Aleem Khan

En­er­gy Min­is­ter Kevin Ram­nar­ine is con­vinced that brighter days are com­ing for the en­er­gy sec­tor in T&T, cit­ing in­creased drilling for hy­dro­car­bons on­shore and off­shore, BP's 3D seis­mic sur­vey, end of main­te­nance work by BP and BG, en­cour­ag­ing signs from Trin­i­ty plc, Petrotrin, Range Re­sources and deep­wa­ter drilling by 2016.

Af­ter years of de­clin­ing pro­duc­tion, lack­lus­tre ex­plo­ration ef­forts and project re­ver­sals, Ram­nar­ine on Mon­day laud­ed as a "ma­jor mile­stone" the sign­ing of a project de­vel­op­ment agree­ment for the set­ting up of the US$850 mil­lion methanol to di-methyl ether (DME) petro­chem­i­cal plant at the Union In­dus­tri­al Es­tate in La Brea.

"Our best days in the en­er­gy sec­tor lie ahead of us," the min­is­ter told the Sen­ate in a state­ment on Tues­day.

This week's sign­ing, with two Japan­ese in­dus­tri­al be­he­moths fol­lowed Feb­ru­ary's an­nounce­ment by Roy­al Dutch Shell, the sec­ond largest en­er­gy com­pa­ny in the world, that it would spend US$4.4 bil­lion to ac­quire Rep­sol's LNG as­sets, in­clud­ing its stake in Point Fortin-based At­lantic.

The deep­wa­ter lo­gis­tics hub of the Caribbean, Port Ga­le­o­ta, is ex­pect­ed to be com­plet­ed this year and work is con­tin­u­ing on the port at La Brea. Mean­while, rig ac­tiv­i­ty is at its high­est lev­el since 2009 and is ex­pect­ed to cross the 3,000 rig day mark by the end of 2013. In 2012, 2,788 rig days were record­ed. En­er­gy Min­is­ter of­fi­cials con­firmed that there were sev­en rigs drilling on land at present.

All about the ether

Both Mit­subishi Cor­po­ra­tion and Mit­subishi Gas Chem­i­cal will have a 33 per cent stake in the methanol-to-DME project, with the Gov­ern­men hav­ing 20 per cent, Neal & Massy 10 per cent and four per cent for IC­CL, a Hous­ton-based gas com­pa­ny.

Ram­nar­ine said that the DME project "will serve as a cat­a­lyst for a resur­gence of in­dus­tri­al de­vel­op­ment in the south-west­ern penin­su­la. The first phase of the DME project will pro­duce 1 mil­lion tonnes per year of methanol and 100,000 tonnes per year of DME." Fif­teen per cent of the plant's pro­duc­tion of methanol, 150,000 tonnes, will used to pro­duce DME with the bal­ance be­ing avail­able for ex­port to the world mar­ket by Caribbean Gas Chem­i­cal, the joint ven­ture formed for phase one of the project.

Of­fi­cials at a re­cep­tion host­ed by the Japan­ese am­bas­sador on Mon­day told the Busi­ness Guardian that all 100,000 tonnes of DME pro­duced by the plant in the first phase will be made avail­able to the Gov­ern­ment or state-owned en­ter­pris­es to mar­ket.

As the pro­duc­tion cost of DME is less than the cost of diesel de­rived from re­fin­ing crude oil, part of the at­trac­tion of the project is that it would al­low the Gov­ern­ment to re­duce the fu­el sub­sidy, if ve­hi­cles that use diesel con­vert to DME, the of­fi­cials said. This means that T&T's fu­el mix will now fea­ture two clean fu­els, DME and com­pressed nat­ur­al gas (CNG).

Apart from its use in trans­porta­tion, DME can al­so be used in pow­er gen­er­a­tion and as a sub­sti­tute for cook­ing gas (LPG), which would give T&T's state sec­tor the abil­i­ty to ex­port DME to the re­gion as a sub­sti­tute for elec­tric­i­ty gen­er­a­tion plants us­ing fu­el oil or diesel and to sell the DME cook­ing gas.

