Trinidad and Tobago's proved natural gas reserves-the main source of revenue for the local economy-have been declining since the year 2000.
The latest gas audit by the Houston-based firm Ryder Scott shows that these proved reserves, which are used to produce Liquefied Natural Gas (LNG), reached an eight-year low last year.
Ryder Scott's audit for 2008 showed that proved reserves, which are also used for the generation of electricity, stood at 15.37 trillion cubic feet (tcf). This was a decline of about 1.6 tcf from the 16.99 tcf recorded in 2007.
Energy Minister Conrad Enill insisted yesterday, however, that the multi-national energy sector companies operating in this country, such as bpTT, had a "high level of confidence in the ability of existing reserves to meet their current contracted demand".
He was speaking during a media briefing on the Ryder Scott report at the Hyatt Regency hotel in Port of Spain.
"This country will, therefore, continue to be assured of a long-term supply of natural gas to meet not only its domestic needs, but also to service our vibrant export-based industry," Enill said.
Nonetheless, Enill noted that the gas brought into production was being used "at an optimum level", which has created a "critical need for Trinidad and Tobago to encourage exploration".
"The volume of gas produced during 2008 was 1.5 tcf at an average rate of 4.1 billion cubic feet (bcf) per day. This is almost the exact amount of the reduction in proved reserves," Enill said.
In 2000, proved gas reserves stood at 19.67 tcf and in 2002, they had peaked to 20.75 tcf.
Last year, the proved reserves accounted for just over half of the total 29.64 tcf of exploration resources, which includes probable and possible reserves.
Ryder Scott recorded a decrease in the amount of gas identified for exploration from 31.25 tcf in 2007 to 29.631 tcf last year, but this still represents a significant amount of supplies still to be discovered.
While there has been an increase in possible and probable reserves, which together total 14.73 tcf, Enill acknowledged that with the existing low price of gas on the international markets, this country will be getting much less money from its number one revenue earner in the 2009/2010 financial year than it did during the existing financial year.
The US-based Henry Hub natural gas price, on which the national budget is partly based, averaged US$7 per million British thermal units (mmbtu) last year. That price has since plummeted to below US$3 mmtbu, and yesterday its trading closed at US2.77 per mmbtu.
Contacted yesterday for comment, however, energy economist Gregory McGuire said the Henry Hub price only affects about 30 to 35 per cent of this country's LNG exports.
Enill said Finance Minister Karen Nunez-Tesheira will be addressing the issue when she delivers the national 2009/2010 Budget in Parliament on Monday.
"I don't expect that the kind of revenues we would get, that we got last year, we would get this year. What the Minister of Finance will tell you on Monday is that she has a strategy for dealing with that, and whatever the gaps are in the immediate term and in the longer term. But yes, you are correct, there is going to be a situation with less revenue, but we would be able to manage on the basis of a particular strategy that would be made available to you on Monday," Enill said.
What was not made available to the media yesterday was an estimate of how many years of gas reserves were left without any additional finds, as had been the case in the presentation of the 2006 and 2007 gas audits.
Ryder Scott managing senior vice-president Herman Acuna told reporters yesterday that when the 2006 gas reserves figures were released in 2007, the firm released the numbers and 'somebody said here is the production one and a half tcf per year and they divided the two numbers and oh we have this many years of gas'.
"And really, that is a misinterpretation of the numbers because in many areas, like I said, in the Gulf of Mexico, if we do that calculation it is one year of gas and they haven't run out of gas for the last 15 years so the sustainability of the resource is what's important," Acuna said.
Energy Ministry resource management director Helena Inniss-King also announced an aggressive plan for increased exploration, with six offshore blocks to be made available in the upcoming bid round. Enill also said consultations are now ongoing with stakeholders in the energy sector concerning a review of the fiscal regime that includes a new taxation regime.
