Key moments in TT’s energy sector

GEOLOGICAL SOCIETY OF TT

This piece seeks to summarise the major happenings in the local sector for this past year.

Due to the Ukraine-Russia war, oil and gas prices have remained high in 2022, with WTI oil averaging US$95 per barrel and Henry Hub gas averaging US$6 per mmbtu. TT’s 2022 budget, presented in September 2021, was based on US$65 per barrel and US$3.75 per mmbtu. The high prices, more than anything else, led to much higher government revenues that expected.

Crude oil plus condensate production averaged just under 60,000 barrels per day for 2022, while gas production was 2.7 bcf/d for the same period – no change to the forecast done in 2021.

New gas (albeit small) from De Novo and Touchstone, as well as first gas from Shell’s Colibri and BP’s Cassia C, progress on developing Shell’s Manatee field, EOG’s new gas platform, and bp sanctioning their Cypre project were significant milestones on the gas production side of things. bp and NGC gas negotiations and the recently concluded restructuring of Atlantic are helping pave a path for a renewed and hopefully more resilient gas business in TT.

New onshore and shallow water bid rounds were also opened in 2022, which we hope will lead to acreage being signed and new exploration activity in the near term (three to five years). The changes to the much talked about SPT announced during the budget are expected to encourage interest in the bid rounds.

In terms of diversification, hydrogen is the talk of the global industry nowadays. Major progress has been made locally with the NewGen project at Pt Lisas, which is expected to tie into bp and Shell’s massive solar plant, which we expect to be commissioned in 2023. National Energy also presented a roadmap to a green hydrogen economy in TT. If successful, this will represent a step-change in our energy sector, possibly giving new life to all our downstream plants, without a dependency on natural gas, but with a whole new emphasis on offshore wind.

Unfortunately, the local industry was marred by a tragedy at state-owned Paria, which is currently undergoing a commission of enquiry. Electricity supply has had at least one major incident for the year with many smaller outages all pointing to failures with maintenance, backups, gas supply, emergency response and communications. Infrastructure failures due to recent floods have only made doing business in TT more difficult, and if these are not addressed, will severely inhibit energy sector and economic growth.

TT must also remain cognisant of regional changes that are occurring at a breakneck pace. Guyana and Suriname are perhaps the most exciting countries on the planet right now for oil and gas. Billions of US dollars from all over the world are flowing into Guyana already, and Suriname is just behind. Sanctions on Venezuela’s oil exports may soon be reduced or lifted. These countries activities present both opportunities for TT’s government as well as private sector, but also make our own acreage less interesting from an investment point of view by many of the majors.

Strategic state led partnerships with Guyana and Suriname, export of our services sector to neighbouring countries, production of Venezuelan gas, quick decision making towards a hydrogen economy, well run bid rounds and maximising our remaining gas and oil are all critical steps to securing TT’s energy future.

January:

• NGC and Shell signed an agreement to start the design of the gas processing facility for Manatee gas at Beachfield. Loran-Manatee is a 10tcf gas field that straddles the Trinidad-Venezuela border. 2.7 tcf is on Trinidad’s side and will be produced independently, with production forecast for 2027. Initial gas output rates from this field are anticipated around 300 mmscf/d, with expected peak production at approximately 700 mmscf/d, according to the Ministry of Finance’s 2022 Review of The Economy.

• PPGPL completed acquisition of an NGL terminal at Hull, Texas, from Keyera Energy Inc. This is the company’s second US acquisition. PPGPL said with this terminal, they will be able to access and aggregate LPG supply to grow its markets in Mexico, Latin America and the US.

February:

• In one of the most horrific incidents to ever occur in TT’s energy sector, five divers contracted to state-owned Paria Fuel Trading Company were sucked into a pipeline they were working on. Ultimately, one was rescued and the other four tragically perished. Under tremendous public scrutiny, a commission of enquiry was launched. Dramatic hearings are currently underway. The CoE is expected to conclude in 2023.

