Can Nutmeg bear fruit?

Trinidad and Tobago’s new government is hitting the ground running, with the energy sector being one of its focuses.

Declaring the embattled and coveted Dragon gas deal as "dead," the Prime Minister Kamla Persad-Bissessar said she is now looking at other areas to ensure TT’s oil and gas sector’s future.

This time her focus is in the Caricom region.

"I have a surprise for you," said a smiling Persad-Bissessar, at the swearing-in ceremony for her cabinet at the President’s House on May 4.

"I intend to send my Minister of Energy to Grenada, because I am being told that Grenada’s offshore has more gas and oil than the Dragon gas field."

She was referring to the Nutmeg field, an oil and gas reserve found about 100 kilometres southwest of Grenada in 2017.

She also expressed plans to look to Suriname and Guyana to strike deals for energy production and exploration.

The idea is already being welcomed by many areas, including the Energy Chamber.

In a statement on May 4, the Energy Chamber expressed optimism that if the Nutmeg field could be developed, it would be an excellent opportunity to export gas to TT.

But can the Nutmeg field bear fruit?

There is still very little known about the field, its geology and the potential for gas supply coming from the field.

Furthermore, given the current progress made in the field, Nutmeg may not be tapped in the short to medium term.

There are also benefits and challenges with other fields in Suriname and Guyana, along with great benefits.

Nutmeg: Planting a seed for the future

In an interview on The Breakfast Show on May 6, CEO and president of the Energy Chamber Dr Thackwray “Dax” Driver elaborated on the opportunities for TT that would come from collaborating on Grenada’s Nutmeg field.

"If it is a major gas field and needs infrastructure to develop it, Grenada is not going to want to put methanol and ammonia plants in Grenada," he said.

He said TT’s production and downstream plants are also very close to the field and has infrastructure in place for the processing of Grenadian gas.

TT also has its foot in the door having had several TT-based service companies involved in the exploration already done.

"I think it is an opportunity and something that would certainly be great to explore," Driver said.

"If there is new information that would suggest that it is something worth exploring quickly, then it is definitely something worth exploring."

During the People’s Partnership administration from 2010-2015, TT and Grenada signed a memorandum of understanding to advance joint exploration and exploitation of hydrocarbons in the maritime areas between the two countries.

The agreement involved collaboration on development and implementation of technical programmes, projects and activities between the two islands.

TT and Grenada would also collaborate on seismic surveys, exploration projects and development plans for unitisation of hydrocarbon reservoirs and bid rounds.

NGC also finalised a commercial agreement with the sole operator of the Nutmeg gas field, Global Petroleum Group (GPG), a Russian-based company, in 2018.

That deal would see that NGC would have first preference for the purchase of any natural gas discovered in the Nutmeg field.

In return, NGC would use its existing infrastructure to aggregate and produce natural gas for the downstream.

For reference the Dragon gas field is about 20 kilometres away from Shell TT’s Hibiscus platform, which was proposed to be used as existing infrastructure to speed up the production of natural gas.

Plans for a 17-kilometre pipeline to be built from the Dragon gas field to the Hibiscus platform were in train as part of the project.

The Nutmeg Gas field is just north of Dragon, sitting on the edge of the TT and Grenadian border.

Driver suggested that the same infrastructure could be used to speed up progress in any project that could be developed from Nutmeg.

However, there are still some unknowns with regard to the Nutmeg field, according to Driver.

"We have had very limited information about that since that find… we would just have to wait to hear more details on the Grenada side to understand what the licence conditions are, who will develop it and all that information and what the reserves are like. We have no indication of that yet."

GPG ran logs and drilled an exploration well in the Nutmeg gas field, which showed evidence of there being gas in the field.

However, the well was plugged and abandoned without further testing. Another well, the Nutmeg 2, was drilled but that was sidetracked because of technical problems.

Grenada’s energy minister John Ogiste said in 2019 that three more wells had to be drilled to determine where the production well should be positioned.

Last October, GPG signed an agreement with Nigerian-based oil and gas company Oceangate.

The deal would involve a production-sharing arrangement with the company for 38 years, which would cover about 7,500 square km of offshore zones in Grenadian waters.

The deal is said to be valued at about EC$1.8 billion (US $666 million).

But in April, chairman of Grenada’s Hydrocarbons Technical Working Group Nazim Burke said they are yet to discuss the agreement between GPG and Oceangate.