Speak­ing at the sign­ing cer­e­mo­ny on Mon­day, Ram­nar­ine said: "Dur­ing phase two of the project, the Mit­subishi con­sor­tium will con­sid­er the pro­duc­tion of mono-eth­yl­ene gly­col (MEG) from Syn­gas and/or ethane ex­trac­tion. MEG can be used to de­vel­op ad­di­tion­al down­stream man­u­fac­tur­ing op­er­a­tions, such as au­to­mo­tive coolants, poly­ester fiber and PET resin. Oth­er projects un­der con­sid­er­a­tion in­clude the pro­duc­tion of acetic acid and acry­loni­trile, which could lead to fur­ther down­stream in­dus­tries in plas­tics man­u­fac­tur­ing." He told re­porters af­ter the sign­ing cer­e­mo­ny that an­oth­er Japan­ese com­pa­ny had al­ready ex­pressed an in­ter­est in be­com­ing the acry­loni­trile pro­duc­er out of T&T.

The min­is­ter quot­ed France's To­tal as say­ing DME has "knock­out com­mer­cial po­ten­tial." He said: "DME has ap­pli­ca­tions in trans­port as a re­place­ment for diesel. It al­so has ap­pli­ca­tions in pow­er gen­er­a­tion. DME is al­so sig­nif­i­cant­ly more en­vi­ron­men­tal­ly friend­ly than diesel as it pro­duces no par­tic­u­lates, lit­tle or no ox­ides of sul­phur and low CO2 emis­sions. As such, ve­hi­cles run­ning on DME have been in­tro­duced in Chi­na, Japan and Swe­den. Ex­ist­ing ve­hi­cles can al­so be retro­fit­ted to achieve com­pat­i­bil­i­ty, pro­vid­ing an­oth­er op­tion for the lo­cal au­to­mo­tive mar­ket and a po­ten­tial an­swer to the press­ing ques­tion of how the fu­el sub­sidy can be grad­u­al­ly re­moved with­out plac­ing ex­ces­sive fi­nan­cial strain on the mo­tor­ing pub­lic."

He said DME was men­tioned in the 2002 nat­ur­al gas mas­ter plan that was writ­ten by con­sul­tants Gaffney Cline. The gas mas­ter plan de­scribed it as be­ing phys­i­cal­ly sim­i­lar to LPG and as hav­ing ap­pli­ca­tions as an aerosol. In one of their six rec­om­men­da­tions for the down­stream sec­tor, Gaffney Cline wrote that: "The Gov­ern­ment should con­sid­er a ma­jor ini­tia­tive for the ex­pan­sion of nat­ur­al gas use (or nat­ur­al gas based fu­els such as DME and fu­el grade methanol) in the Caribbean." He said: "That was writ­ten 11 years ago and as you know, 'there is noth­ing more pow­er­ful than an idea whose time has come'."

Ad­dress­ing the con­cern "where the nat­ur­al gas is com­ing from to sup­ply this project," he said the min­istry "and the Na­tion­al Gas Com­pa­ny of T&T (NGC) are al­ready in di­a­logue with an es­tab­lished nat­ur­al gas sup­pli­er in T&T, who has ad­vised that it could have gas avail­able by 2016."

He said that the most re­cent Ry­der Scott au­dit (for 2011) demon­strat­ed that T&T's proven re­serves re­mained es­sen­tial­ly flat, his min­istry "is now en­gaged with Ry­der Scott for the 2012 au­dit and we ex­pect that the re­sults for 2012 would be im­pact­ed in a pos­i­tive way by BP's dis­cov­ery of one tril­lion cu­bic feet of nat­ur­al gas in its Savonette 4 well last year."

He said: "You would note too that BP, our main pro­duc­er of nat­ur­al gas, has sig­nif­i­cant­ly in­creased its ac­tiv­i­ty lev­els in re­cent times. At present the com­pa­ny has two rigs drilling si­mul­ta­ne­ous­ly - the Rowan XL 2 and the West Jaya. BP is al­so in the process of con­duct­ing an­oth­er phase of its Ocean Bot­tom Ca­ble 3D seis­mic over its acreage in this coun­try and we are ad­vised that the qual­i­ty of seis­mic da­ta be­ing ac­quired us­ing the OBC tech­nol­o­gy is vast­ly su­pe­ri­or when com­pared to the old­er tech­nol­o­gy. I want to pause here to say that this 3D seis­mic sur­vey cur­rent­ly tak­ing place has the po­ten­tial to be a ma­jor 'game chang­er' for the nat­ur­al gas in­dus­try in Trinidad and To­ba­go."

