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Monday 24 June 2019
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Phoenix Park safe from Atlantic supply fallout

An aerial shot of Atlantic's liquefied natural gas facility in Point Fortin.
An aerial shot of Atlantic's liquefied natural gas facility in Point Fortin.

Any halt in natural gas liquids supplies from Atlantic train one will not disrupt Phoenix Park Gas Processors Ltd's (PPGPL) operations, it's parent company said in a statement yesterday.

TTNGL Ltd sought to assure the public of the strength of PPGPL's structure to withstand any shortfall if Atlantic is unable to provide liquefied gas in 2020 and 2021.

The state energy company was responding to a forecast that Atlantic may not be able to expand train one production over the next two years, following shareholder BPTT's recent announcement that it had "disappointing results" from its drilling programme in the Columbus Basin.

It has since been reported that the energy giant drilled two dry wells, raising concerns in the industry.

However, TTNGL expressed optimism about the continuance of PPGPL despite the development at BPTT and Atlantic.

"The public is advised that as a consequence of its commercial and operating structure, the performance of PPGPL will be marginally impacted should a cessation in delivered natural gas liquids (NGLs) volumes from Atlantic LNG Train 1 materialise in 2020 and 2021," TTNGL said in a release.

It noted that BPTT has not stated that there would be any significant decline in natural gas supplies to train one for this year.

But should volumes fall, PPGPL can substitute its source, said TTNGL.

"BPTT’s public pronouncements have not indicated any significant decline in natural gas supplies to Train 1 in 2019. Any potential decline in NGL volumes from Train 1 in 2020 and beyond (propane and butane in particular) can be substituted with NGLs derived from PPGPL’s product trading operations to ensure continued supply to its markets."

TTNGL is 75 per cent owned by the public, with a 25 per cent stake held by the National Gas Co Ltd (NGC), and, as an investment holding company it's primary asset is a 39 per cent shareholding in PPGPL.

PPGPL’s core business consists of natural gas processing, NGL aggregation, fractionation and product marketing. PPGPL operates the country's only natural gas processing and NGL fractionation plant and is the largest producer and marketer of propane, mixed butane, iso-butane and natural gasoline.

The holding company identified PPGPL’s three main revenue streams.

Firstly, revenue from the processing of natural gas supplied by NGC for delivery to petrochemical and other industrial consumers. This is the largest contributor to PPGPL's after-tax earnings.

"This revenue is derived by extracting of NGLs from the gas stream, fractionating the NGLs into the component products, retaining and marketing these products," the company said.

It's second revenue source is generated from fractionating NGLs purchased from Atlantic's trains one, two and three and marketing the products. "PPGPL earns a fixed margin from this operation and in 2018 Train 1 NGLs accounted for 3.4 per cent of PPGPL’s after-tax profits."

Thirdly, PPGPL earns revenue from third party processing/capacity fees under arrangements with Atlantic's train four for NGL processing and Petrotrin (now Heritage Petroleum) for the supply of iso-butane.

"Consistent with best practices, PPGPL will continuously assess these impacts and provide the appropriate advisories to TTNGL. Finally, and as a shareholder of PPGPL, we also note the progress of PPGPL’s internationalisation agenda which is expected to improve PPGPL’s financial results."

Finance Minister Colm Imbert, in his mid-year budget review on May 13, had also assured any fallout from a curtailment in Atlantic's train one expansion would not cause the economy to collapse.

“There is continuous growth and momentum in the production of natural gas and that is what is driving our economy,” he said during the wind-up of the debate.

He reported BPTT had plugged and abandoned one well and another well was producing lower than expected – 50 or 75 million standard cubic feet compared to 100 million – but it was still commercially viable.

Imbert said BPTT has just pressed the “pause button” because of the disappointing results from the two wells.

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