Nestled just 11km off the coast of North Eastern Venezuela, Trinidad and Tobago has been a petroleum producer for over a century, with cumulative production totalling over three billion barrels, according to government figures.
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The Caribbean’s biggest producer, in the 1990s the country transitioned from being oil dominant to a major natural gas producer and is now home to one of the largest natural gas processing facilities in the Western Hemisphere – the Phoenix Park Gas Processors Limited natural gas liquids complex.
The energy sector accounts for around 34.9% of the country’s GDP, according to the Central Bank, and is key to the wealth of the nation.
Yet, over the past decades only weak reserves have been added and production at mature fields has declined. This, paired with weak global commodity prices, has resulted in a lull in production and direct foreign investment.
In June, however, as the government continued to mull over a newly proposed Natural Gas Master Plan that will map out the sector for the next ten years, the Ministry of Energy and Energy Industries received some good news.
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By GlobalDataNew discoveries
On the first day of the month, BP Trinidad and Tobago (BBTT), which is 70% owned by BP and 30% owned by Repsol, announced it had made two significant discoveries totalling approximately two trillion cubic feet (tcf) of gas. The company’s president called the find “the start of a rejuvenated exploration program on the Trinidad shelf”.
The discoveries were made in the Savannah and Macadamia exploration wells 80km off Trinidad, for which BBTT has a 100% working interest. The Savannah exploration well was drilled at water depths of over 500 feet into an untested fault block east of the Juniper field, a $2bn BBTT project sanctioned in 2014.
Based on the success of the Savannah well, the company expects to develop the reservoirs via a future tieback to the Juniper platform, which is due to come online in mid-2017. The Macadamia discovery is expected to support a new platform post-2020.
BPTT’s president Norman Christie said the discoveries had been possible due to recent investments in state-of-the-art seismic acquisition and processing technology.
“They show that that even after 55 years of operations the Columbus Basin still has more to give with the right technology being applied,” he said.
The company, which works across 904,000 acres off Trinidad’s east coast and has 14 offshore platforms and two onshore processing facilities, announced in May it will invest a further $56bn in Trinidad over the next five years, after having already invested $10bn from 2012 to 2022, despite continued predictions of depressed hydrocarbon prices.
Other deals
Also in June, the company announced it had received approval for the development of its Angelin offshore gas project, which will feature the construction of a new platform 60km off the south-east coast of Trinidad in water depths of approximately 65m.
The development will include four wells and will have a production capacity of some 600 million standard cubic feet of gas a day (mmscfd). Drilling is due to commence in 2018, with first gas from the facility expected in 2019.
Furthermore, in June, Royal Dutch Shell agreed to acquire Chevron‘s assets in Trinidad and Tobago, including its holdings in the East Coast Marine Area Blocks 6, 5a and E. The transaction, worth around $250m, will allow Shell to optimise its developments across the East Coast Marine Area, a core component of Shell’s interests in Trinidad and Tobago through which it is supplying gas to both the domestic market and Atlantic LNG, the company said.
Deepwater exploration
Meanwhile, most in the industry is eagerly waiting to hear more about BHP Billiton’s LeClerc discovery in the deep water off Trinidad’s South East coast, as it could signal major potential in underexplored areas.
The company is yet to release data on the field but in January this year described it as a “large potential gas resource” that contains both natural gas and oil.
BHP began drilling LeClerc in May 2016 with a target depth of 6km. The company was looking for three different sands – two gas-bearing and one containing black oil.
For now, it is unknown how BHP will proceed, but the company’s asset president Geraldine Slattery said at the Trinidad and Tobago Energy Conference that the discovery was the first in the Caribbean’s deep water.
“Testing new plays in the deep water Caribbean and around the world has historically taken more than one well to test and we remain very optimistic of a tier one play in Trinidad and will return to drilling in financial year 2018,” Slattery said.
She added that if the appraisal went well, it had the potential to hit the market in the early to mid-2020s.
With the increasing feasibility of deepwater exploration, Trinidad and Tobago’s oil and gas sector is poised to grow and maintain its economic significance.
Future proofing
The question is: should the stalwart fossil fuel producer expect an investment surge anytime soon, despite these uncertain times and particularly in its deepwater offerings?
“I do expect more interest in the Trinidad and Tobago deep water, with BHP Billiton activity in the area,” says Georgia Cooper, regional manager for energy at IHS Markit.
“Trinidad and Tobago will be viewed as a more competitive market for investment and development. Above ground issues are a challenge for operators; however when the government is receptive to foreign investment, companies are willing to work with the local administration,” Cooper adds.
Her opinion is backed by Edgar van der Meer, senior analyst at NRG Expert, who says any significant find will bring with it investment, if it is feasible to explore.
“With the price pressure and over-supply on commodities presently, investment may be delayed or stalled, but this is certainly an area to watch,” van der Meer adds. “Besides the state, other international oil and gas companies such as BP, British Gas, Repsol, and Suez have interests in the country’s oil and gas sector and will likely be eyeing possible expansion.”
Although the country offers new potential complete with the necessary infrastructure and skills, investors will likely be watching the government’s review of its upcoming Natural Gas Master Plan with interest, as well as political unrest in neighbouring Venezuela.
Yet, as the energy sector continues to be integral to the long-term economic growth and development of the country, contributing significantly to government revenue, export earnings as well as GDP, it is likely that the government will be keen to secure reasonable terms for operators and to mitigate any future problems as quickly as possible.