BP, BG planned shut­downs

With re­gard to the cur­rent gas sup­ply sit­u­a­tion, at Point Lisas, the min­is­ter said: "We have seen some en­cour­ag­ing signs that the nat­ur­al gas sup­ply sit­u­a­tion has sta­bi­lized. Since mid-De­cem­ber 2012 there has been min­i­mum cur­tail­ment of nat­ur­al gas sup­ply to Point Lisas. While we are en­cour­aged we are not out of the woods as yet. We con­tin­ue to work with the NGC and Point Lisas Ex­ec­u­tives As­so­ci­a­tion (PLEA) and we hold reg­u­lar meet­ings with the lead­er­ship of the up­stream to co­or­di­nate sup­ply."

He said that in the third quar­ter of this year both BP and BG will be en­gaged in shut­downs of the Cas­sia B hub and Dol­phin plat­form re­spec­tive­ly. He said the min­istry has been work­ing with both com­pa­nies to op­ti­mize the im­pact of these shut­downs and has com­mu­ni­cat­ed this to the Min­istry of Fi­nance, the Cen­tral Bank and the In­ter­na­tion­al Mon­e­tary Fund. Ram­nar­ine said: "It is ex­pect­ed that nat­ur­al gas sup­ply in T&T will re­turn to nor­mal­cy in 2014."

The min­is­ter took ad­van­tage of the op­por­tu­ni­ty to speak about the still-in-draft nat­ur­al gas pol­i­cy. He said: "We are cur­rent­ly for­mu­lat­ing a pol­i­cy pa­per on the nat­ur­al gas sec­tor and we are await­ing the sub­mis­sion of the En­er­gy Cham­ber.

Notwith­stand­ing that there is a pol­i­cy frame­work that al­ready ex­ists and its key el­e­ments in­clude:

�2 Re­form of the fis­cal regime for up­stream nat­ur­al gas de­vel­op­ment;

�2 En­er­gy ef­fi­cien­cy;

�2 Di­ver­si­fi­ca­tion by go­ing fur­ther down­stream;

�2 In­creased own­er­ship of as­sets through Gov­ern­ment eq­ui­ty or pub­lic list­ings.

�2 Re-de­f­i­n­i­tion of the roles of the NGC and the Na­tion­al En­er­gy Cor­po­ra­tion."

Neal & Massy CEO ex­cit­ed too

The min­is­ter was not the on­ly one ex­cit­ed on Mon­day. Neal & Massy Hold­ings Ltd Group Chief Ex­ec­u­tive Of­fi­cer Ger­vase Warn­er on Mon­day said: "I am per­son­al­ly very ex­cit­ed about DME, Mono Eth­yl Gly­col (MEG), Acry­loNi­trile, and Acetic Acid as new prod­ucts," that would come out of the plants in phas­es be­yond the first.

Warn­er echoed that DME can be used as a diesel sub­sti­tute and can help T&T to clean up diesel emis­sions and to re­duce the ex­pen­sive fu­el sub­sidy on diesel. "DME can al­so be used to fu­el pow­er gen­er­a­tors and could be a part of the en­er­gy so­lu­tion for the re­gion with a low­er cost, clean­er burn­ing fu­el that can be eas­i­ly ex­port­ed. DME has sim­i­lar phys­i­cal prop­er­ties to LPG. MEG is used to pro­duce PET Resins and you know how many PET bot­tles (col­lo­qui­al­ly known as plas­tic bot­tles) and re­cep­ta­cles are pro­duced in Trinidad and the re­gion. MEG can al­so be used to man­u­fac­ture coolants for mo­tor ve­hi­cles. AN has sev­er­al plas­tics ap­pli­ca­tions in­clud­ing acrylic fiber, car parts, elec­tron­ic cas­ings, gloves, (and as a) wa­ter treat­ment agent. With the in­tro­duc­tion of these new petro­chem­i­cals in­to Trinidad and To­ba­go, Neal & Massy is look­ing for­ward to in­vest­ing in some of the new man­u­fac­tur­ing in­dus­tries that will be made pos­si­ble by the in­tro­duc­tion of these new prod­ucts."