Home' Trinidad and Tobago Guardian : June 12th 2014 Contents JUNE 2014 • WEEK TWO www.guardian.co.tt BUSINESS GUARDIAN
ENERGY | BG9
T&T s natural gas users have continued to
suffer from massive changes in gas production,
according to figures from the Ministry of Ener-
gy and Energy Affairs.
Statistics reveal that for the first four months
of 2014, there were average daily swings in
natural gas production on a month by month
basis by as much as 400 million standard
cubic feet per day. This swing is more than
all the natural gas used to supply electricity
to the entire country. It is more than twice
the natural gas used to supply the Pointe-a-
Pierre refinery, the iron and steel plants, cement
manufacture, all the light manufacturing plants
and hotels using natural gas and natural gas
used in the manufacture of ammonia deriv-
The shortfall has been a major sore point,
particularly for the country s lucrative petro-
chemical sector, which is experiencing windfall
prices, but which has not been able to fully
capitalise on the high prices because of insuf-
ficient supply of natural gas. It also means the
country is losing out on major revenue and
United States currency because of the con-
tinued shortfall and swings in production.
In January 2014, for example, the production
of natural gas averaged a mere 4,006 mmcf/d,
which was curtailed due to bpTT s decision
to take its Savonette well offline.
The company at the time explained,
"Although the period of intensified mainte-
nance activity has ended, in line with regular
business activity, there are from time to time
normal operating activities that may have
short-term impact on production, such as rig
moves, heavy lifts or delays on the drilling
programme. We strive, as far as possible, to
work with all stakeholders, including the Gov-
ernment, and downstream, to co-ordinate
these activities to mitigate impact on their
BPTT said in the first quarter of 2014, it
completed drilling on the Savonette 6 well
and also took the Savonette platform offline
to facilitate heavy lifting required for the start
of drilling of the Savonette 7 well. The platform
was brought back on production once drilling
started. It added this was a necessary outage
to continue to progress its drilling programme
and bring gas online. "This period of outage
would have had an impact on gas supply,"
bpTT told the Business Guardian.
However, in February and March, natural
gas production increased significantly to 4,397
mmcf/d and 4,361 on account of a 400mmcf/d
increase in production from bpTT.
That increase in crude production would
not last, however, and in April, natural gas
production plummeted to its lowest production
for 2014 to bellow the 4,000 mmcf/d average
production levels to 3,973 mmcf/d.
This fall in production was on account of
at 20 percent decline in production from bpTT
while BP s production again declined by 150
According to the Ministry of Energy s sta-
tistics in April, BG T&T s production was down
to 797 mmcf/d from 1,006 mmcf/d and over
1,000 mmcf/d for the first three months of
2014. Meanwhile, bpTT s production was down
from 2,329 mmcf/d to 2,168mmcf/d.
BHP Billiton, EOG and Petrotrin have been
able to generally keep their production stable,
according to the figures.
In its first quarter report, the global
Methanex noted there were gas curtailment
that negatively impacted the company s per-
formance in Trinidad.
Charles Percy, president, Methanex Trinidad,
admitted his company was operating at 90
per cent of its name plate capacity and it con-
tinued to face real challenges in terms of the
gas supply situation.
Industry sources told the Business Guardian
the ebb and flow in the supply was negatively
impacting the equipment and causing more
maintenance work than normal.
Energy Minister Kevin Ramnarine agreed
there was a very tight relationship between
supply and demand to the point where if one
of the upstream companies has production
issues, it leads to a shortage gas for the down-
He said more gas has to be brought on and
pointed to the country s largest producer bpTT
as the only producer with the capacity to
increase its gas production.
"We expect Starfish to come on around Sep-
tember. I have to crunch the numbers again,
but I expect us to be in a positive situation
with Starfish coming on with that quantum
of gas," Ramnarine told the Business Guardian.
Starfish is a field discovered by BG T&T in
1998 and which is expected to be developed
by the end of the year and bring gas into pro-
In an interview following Atlantic s award
dinner in May at the Hilton Trinidad, the
Energy Minister added, "Going forward, we
have to continue to do a number of things.