• On February 16, just after 12 pm, there was a Trinidad-wide blackout that lasted over 12 hours for most of the country. Chaos ensued as the relevant agencies were wholly unprepared for such an event. Cell signal, data and radio stations were significantly affected. A committee was tasked to investigate the cause. They reported that a 21-metre tall fungal infected tree in Rousillac fell onto a TTEC 12kV distribution line, which caused it to contact the 220kV line that transmits most of the power from TGU to TTEC. This resulted in a trip cutting off the TGU plant. The sudden loss of almost 50 per cent of the country's generating capacity led to unstable conditions cutting off the rest of the power plants (Pt Lisas and Penal). This entire sequence was reported to have taken 3.6 seconds. Inadequate equipment to restart the plants, a lack of technical capacity, the absence of documented plans and general lack of preparedness resulted in the huge delays to restore power.

March:

• Shell had first gas from their huge Colibri project, from blocks 22 (Cassra Field) and NCMA 4 (Orchid Field) off Trinidad’s north coast. Peak production is expected at 250 mmscf/d.

• WTI crude spiked to US$130 per barrel and Brent spiked to US$139, the highest since 2008. Prices jumped as the market began to react to Russia’s invasion of Ukraine.

May:

• Energy Minister Stuart Young disclosed that the government is in talks with Quanten LLC, a US-based firm, for the sale of the former Petrotrin refinery. Proposals from four bidders were evaluated and discussions with Quanten are taking place. In December, the Prime Minister reported to Parliament that talks with Quanten had fallen through and assessments for new bidders will be done.

• Shell drilled the Ice-1 exploration well in block 5(c) from October 2021 until May 2022. It was found to be dry.

June:

• BHP and Woodside completed their merger to create a company worth US$40 billion. In August, the iconic BHP building in Port of Spain changed its sign to Woodside.

• Shell begins drilling their Aphrodite-1 exploration well using the Maersk Discoverer semi-sub in block 5a of their east coast acreage.

• The Energy Chamber held the annual energy conference from May 31 to June 2, returning to a physical conference since 2020.

July:

• The GSTT held its 7th Geological Conference from July 11-13, using a hybrid in-person and virtual format.

• Onshore and nearshore bid round for 11 blocks launched at the GSTT conference. Open until Jan 2023.

• DeNovo announced first gas from its brand new Zandolie platform in block 1(a). The US$50 million project will produce 40mmscf/d of gas from one well, tied back to the Iguana platform. Zandolie is powered from renewable sources on the platform, a first for TT.

• Heritage announced that five development wells onshore were drilled for the year, with four more scheduled before end of 2022. These were being drilled by two rigs focusing on Palo Seco, Forest Reserve and Point Fortin Central fields.

August:

• Nominations opened for shallow-water bid round. Twenty-three blocks up for nomination off the East, West, North and South coasts.

• In 2021, EOG farmed into Heritage’s TNA acreage (offshore west coast). EOG completed CT-1, their first exploration well in TNA, which was dry. The well was drilled to approximately 13,000ft.

September:

• Fuel prices were raised by the Minister of Finance in his budget presentation. Premium, super and kerosene were increased by $1 per litre, and diesel by 50 cents. New prices per litre: premium – $7.75, super –­ $6.97, diesel – $4.41, kerosene – $4.50.

• During the budget presentation, long-awaited SPT (supplemental petroleum tax) changes were announced, effective January 1, 2023:

• Small onshore producers will now be those producing up to 4,000 barrels per day. SPT will be zero per cent for these operators up to US$75 per barrel, and 18 per cent up to US$90.

• New oil wells in existing or new fields for shallow water acreage will have lower SPT rates based on a new tier system.

• The Valaris 118, formerly known as the Rowan Joe Douglas jackup rig, returned to TT, under contract from bp. Phase one of the project involves development drilling at the Mango and Savonette fields. The rig is expected to be in country for at least 18 months, with possible extensions.

