Gas
Reserve?
By
Roxanne Stapleton-Whyms
Trinidad & Tobago Newsday
Port Spain
Petroleumworldtt.com
08 18 07
IN 1974 Trinidad and Tobago had
reserves for eight years. That’s four years less than the 12,
the current Ryder Scott Gas Reserves Audit Report
found. In fact, it’s interesting to note
that Ryder Scott’s first audit report on
this country’s reserves was done in 1974 — a
relationship which now spans 33 years.
Its most recent report states that
Trinidad and Tobago’s gas supply is assured up to 2019
at 4.5 billion cubic feet usage per day, Energy
Minister, Dr Lenny Saith announced two weeks ago.
Saith, speaking at a press conference said that
the report showed a dip in the reserves, but it
did not mean that the country is running out of
gas, nor is there need for any “doomsday” alarm.
What it does mean however, is that it is crucial
that TT find more gas to go beyond the 2019 projection.
The key is in getting oil and gas
companies to up the exploration ante. The eight-year
as opposed
to 12-year statistic was recapped for Newsday’s
Saturday Spotlight by one of this country’s
most treasured energy specialists, Trevor Boopsingh,
one of the go to men, when tricky questions regarding
our oil and gas supplies surface.
Boopsingh, is chairman of the Association of Caribbean
Energy Specialists. He is a former senior lecturer
in Petroleum Economics and Management at the University
of the West Indies. From 1981 to 1987 he held the
position of Permanent Secretary in the Ministry
of Energy. He also served as chairman of Trintopec
and Petrotrin, consultant to the Commonwealth Secretariat,
the IADB and the World Bank.
He is currently the chairman of the Eastern Caribbean
Gas Pipeline Company and a director at Neal and
Massy Holdings. Of the recent Ryder Scott report,
Boopsingh said that its results were no surprise
to him.
“If you go back over time you will see that
there were reserves figures which were smaller
by far, than the reserves currently. It’s
a bad misuse to say that gas will finish in 12
years.
“That’s not how reserves to production
ratios are run. If you go back to the 1974 reserves,
you will see that there was gas for eight years.
If you go back to 1938, you will see all was finishing
in ten years — I can speak factually to the
reports at the Ministry of Energy’s library
and that 1938 report, was 70 years ago.
“What is important is to
have activity which is designed to get new reserves
identified.
“What happened in this current time frame
is two-fold. The reserves fell compared to the
last audit and apparently they’ve been doing
them now every two years.
“So it meant that compared to the previous
two years the reserves fell and that will always
happen if you don’t have exploration.” Boopsingh,
making a comparison, said that the way a business
is run quite frankly — when you use up stock,
you must replenish it, stating that the philosophy
is no different for exploration.
“In this last period we had
a sharp drop because exploration had fallen off.”
He noted that we are busy producing more and more,
highlighting that in 2006 we were expanding output.
“These last five years we’ve been
expanding through Trains I to IV. Bear in mind
however, that the projects, while they are many,
do not all have the same gas utilising impact,
for example, the Alutrint Smelter is just 71 million
cubic feet. Out of 3.9 billion cubic feet, that
represents less than two per cent of the gas,” Boopsingh
said.
Turning to the disappointing results
of the last bid rounds, where the ultra-deep
blocks only attracted
one bidder, Norway’s Statoil, Boopsingh again
registered that he was not surprised at those outcomes.
Deep water requires very high cost equipment. Typical,
deep water, medium-sized field will take US$2 billion
to develop, he said.
That is just not the same as developing
a gas field offshore in 100 feet of water, so
you can’t
apply a high tax regime in this scenario. Similar
considerations had to be applied three times before
in Trinidad and Tobago, he said.
“There are three factors at play — high
cost, low price and how big the field is.
“When we wanted to go from land to offshore
in Trinmar — it was incentivised.
“When we wanted to go from
shallow Trinmar to offshore East Coast, it was
incentivised and
now we want to go to deep water we have to provide
incentives.
“It is hugely expensive and what is worse
is the probability that you’ll find gas rather
than oil, and gas is far lower revenue generating
than oil.
“Companies have to be aware that if they
go and invest they might find gas and if they find
gas, the question is whether you’re going
to be able to pay the kind of prices that they
want for that gas.”
Turning to Government’s thrust, he surmised
that if it is decided that the gas should be used
in low cost industries, you would then have to
further encourage the investor to invest. The solution — more
incentives.
Boopsingh, speaking to the continuity
of the oil and gas sector, explained that when
oil fields
are found, the big ones are first discovered and
then they get smaller. “That is a good thing
because the business keeps going, it lengthens
the life span but companies will have to do more
work to get the small fields. These small fields
have not been addressed — we call them marginal
fields,” he said.
Delving further, he said that with small fields
you do not have as much volume to meet the costs.
Drawing a reference, he said if you take an average
area you may have five big fields, ten medium-sized
fields and 20 small fields, the tax regime for
the five big fields cannot work for the 20 small
fields.
Going further into the intricacies of the local
sector, he pointed to some headaches.
“What frustrates me the most, we’ve
had two billion barrels of heavy oil and a lot
of it is underwater in Trinmar. The Venezue-lans
have exploited that heavy oil in Lake Maracaibo
for more than two decades, but we have not. And
the reason is simply that we’ve not attempted
to put in place the right fiscal regime to ensure
that that heavy oil comes out.
“Heavy oil takes more equipment and a longer
time, you have to steam the wells to make them
lighter. Heat to thin it — that costs money.
Secondly, if it’s under water you have to
carry that heat through the body of water, which
means you have to lag the pipe and prepare it,
incurring costs and thirdly, because its heavy
it doesn’t come out voluminously, it squeezes
out, which means that the pay-out for the investment
is very long.
“So a typical heavy oil investment
could take ten years between when you first start
to
invest and first oil.”
Detailing the status of the Eastern Caribbean
Gas Pipeline Project, which is a project involving
Trinidad and Tobago providing gas to a few islands
going up the Caribbean chain like Barbados, Martinique
and Guadeloupe amongst others via pipeline, he
revealed that the Barbadian Government officials
came to Trinidad and had their first commercial
negotiations as they met with producers and the
Ministry of Energy and returned to Barbados.
“They’re now beginning to understand
the gas structure here. The French came down and
made a request for gas and it’s before the
Government,” Boopsingh said.
Trinidad
& Tobago Newsday
Saturday, August 18
2007
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