Home' Trinidad and Tobago Guardian : November 26th 2015 Contents NOVEMBER 26 • 2015 www.guardian.co.tt BUSINESS GUARDIAN
ENERGY | BG9
The six per cent fall in the
country s proven natural gas
reserves is simply a case of
there being no impetus for
any company to drill for
additional gas except to fulfil
existing contractual obligations.
This is the view of the former head of
resource management at the Ministry of
Energy and Energy Affairs, Helena Innis who
remains adamant that the country is neither
running out of gas nor is there a fundamental
shortage of the commodity but rather no
incentive to increase exploration and pro-
It was the Business Guardian which, in an
exclusive story last week, revealed that the
yet-to-be released Ryder Scott Report for
2014 showed that last year proven reserves
of natural gas declined for the twelfth year
The Ryder Scott report for 2014 showed
that last year 1.41 trillion cubic feet (tcf) of
gas was used and only 670 billion cubic feet
Proven reserves are those quantities of
hydrocarbon which analysis of geological
engineering data can be estimated with rea-
sonable certainty to be commercially recov-
erable under current economic conditions
and operating methods.
According to the report, the findings are
based on audits that Ryder Scott conducted
of reserves and exploration resources from
bpTT, BHP Billiton, BGTT, Centrica/Petrotrin,
Chevron, EOG Resources, Niko Resources,
Repsol, Trinity Exploration and open areas.
Probable reserves are estimated on data
similar to proven reserves but technical and
commercial uncertainties preclude the prob-
able reserves as being classified as being
proven while possible reserves are suggested
by structural and or stratigraphic exploration
beyond areas classified as probable based on
geological and geophysical interpretation.
When combined, the country s 3Ps or
proven, probable and possible reserves are
22.694 tcf as of the end of last year and this
compares to 23.882 at the end of 2013. This
means that the country s 3Ps fell by 1.18 tcf
of gas last year.
Compare this to 2002 when proven reserves
were 20.758 tcf, probable 8.280 and possible
reserves at 6.062 tcf for a 3Ps of 33.5 tcf of
gas or 12 tcf more than the 2014 figure.
Looked another way, the decline in the
last 13 years of almost 12 tcf of 3P reserves
reflects almost the entire annual production
for the time period and highlights, that in
the last 12 years, the country has basically
used its reserves and not replaced it with
The figures also indicate that when one
looks at the reserve-to-production ratio T&T,
at the current rate of production, would run
out of gas by 2025 if no new sources are
found or there is no movement of natural
gas from the probable and possible column
Seen from the eyes of the 3P position this
then moves to 19 years or 2034 before the
country runs out of gas using the same cal-
The Ryder Scott survey also showed that
there was a decrease in probable reserves
which fell from 5.526 tcf to 5.470 tcf. Possible
reserves was also down from 6.116 tcf to
Innis said the results were simply a function
of a lack of projects and therefore a lack of
interest by the gas companies to go after the
She said: "Some years proven is up, some
years it s down. If you could tell me why a
company should drill, find gas and develop
gas just to fulfill our idea of what are proven
reserves, then you may have the answer to
that question. The operating companies aim
and the country s aims are not always aligned
and sitting gas without a market is not con-
sidered reserves. You would be surprised that
some companies in T&T are working overtime
to find a market for their gas, what does that
On the issue of whether this country has
not, in fact, had any new gas-based projects
in the last decade and, therefore, her argument
does not hold, Inniss rubbished the notion.
"Name them please. What projects? I can
think of Train IV and MHTL and BP and BG
drilled to ensure there was enough gas to go
forward with Train IV. What else of substance
was there. Nothing happened really so where
was the impetus. Check it out. We have this
much reserves because those two companies
saw an opportunity and indulged in a drilling
spree to ensure that they had the resources
to supply the plant. Note the initial pipeline
ownership. Everything was done to ensure
the project worked."
Prime Minister Keith Rowley has been
expressing concern about the country s natural
gas situation especially the continued shortage
of gas for the downstream sector.
In his recent contribution to the budget
debate, Rowley said he s been having meetings
with executives at the industrial estate which
demonstrated that the problem was serious.
