New tenders for oil and gas drilling acreage soon

Energy Minister Franklin Khan
Energy Minister Franklin Khan

A competitive tender process will give the oil and gas upstream sector an opportunity for contracting new drilling acreage, Energy Minister Franklin Khan said on Friday as he addressed the EOG Resources (Trinidad) 25th-anniversary dinner at the Hyatt Regency, Port of Spain.

As he lauded EOG’s successes as an upstream producer, Khan said the country, particularly in the current gas situation, can ill afford to have idle acreage, which has potential to produce hydrocarbons.

“In the existing scenario, there is the opportunity for collaboration in all aspects of the upstream operation. There has been some level of collaboration such as in the use of technology and infrastructure. However, some companies do have idle acreage which is not currently exploited or which have been given low priority,” he said.

The minister pointed to initiatives undertaken by EOG to enter into joint ventures with BP in the Sercan, EMV and TP61 Blocks.

“The Petroleum Act facilitates such collaboration by allowing licensees to issue sub-licences to other upstream companies for development of idle and maturing acreage both on land and in marine areas.

“As a Government, we are supportive of any such action, which has the potential to bring idle prospective acreage into production. As a country endowed with significant hydrocarbon resources albeit in a geology which can be very complex it is important that companies,

which choose to operate in this environment, have the technical capability and know-how,” Khan said.

He said EOG had an impressive portfolio of assets, which included nine offshore platforms with 54 oil and gas wells with a total production of 2.7 trillion cubic feet of gas and 36 million barrels of oil.

He said EOG was currently ranked second to BP in financial contributions to the State in the form of royalty, taxes and other payments with its financial contribution between 2011 to 2016 amounting to approximately $15 billion.

“In the 2018 Budget, Government decided to standardise the rate of royalty at 12.5 percent. EOG has subject to royalty on all its production. In the SECC Licence for Blocks 1, 2 and 3 there is a graduated rate royalty rate on gas, which rises from five percent to 15 percent, with 15 percent being applicable to production over 200 million standard cubic feet per day.

“Therefore, the change in the royalty rate may provide some relief to EOG,” he said.

“In relation to its Production Sharing Contract, EOG has had the benefit of cost recovery which has ranged from 45 percent to 65 percent and which worked to the benefit of both the

contractor and the state. As the phase ends, returns to both parties should improve,” Khan added.

He also reminded that in June, a new gas supply contract was executed with NGC for five years, following Prime Minister Dr Keith Rowley’s meeting with the heads of BP, EOG and Shell in Houston earlier in March.

“Over the next five years, EOG’s capital expenditure on its upstream operations is projected at approximately US$1.0 Billion. This, when added to a prior investment of US$1.8 billion, will bring total investment in Trinidad by EOG to US$2.8 Billion,” Khan added.

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