T&T’s petrochemical sector is not as competitive as it used to be because of issues surrounding a reliability of supply, according Charles Percy, president of one of the country’s largest methanol produces, Methanex.
Percy said the immediate challenge facing the downstream sector is both reliability of supply and having sufficient gas for plants to operate at their name plat capacity.
He said: “Let us be fair, while shale gas is a major issue going forward right now, T&T is not the most competitive place to invest in the downstream. This has little to do with shale gas or issues surrounding even the price of gas; it has to do with sufficient supply and reliability of supply.”
Percy noted that the gas shortage started towards the end of 2010 and the downstream producers were told it was a short-term issue and it was now the end of 2012 and the situation has not been resolved, with the prediction there will be more of the same come 2013.
“How does a situation like that inspire confidence?” Percy asked. He confirmed the Methanex plants were operating at close to 90 per cent of their capacity, which means there is a lost of opportunity, especially when methanol prices on the spot market were close to US$400 per metric tonne.
Opposition Dr Keith Rowley on Sunday alleged that a major investor in T&T is in the process of moving plants from another country and is not choosing to come to T&T, but was instead going directly to the United States where, for the first time in several years, gas prices and reliability of supply are beginning to be competitive with those being offered in T&T.
Percy said: “We may be witnessing the start of investors fleeing or reducing their investments in T&T.” He said the issues of gas pricing and supply must be dealt with. Both Energy Minister Kevin Ramnarine and bpTT have said the supply shortages are expected to significantly ease when the country’s largest supplier bpTT completes its maintenance work by the end of 2013.
On Monday, the Ministry of Energy said that the bpTT Kapok and the BGTT Dolphin platforms were now fully operational and were delivering about 800 million cubic feet of natural gas a day. In a release, the ministry said the NGC had reported that since Saturday all gas restrictions had been lifted—except for two industrial customers that were having process plant problems— providing for a steady supply to the Point Lisas Industrial Estates.
The maintenance work on the Kapok and Dolphin platforms was necessary to ensure asset integrity, compliance with international safety standards and the long-term sustainability of the country’s natural gas supply. With the gas curtailment issues close to resolution, the country must now contend with shale gas and the threat it poses to this country’s downstream in a situation where most of T&T’s methanol and ammonia are sold in the US market, analysts said.
Only on Monday, it was announced that Lake Charles Clean Energy (LCCE), has secured major long-term commercial offtake contracts with BP Products North America Inc, Air Products and Chemicals, Inc and Denbury Onshore LLC, a subsidiary of Denbury Resources Inc, for the Lake Charles Clean Energy project located at the Port of Lake Charles.
According to LCCE, securing long-term commercial offtake contracts is a major milestone as it enhances Leucadia Energy's ability to seek and obtain necessary third-party financing for the project prior to commencing construction. “This project, employing commercially proven gasification technologies to cleanly manufacture industrial products from petroleum coke, would be the first of its kind in the US. LCCE is expected to be one of the world's lowest-cost producers of methanol and hydrogen and a low-cost producer of other products used in the chemical and refining industries.
In addition to limitations on emissions of criteria pollutants, the plant is designed to capture, compress and sell 90 per cent of its carbon dioxide (CO2) production for use in enhanced oil recovery (EOR) in the US Gulf Coast. Lake Charles Clean Energy will be a low-cost producer of all its products and is expected to be one of the world’s lowest-cost producer of methanol, as petcoke-based gasification is generally expected to outperform natural gas-based methanol. In addition, the CO2 it captures will be used in enhanced oil recovery operations along the US Gulf Coast.