Rowley said: "This gas shortage in T&T is
a serious problem. It is not temporary. There
could be serious consequences for the people
Additionally, the Prime Minister said the
problem is so acute that some companies are
considering their future here.
However, it is not all bad news. While Ryder
Scott found that the 3P reserves continue to
fall, the country s exploration potential jumped
by almost 4 tcf. It moved from 39.876 tcf to
Sources say this is likely due to the results
of bpTT s Ocean Cable Bottom survey which
has reportedly given the company sharper
images of the sub surface and therefore made
it very optimistic that it has far more gas in
the Columbus basin than it previously thought.
The 2014 exploration potential is also 14
tcf more than it was in 2002 and perhaps
reflects how technology is showing far more
possible natural gas accumulations than pre-
Innis said the country is not a declining
gas province and can support its current level
of production which is close to 1.4 tcf annually.
She said to move the resource potential to
the 3P category there is a need to change the
"risk/reward profile for all parts of the value
Innis said she was aware that her views
were not consistent with what is being said
in the public domain but that she was calling
it as she sees it.
Low oil prices are leaving many oil and gas com-
panies with difficult debt loads, causing them to
default at an extraordinary rate.
On top of that, rating firm Moody s forecasts the
default rate will increase.
"The energy sector remains the most troubled,
accounting for almost a quarter of the 79 defaults so
far this year," said Sharon Ou, Moody s Credit Policy
Research senior credit officer.
The strain on the oil patch comes after years of
borrowing heavily at the start of the domestic energy
At the time, oil was hovering around US$100 a
barrel. But now, with West Texas Intermediate crude
oil slightly above US$40 a barrel, these companies
are seeing their revenue dry up---and remain saddled
Marc Lasry, the chief executive of distressed investing
specialist Avenue Capital Group, said these energy
companies boosted their borrowings to between
US$250 billion and US$300 billion, compared with
the US$100 billion at the start of this year.
The energy boom of the past decade was fueled
by a wave of credit from US banks that now say they
expect more delinquencies and charge-offs from
energy companies this year.
Federal Reserve officials earlier in November noted
an increase in weakness among credits related to oil
and gas exploration, production, and energy services
following the decline in energy prices since mid-2014.
Among the major banks raising red flags about the
health of the loans are Wells Fargo, Bank of America
and JPMorgan Chase.
Some banks are renegotiating their credit lines to
gas and oil companies, while others are cutting credit
lines to oil and gas firms and are requiring more col-
lateral to protect against the surge of defaults.
Of the 31 companies that have disclosed information
on loan resets so far, banks have cut credit lines of
10 firms by just over US$1.1 billion, Reuters reported.
Some energy companies are aggressively looking to
take matters into their own hands to alleviate the debt
pressure. Some are selling assets, others are cutting
spending, some are issuing new shares, and others
are hedging their oil production at a certain price.
Some, however, can t escape the grip of debt, falling
victim to low oil prices and filing for bankruptcy.
OPEC cannot allow an oil price war and must take
action to stabilise the crude market soon, Venezuelan
oil minister Eulogio del Pino said on Sunday.
"OPEC has to do something very soon ... We don t
agree with the position that says the market some
way is going to dictate the price of crude oil. We don t
agree with that position of Saudi Arabia," del Pino
said on the sidelines of the Gas Exporting Countries
Forum (GECF) Summit in Tehran.
"Iran is announcing its production is going to
increase as soon as they lift the sanctions and we
need to do something. We (OPEC) cannot allow going
into a war of prices. We need to stabilise the mar-
When asked how low oil prices could go in 2016
if OPEC doesn t change its policy, he said: "Mid-
Venezuela had made a proposal in Vienna on October
21 about an equilibrium price that could stabilise the
market, del Pino said, repeating that the equilibrium
price where future investments can continue to replace
a natural decline in production is at the level of US$88.
He said low oil prices will affect future oil invest-
ments which could mean not meeting future demand
growth for oil and that could lead to a spike in prices
'No worries over
brace for big wave
of debt defaults
Venezuelan oil minister says
OPEC cannot allow a price war
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