Petrotrin gears for peak oil, peak refining
capacity
PM Patric Manning at an hydrocarbon facility
Trinidad Express
Petroleumworldtt.com
03 30 08
With few
prospects for striking big crude oil finds, Trinidad
and Tobago's only option in the
sector it made history 100 years ago-when a well
at Aripero, drilled by Randolph Rust, yielded oil-is
to upgrade and enhance its refining capacity.
Gas finds and revenues, currently
exceeding anything oil has contributed over the
past ten years or
so, have put a damper on further exploration for "black
gold".
Even though the Government-appointed Vision 2020
energy sub-committee's report spoke of the prospect
of this country producing up to one million barrels
of oil per day (bpd) by 2020, reality is the sector
is struggling to average 130,000 bpd, some 80,000
bpd short of the low-end projections for 2009 by
the said sub-committee.
Data on crude oil available up to 2005 show an
almost constant average of around 130,000 barrels
per day (bpd) over six years, with reserves pegged
at two billion barrels. In contrast, gas production
moved from 580 billion cubic feet per year (bcf/y)
to one trillion bcf in 2004.
Recognising this stagnation in oil and stuck with
an aging refinery that was designed to primarily
to process low grade fuels as well as fuel oil
for export to the USA, state-owned Petrotrin embarked
on an upgrade programme as far back as in 1994
(Upgrade 1) which ended in 1997.
By then, the refinery had reduced its dependence
on fuel oil, improved its products' mix and quality,
cut back on fuel oil, and was refining 160,000
bpd
Bearing in mind that as far back as in 1948 the
country's crude oil production stood at 82,000
bpd, and had, in 1978, reached 230,000 bpd (with
three refineries processing 430 bpd), the downward
trend in both production and refining had to be
arrested. The second phase of the upgrade programme
is currently underway.
According to a senior official at the company,
the improved Cat Cracker plant will increase capacity
by 35,000 bpd of gasoline with improved octane
ratings.
The new Alkylation and Prefactionation units will
also boost Petrotrin's capacity to produce premium
gasoline, which is used by most vehicles produced
over the past ten years.
These improvements are expected to come on stream
by mid-2009.
In his last National Budget presentation, Prime
Minister Patrick Manning announced that a new,
US$4 billion refinery would be built on Petrotrin's
Pointe-a-Pierre compound.
This project still resides with the Ministry of
Energy since Petrotrin is yet to be informed of
its details.
But for the biggest refinery in the Caribbean,
it has been anything but smooth sailing. Although
it posted product-sales revenue of $25.8 million
in 2006, Petrotrin's operating, marketing and administrative
expenses (among other items) amounted to a whopping
$22.6 million. Its profit amounted to $1.314 billion.
Based on its assets and operations, though, the
State-owned oil company looks good:
While countries across the world
are rushing to upgrade their existing refineries,
or build new
ones (in the USA, the last refinery built was in
1976), questions of "peak oil" and the
inevitable shift from fossil fuels stalk those
who are ploughing big money into increasingly costly
plants.
Still, oil experts believe the proposed US$4 billion
new refinery can bring benefits to Petrotrin and
the country.
China, India, Iran, Venezuela and
Saudi Arabia are among countries seeking to substantially
increase
their refining capacity. T&T, however, located
closer to the seemingly insatiable market that
is the USA, would benefit from exports of both
refined oil products, LNG and other downstream
gas products.
Writing about challenges facing
the refinery, the company said: "Petrotrin
today, needs new sources of crude, a virtually
new refinery,
a significant injection of new capital and new
markets. Petrotrin operates in a highly dynamic
and competitive international environment and it
must change constantly in order to respond to challenges
in the global energy environment.
"World demand for refined
products is expected to increase from current
levels of 75 million barrels
per day to 115 million barrels per day by 2030.
It is projected that almost 75% of this growth
will be in the transport sector."
Elliott Gue, editor, The Energy
Letter, summed up the demand for new refinery
capacity this way: "What's
often ignored is that we don't consume crude oil.
You don't fill your car's tank with crude, nor
is it used to power jet aircrafts, cruise ships
or railway locomotives. Crude oil, in its natural
state, often isn't even that flammable; one of
the first uses of crude oil was as an alternative
to whale blubber in oil lamps. The real global
source of energy is refined products: gasoline
(petrol), diesel and jet fuel. Crude oil is nothing
more than a raw material--the feedstock used to
produce these refined products."
Crude oil production in Trinidad has had its peaks
and troughs over the past five years, as the following
chart (from the TT Geological Society) shows:
Of total local crude processed less than one-half
comes from local production. The refinery has a
capacity of 160,000 bpd, but only 45 per cent (or
72,000 bpd) comes from local crude, mostly from
Petrotrin's own wells.
The company has to import around
88,000 bpd of crude at market prices, which peaked
last week
at US$103 per barrel. "It does not mean we
pay that price," said a company official. "The
actual price we pay is based on the quality of
the crude we import."
On the sales side, 85 per cent of its products
are exported. These include motor and aviation
gasoline, diesel, LPG, kerosene/jet fuel, bitumen
and fuel oil.
Kenneth Allum, the company's VP
(Refinery and Marketing), said: "Our Refinery
Upgrade objectives are deeper conversion, higher
throughput (up from
160,000 bpd), and the production of more gasoline
and diesel. When this upgrade is complete by August
2009, we expect to have much improved performance
of the refinery, as well as greater profitability."
He alluded to Venezuela's Petrocaribe initiative
eating into Petrotrin's traditional Caricom markets,
but said there are many other markets for the company
to tap into.
The Gasoline Optimization programme will result
in increase in octane barrels, see a reduction
in benzene and aromatics, and sulphur content.
Diesel quality will also be achieved through similar
processes.
Total expenditure on Phase Two of the upgrade
programme is US$917 million. Over the next three
years, Allum said, TT$1.8 billion will also be
spent on improving HSE, infrastructure upgrade,
improving reliability and efficiency at the company
nine-berth port facility, establishing a new industrial
estate and distribution bond, as well as state
of the art laboratory facilities.
A gas-to-liquids (GTL) plant is another of Petrotrin's
thrusts as it moves to become more diversified,
profitable enterprise.
"Gas to Liquid plants would assume increasing
prominence as the demand increases for clean liquid
fuels," he said.
Meantime, on the production side, Petrotrin is
engaged in a 20-million barrel, major enhanced
oil recovery (EOR) thermal project within the Exploration
and Production Division.
Enhanced Oil Recovery refers to a series of methods
applied to a reservoir to recover additional oil
that cannot flow to the surface on its own.
Electrical pumping, steam, carbon dioxide, microbes
and water are sometimes introduced to power the
oil to the surface.
The pilot project is fully commissioned and has
been showing good response to steam injection.
Oil production averaged 318 bopd in 2006.
"Petrotrin is positioning itself to be the
best refinery in the region," said Allum. "While
we do not anticipate major oil discoveries here,
and may remain dependent on usage of imported crude
as feedstock. With all the upgrades and other measures
we are taking, we can expect greater efficiency,
bigger profits, as well as significant improvements
in health and safety, and a very important, the
environment."
Story by Raffique
Shah from
The Trinidad Express
The
Trinidad Express
Wednesday, March 12th 2008
Copyright© 2008
respective author or news agency. All rights
reserved.
We welcome the use of Petroleumworld™ stories
by anyone provided it mentions Petroleumworld.com
as the source. Other stories you have to get authorization
by its authors.
