TT has been, for a long time, one of the “first movers” in the energy industry in the Caribbean. This “first mover advantage” which is the advantage gained through being the first to invest in a market – in this case, the energy industry – has benefitted TT industries for a number of decades.
However, TT Energy Chamber chairman Eugene Tiah believes that status has been eroded because of smaller gas fields, higher costs to develop those fields and limited supply conditions.
Tiah made the point at the opening of the 2020 Energy Conference at the Hyatt Regency Port of Spain on Monday.
He said for TT to remain ahead of the game and for the Caribbean to survive in an ever-changing energy landscape, the region would have to be flexible and innovative.
“Our first mover advantage in both the LNG and petrochemical business has well and truly been eroded. This new reality is driven by tight supply conditions and the increased development costs for bringing fields – now smaller – on to production and magnified by the lower natural gas cost in the US due to shale gas. It has slowly but inevitably driven constant and deep reflection of the future state – a state that will be in the best interest of all the players.”
Tiah said the demand for fossil fuels has reached its peak and will soon begin a decline because of the need to de-carbonise energy production. This has led to an expectation that fossil fuel prices will drop and stay low.
“Operators are responding to this expectation with a relentless drive to keep input costs as low as possible. The near to mid-term implications for our contractors and service community are obvious. However, rapid developments in automation and artificial intelligence present significant opportunities for the service industry.
“Evidently, technology and innovation will be an essential feature of success in the future,” Tiah said.
He said despite the peak demand TT will be poised to gain from the energy industry because of an increase in proved, probable and possible reserves, which gives the hope that the fossil fuel industry still has a long future.
“Developments in the TT deepwater in particular are very exciting and could be a game changer. Nevertheless, the best-case scenario would be to see that deepwater production come into the system towards the end of this decade. In the meantime, the challenge is to try to maintain gas production at a match between supply and demand at as high a level as possible, and for as long as realistically possible.”
Tiah said if the TT energy sector is to grow, it would first have to ensure that it gets the highest possible return from its oil and gas investments. They would then have to find new and innovative ways to access gas resources and look for short term growth in oil production.