"We heard the GPG had entered into an agreement with a Nigerian-based company but we cannot say very much about the details about that," Burke said during the Grenada Broadcasting Network’s Beyond the Headlines programme.

He said GPG promised to provide details about the deal, but they had not yet been forthcoming.

Driver said that while the believes the Nutmeg gas field could yield results, benefits from that field may not be immediate.

"It is not something that is going to happen tomorrow. It is going to take a while," he said.

Guyana gas future

While Guyana’s gas finds are proven and significant, it still has a few challenges. One of the challenges is that TT may or may not be in Guyana’s plans for using its natural gas.

In an Argus Media news article in February, Exxon Mobil Guyana president Alistair Routledge indicated that Guyana is looking at plans to connecting Guyana’s gas resources to world markets, but not necessarily to TT.

"While it may be cost prohibitive to lay a pipeline all the way to Trinidad, there is still the possibility of using liquefied natural gas to connect us to local markets," Routledge said.

He said Guyana and Exxon are also looking at further options for its natural gas coming out of the giant Starbroek block discovered in 2015.

Among those plans are the commissioning of the gas-to-energy project, which is in phase one and is about to enter phase two.

Some of Guyana’s gas, before the gas-to-energy project, was either flared or re-injected for further production..

The commissioning of the gas-to-energy project is estimated to be about US$2 billion and is expected to serve as a solution to Guyana’s high cost of power and unstable power supply.

The Guyanese government has said the project and other associated investments could result in a 50 per cent reduction in the cost of power, and reduce emissions from generating power by replacing fuel oil with natural gas.

A pipeline is expected to be established to deliver about 50 million cubic feet per day through a pipeline, which will generate about 300 megawatts of power and give an additional 4,000 barrels of oil equivalent per day in natural gas liquids for the next 20 years.

An Oil Now online article said a US-based group, CH4-Lindsayca, is building an integrated facility at Wales in Guyana, which includes a power plant and a natural gas separation plant.

However, disagreements between the government and the contractor over costs and timelines led to the filing of multiple claims.

In March, an Oil Now report said the Guyanese government and CH4-Lindsayca have agreed to continue arbitration and work on the project continues.

Guyana also has plans to develop its petrochemical sector and its LNG sector, similar to TT.

Driver said, just because Guyana has its plans for natural gas, that doesn’t mean TT would not be able to engage in some trade.

"Guyana is looking at various options," he said. "Trinidad is one of the options they are looking at. These are not things that it has to be either one or the other. It could be all of the above.

"They (the options) all have their challenges and they all have their pros. What we need is deep conversation and negotiation with Guyana and the operating companies in Guyana such as Exxon."

Suriname's gas exploration

Suriname’s natural gas resources are also significant, with 11 shallow water opened for bids in 2024.

The country’s first offshore project will be developed by Malaysia’s state-run Petronas, who partnered with ExxonMobil in March, 2024.

Offshore oil production is expected to kick off in 2028. Production of gas is expected in 2032, with gas expected to be exported through a floating LNG system – a ship or barge-based facility that liquefies natural gas at sea – instead of running a pipeline to shore for production.

The oil and gas discovery is expected to expand Suriname’s GDP by 55 per cent by the year 2028.

Driver said one benefit to TT on Suriname's natural gas discovery is that there is no existing infrastructure for natural gas.

"You would either have to develop that market like we did in TT, which takes a long time, or you can find an export market through LNG, or it could be via pipeline, and the nearest market where there is a significant demand for natural gas is TT."

Dragon not 'dead'

Contrary to the Prime Minister's statements, Driver said the Dragon gas deal is not "dead."

"People talk about the Dragon deal as if it is an actual dragon. It is an accumulation of gas under the sea in the Venezuelan territory.

"Obviously that gas has not gone away, it is still there and there is also a licence which exists to produce that natural gas with the government of Venezuela it is held by shell and NGC."

He said the only challenge to the progress of the Dragon gas deal is the politics behind it.

"The challenge is the sanctions regime which the US government has put on Venezuela, we had a licence that allowed us to operate in Venezuela despite the sanctions regime, that has now been removed.

"I don’t want to comment on whether that will change in the future or not.

"That is a geopolitical issue between the Venezuelan government and the US government.

"Things may or may not change, we will have to wait and see what happens there. But the field is still there. The resources are there. Hopefully at some stage, we will be able to sort out the politics there."