State-owned Petrotrin and TOSL Engineering Ltd have embarked on a $25 million climate change initiative for the development of carbon credits, which would capture methane gas from its oil wells and then for power generation.
These carbon credits would then be monetised.
This is the first carbon offset programme in the Caribbean under the Kyoto Protocol.
News worldwide has reported on several instances of environmental devastation that point to the neglect of seriously addressing the issue of climate change. According to the July 2011 National Climate Change Policy of T&T Section 2.4, "T&T accounts for 0.1 per cent of greenhouse gases in the context of global absolute emissions, but has a relatively high per capita emission.
The carbon dioxide emissions level of T&T for 2008 was 28.37 t/CO2/per capita, which was the highest in the region. This is as a result of having a small population, coupled with being the leading Caribbean producer of oil and gas."
In a tele-conference interview on Monday with Shazan Ali, TOSL's chief executive officer, Gary Clyne, TOSL's clean development manager, and Rishi Mahadeo, senior process engineer, Ali explained how the initiative was established.
Ali said they have been discussing the issue of reducing T&T's carbon emissions for some time now as the country is the second largest emitter of carbon dioxide per capita in the world and 36th in total in the world.
"The effects of climate change is more severe in developing countries than first-world countries."
It is with this in mind, Ali said TOSL approached Petrotrin to examine their oil fields and refinery to see how best they could capture methane gas, which is comparatively more than 20 times greater than carbon dioxide regarding the impact on climate change.
He said TOSL, which would act as the project manger for the project, will oversee and ensure that Petrotrin follows all the guidelines and rules laid out in Kyoto Protocol.
He explained that Petrotrin has to tender for a company that would has the competence, the right price and ability to deliver.
While the technology is a simple one where the gas is captured in the atmosphere, compressed, scrubbed and cleaned and then put into a pipeline for further processing, he added, the project requires a lot of equipment.
The first part of the two-phase project requires approximately 54 compressors at an estimated total of cost US$4.2 million, 64 separators and scrubbers and almost 140 kilometres of pipeline across five oilfields and 600 wells.
This reduction of emission is equivalent to about 80,000 cars a year of emission into the atmosphere, which is about 40,000 tonnes per annum of carbon dioxide, Ali said.
Job creation
Ali said nothing much has been done in the last two-and-a-half years to kickstart the economy.
He said this project is an opportunity to create jobs for local companies as it allows T&T to bring other flare gas projects around the world under TOSL programme of activities (POA) platform.
This opportunity will allow engineering companies and those involved in service sector in the oil and gas industry to develop their competencies and move to a higher level, Ali said.
Further explaining this ideology was Gary Clyne, TOSL's clean development mechanism manager, who explained that TOSL sent a PoA-Clean Development Management (CDM) proposal to Petrortin and then to the United Nations.
It was accepted.
Only Columbia and T&T have engaged in such a project.
Whatever proposed quantity of carbon dioxide is captured, Clyne said, Petrotrin will be awarded carbon credits that can be sold in the CO2 market to developed countries for cash.
The carbon credits will be generated using this PoA-CDM platform.
The platform can be used to monetise carbon emissions for vent and flare out projects in T&T, as well as other eligible developing countries.
This includes, but is not limited to, the development of carbon assets from associated gas gathering and utilisation projects in Petrotrin's oil and gas onshore and offshore fields.
Cylne said once this PoA platform is well developed, Petrotrin can earn additional revenues by sharing its platform with private and public oil and gas producers internationally.
Even though the prices of the carbon credits on the European exchange have fallen from 30 euro to about 3.60 euro, Cylne said countries can hold onto their credit until the market goes up.
The PoA platform would provide the required guidelines and criteria for the project and would facilitate the basis for policymaking.
Cylne said T&T has the resources and is making the required preparation to engage other countries, like Mexico and Nigeria, to come under TOSL platform.
He said the first phase has began and is on target to meet its January 2014 deadline at an estimated cost of US$2 million.
Targeting smaller oil companies
Rishi Mahadeo, TOSL senior process engineer who is also a member of the energy sub-committee at the Energy Chamber, is working with Cylne to produce a paper where they would be targeting and marketing this idea to encourage other T&T oil and gas companies to capture their gas.
This presentation, he said, will be done at next week's T&T Energy Conference at the Hyatt Regency Trinidad hotel, Port-of-Spain.
"If we do this in T&T, then we would be significantly contributing to the reduction of our carbon footprint."
He said this would allow smaller producing oil and gas companies like Lease Operators Ltd (LOL), Trinity Exploration and Production and API Pipeline Construction Company Ltd to enter into TOSL platform and earn carbon credits.
Mahadeo said the first phase of the project has started and it's in the pre-development stage of surveys, engineering design and the engagement of controls systems to manage the project.
Mahadeo said construction should begin by February 26 in Petrotrin's south fields in the vincity of Palo Seco and Penal.
As project manager, TOSL will assist with project financing, technical and commercial proposals and stay attentive of the rapidly changing rules of the United Nations Framework Convention on Climate Change (UNFCCC).
According to TOSL's document, the international policy response to global climate change has been through the adoption of two legal instruments: UNFCCC and the Kyoto Protocol. T&T is a ratified signatory to both these legal instruments.
The ultimate objective of the UNFCCC is "the stabilisation of greenhouse gas concentrations in the atmosphere at a level that will prevent dangerous human interference with the climate system and in a timeframe that would allow ecosystems to adapt naturally, will not hamper food production and allow sustainable economic development."
The Kyoto Protocol is a legally binding instrument that required developed country parties to reduce their aggregate greenhouse gas emissions by 5.2 per cent below their 1990 levels by 2012.
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