Big hopes for oil and gas in 2022

At a virtual news conference on Thursday, Energy Minister Franklin Khan was bullish on improved revenues in 2022, on the basis of the 2019 audit of TT's gas reserves by the oil and gas consultancy agency Ryder Scott.

Mr Khan pointed to increases in technically recovered resources, representing a 113 per cent recovery of existing reserves, while lauding three years of incremental growth in this country’s gas resources.

The Energy Ministry is depending on the success of future projects to deliver thousands of millions of square cubic feet of natural gas,;but future success depends on the riskiest of exploration initiatives, deepwater exploration.

The earliest that any increase is expected to come on stream is the third quarter of 2021, when BHP’s Ruby project is expected to produce 150 million standard cubic feet per day (mmscfd).

BP’s Matapal project is expected online in 2022, producing 300 mmscfd, and Shell’s Barracuda and Colibri projects are expected in 2021 and 2022, adding 450 mmscfd of product.

The Government's optimism has led it to keep train 1 of Atlantic LNG operational after BP, the country’s leading natural gas supplier, declined to renew its contract to supply that node of the gas-processing facility.

There are also hopes for improvement in supply from Heritage Petroleum, which recently signed a $100 million deal with the government, with a blue-sky plan to improve production of oil from the Gulf of Paria from an existing peak of 40,000 barrels of oil equivalent per day to more than 60,000 barrels in the next two years.

Hopes for renewed oil fortunes are challenged by the growing lack of interest demonstrated by mainstream oil companies in continued exploitation of fossil fuels as the world considers clean-energy alternatives.

The government is also not talking about the drop by half in TT’s most exploitable gas reserves from a peak of 20 trillion cubic feet in 2002. Exploitation of that resource hit its peak in 2010. Probable and possible gas reserves will demand significant work to prove and access.

So it seems the Energy Ministry’s good-news plans – which it admits will yield little during 2021 – are based on old economic models that are heading for a dead end.

Globally, the natural gas market is being positioned as a transitional energy source, cleaner than coal for mass energy-generation, while a path to greener, more sustainable sources of energy is charted.

The challenge of the next five years for the government – as even a reasonably intelligent and informed lay person could surmise – is not just to increase oil and gas exploration, but to create an effective and sustainable economic diversification strategy into more downstream industries powered by the energy advantage we still have.

That kind of long-term thinking is not new, yet remains in dramatically short supply – and still awaits effective exploration and exploitation – in short, action.