• Perenco installed the Macarius Power, the first platform in the TSP (Teak, Samaan and Poui) block in four decades. A decommissioned jackup rig was bought and refurbished in Trinidad at a cost of US$ 200 million.

• bp announced their Cypre gas project (pronounced ‘sip’) will proceed. Drilling is to begin in 2023 with first gas expected in 2025 and will deliver 250 – 300 mmscf/d. seven wells will be tied back to the Juniper platform.

• NGC and bp signed a new gas supply contract after months of negotiations. bp said the contract will underpin future upstream investment in TT.

October:

• The Ministry of Finance reported that taxes from the upstream for 2022 was estimated at 10.45 billion, while it was 3.1 billion in 2021.

• Touchstone begins production from Coho, the first onshore gas project in over 20 years. Gross production of 10.5 mmscf/d (net of 8.4) was announced. The gas is being delivered via a 2.7km 6in pipeline to the Baraka facility (operated by Shell) to NGC.

• Woodside began the country’s first CSEM survey (controlled-source electro magnetic) over deepwater blocks TTDAA 14 and 23(a) to better define the Calypso field. 1600 sq km will be surveyed in water depths of 2200m, over 70 days.

• After a massive explosion in April 2021, NiQuan has restarted its GTL (gas-to-liquids) plant at Pointe-a-Pierre. The NiQuan plant has a nameplate capacity of 2,400 barrels a day, producing paraffinic GTL diesel and naphtha that have near-zero sulphur content and near-zero aromatics.

• EOG’s brand new Osprey B platform was installed off Trinidad’s east coast. First gas has not yet been announced.

November:

• Kenesjay Green Ltd’s NewGen project was officially launched. Earlier in 2022, French firm HDF acquired 70 per cent of the project. It’s expected to produce the world’s largest clean hydrogen plant (20,000T per day) at a cost of US$200 million with commercial operations from 2026/2027. Hydrogen will be produced from desalinated water and 125MW of electricity from two "clean" sources – Lighthouse bp and Shell’s solar Project Lara, and waste heat from existing power plants.

• The MEEI launched The Roadmap for a Green Hydrogen Economy in TT. National Energy collaborated on behalf of the MEEI with the IDB and KBR Inc to assess the potential of TT to produce green hydrogen for the power and industrial sectors. The document is available on the ministry’s website.

• Shell country chair Eugene Okpere gave a progress update on Project Lara, the country's first large scale solar plant, which will also be the largest in the Caribbean. He said in the next few weeks very exciting news will be shared (expected to be finalisation of negotiations with the government). The plant is expected to be commissioned in 2023. The project is a JV between Lightsource bp and Shell and will generate 112mw of electricity from two sites at Brechin Castle and Orange Grove (approximately 10 per cent of TT’s electricity demand).

• bp – Cassia C has delivered first gas. It is bp’s 16th offshore facility, their first compression platform and the biggest offshore facility. Peak production is 200-300 mmscf/d. The jacket (legs and frame) was built in Trinidad and installed in 2020 while the topside was built in Mexico and installed in 2021.

December:

• bp announced they will be investing US$800 million in TT during 2023. This will go into replacement of two key pipelines at Galeota, drilling with the Valaris 118 (Joe Douglas), among other projects. BP added US$3.4 billion was invested in TT from 2018-2022 in major projects like Matapal and Cassia C.

• Atlantic LNG shareholders (bp, Shell, NGC) have completed commercial negotiations for a unitised model with a common ownership structure, which began in 2018. No details on the splits of this new company have been disclosed, but the Prime Minister stated NGC will have an increased shareholding. The new arrangement will also allow 3rd party gas producers to participate in Atlantic.

The Geological Society of TT is a professional and technical organisation for geologists, other scientists, managers and individuals engaged in the fields of hydrocarbon exploration, academia, vulcanology, seismology, earthquake engineering, environmental geology, geological engineering and the exploration and development of non-petroleum mineral resources.