Natural gas beyond 2019...
PORT SPAIN
Petroleumworldtt.com
03 02 08
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, when then 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 trillion cubic feet of gas yet to be explored.
In an interview last Thursday, 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."
Business Express caught up with him at the end
of the two-day Trinidad and Tobago Petroleum Conference
at the Hilton Trinidad Hotel and Conference Centre,
St Ann's last week 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 Business Express.
"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 bcf per day and the Government had
allocated an additional 0.6 bcf 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 trillion cubic
feet (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 $7 billion (US$1.2 billion) 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 in an interview with Business Express.
"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 in 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.
Story
by Juhel
Browne from The Trinidad Express
-jbrowne@trinidadexpress.com
The
Trinidad Express
Wednesday, March 5th 2008
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