BHP is going to be doing Angostura Phase 3,
which will bring on more gas and we expect
that from all the infill drilling that BP has in
the next two years, more gas will be made
available and, of course, we have Juniper."
The decision by the Ministry
of Energy and Energy Affairs
to approve the change of own-
ership of the two deepwater
blocks TTDAA 14 and 23 (a)
from 100 per cent ownership
by BP to a farm-in arrangement in which 70
per cent of the block is now owned by Aus-
tralian outfit BHP Billiton means BHP has
interest in all the blocks awarded in this fron-
It also raises the issue of whether a single
exploration strategy makes sense for T&T.
That is the among the concerns raised by
energy consultant Anthony Paul who asked,
"What are the benefits that the ministry is
seeking and where is the evidence that a single
exploration strategy is appropriate for such a
large, complex and unexplored area, rather
than multiple approaches?"
In July 2011 BP Exploration Operating Com-
pany was awarded 100 per cent interest and
operatorship of Blocks 23(a) and TTDAA 14
offshore the east coast of Trinidad. Spanning
2,600 square kilometres, Block 23(a) is located
in waters averaging 2,000 metres deep about
300 kilometres northeast of BP s Galeota Point
onshore processing facility. The adjacent
TTDAA 14 covers 1,000 square kilometres
with similar water depths.
Under the production sharing contract
(PSC), the company had promised to shoot
its seismic since last year, but did not meet
its commitments under the PSC and was
given the go ahead by the Ministry of Energy
to delay the seismic ostensibly so it can save
costs by jointly shooting it with BHP Billi-
BP then announced it had given up oper-
atorship of the block to BHP Billiton and it
was keeping only 30 per cent working interest
in the block and had farmed out 70 per cent
to BHP Billiton.
In an e-mail response on Tuesday to ques-
tions from the Business Guardian, Paul said
questioned the ministry s acreage management
strategy and how does competition play into
this. He said there was a need for a clear strat-
egy by the ministry, which should consider,
among other things, the need for competi-
"In fact, the ministry s bidding evaluation
criteria suggests no such strategic approach
as the bids were awarded on the amount of
work proposed to be done, irrespective of the
suitability or objective of the work," Paul said.
The energy consultant said in considering
whether to approve the change, the ministry
should have looked at the record of both BHP
and BP in similar deep water provinces and
their technical abilities. He also cautioned
there should have been a review of both com-
panies performance in T&T.
He said, "Did the transfer consider other
factors required for success and good man-
agement of the asset, such as:
• A track record for successful exploration
in similar basins and in similar drilling con-
• A track record for successful, safe and
efficient field development in similar condi-
• Past performance, if any, in T&T:
• BHPs record for field development in T&T
is there for all to analyse.
• BP s cost effectiveness (based on its effec-
tive tax rate compared to its peers) and field
production management, particularly as it
affected the national economy in recent times,
are there for all to see.
Paul said the decision of the country s largest
energy producer to significantly reduce their
interest in the deep water raises the question
of what is BP s strategy for T&T, if the Ministry
of Energy is aware of that strategy and how
is it adjusting policies to meet with this strat-
He further questioned whether the 2011 bid
round that BP won the two blocks in required
that the winner (and subsequently, did the
contract require that the farm-in operator)
have the requisite capacity to effectively and
safely execute the agreed work programme?
Paul explained, "Usually, and in this bid
round, the capacity to execute an agreed and
specific work programme applies, not a strategy
that will drive the work programme.
"In this case, the requirement would be
that the party chosen and to whom the con-
tract was assigned would be required to
demonstrate the capacity to undertake the
committed work programme."
BP last week defended the farm in saying,
"The farm-in provides an opportunity to
maximise synergies with BHP Billiton s deep-
water operations in contiguous blocks. BP
remains committed to Trinidad with a growing
portfolio of exploration, appraise and devel-
opment opportunities in the Columbus Basin
identified through the interpretation of recent-
ly-acquired Ocean Bottom Cable (OBC) 3D
Paul has worked at senior levels for both
bpTT and the Ministry of Energy.
bpTT farming out
deepwater to BHP
Swings in natural gas production hurting economy
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