,” he said, adding it was important
that reliable data on oil and gas reserves is made
available in a timely manner.
“The concern must be whether
the replacement rate is sufficient to compensate
for this depletion rate and what exploration programmes
are being pursued in order to achieve a satisfactory
increase in proven reserves,” he said.
What is clearly needed, he observed,
are new discoveries to buttress the country’s
reserves.
Motilal, chief executive officer
of the Methanol Holdings Group of Companies, however,
remains optimistic that the country possesses significant
hydrocarbon resources and that Government must be
encouraged to adopt programmes to motivate energy
companies to aggressively pursue this objective.
He
also referred to the poor performance of the country’s
first deep Atlantic bid round in which one company
expressed an interest. The South Chamber president
urged the government to re-evaluate the current
package of incentives to attract companies to carry
out exploration and review the Production Sharing
Contracts.
Trinidad
& Tobago NewsDay
Thursday,
February 15 2007
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