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Deepwater E&P, cross-border gas supply needed to arrest decline

Published: 
Thursday, September 7, 2017
Natural Gas Master Plan:

T&T’s downstream sector could face further decline if there is no deepwater gas discovery next year or significant progress is not made on cross-border gas between Venezuela and this country by 2020.

This is the assessment of Poten and Partners, the consultants that were hired to produce the country’s Natural Gas Master Plan.

Painting an almost doomsday scenario Poten and Partners warns that the sustainability of the plants on the Point Lisas Industrial Estate depends on urgent exploration success.

The report says, “If there has been no deepwater exploration success by 2018 or significant progress in cross-border discussions with Venezuela by 2020 then the industry should prepare for a further decline in long-term gas supply levels.”

T&T has suffered natural gas shortages for the last six years due to declining production from the major upstream companies.

This has led to a loss of revenue and reliability of the methanol, ammonia, and urea plants, along with Atlantic LNG, and has cost the country hundreds of millions of dollars in revenue.

Poten and Partners said without major gas discoveries the country’s production rates were unlikely to go past 3.85 billion cubic feet on average per day, which is almost 400 million cubic feet short per day based on installed capacity.

It painted the following scenario:

1. Gas supply rates of 3.85 bcf/d (average) are likely to persist in the coming years.

2. Beyond 2017 gas supply is increasingly dependent on offshore projects which are as yet not sanctioned for development. The 3.85 bcf/d plateau allows for deferral / cancellation of only a minority of those projects.

3. Plateau production from the T&T shallow-water area is expected to drop below the revised 3.85 Bcf/d by 2025.

Poten and Partners noted that the deepwater and cross-border gas provide the best options for the country to continue into the mid and long term with its downstream economic base but insisted that both were fraught with “uncertainty in timing and volume of supply”.

It noted that in the deep water the discoveries will need to be at least three trillion cubic feet in size and the country will need at least three of those.

BHP Billiton has been awarded all the deep water blocks offshore Trinidad and has so far drilled two exploration wells.

One has been declared an exploration failure and the company has said it has made a natural gas discovery in Le Clerc.

The company reported that its LeClerc discovery in the deep waters off Trinidad’s South East coast is a “large potential gas resource” that contains both natural gas and oil.

Geraldine Slattery, BHP’s asset president, conventional, informed the T&T Energy Conference that the discovery was the first in the Caribbean’s deep water.

“We are very encouraged by the large potential gas resource found in the Le Clerc in Block 5 with gas penetrating multiple horizons,” she said.

“We are currently evaluating recoverable gas volume as well as conditions both above and below ground necessary to support the further appraisal of that potential.

“We were also very pleased to have oil shows in the deep of that well, a strong indication of a liquid hydrocarbon system which supports prospectivity for oil in the southern play.

“Testing new plays in the deep water Caribbean and around the world has historically taken more than one well to test and we remain very optimistic of a tier one play in Trinidad and will return to drilling in financial-year 2018,” Slattery said.

She added that if the appraisal went as well, it had the potential to hit the market in the near term in the early- to mid-2020s at a time when there is expected to be a gas shortfall in both LNG and in T&T’s gas supply.

So far, no appraisal well has been drilled and the Business Guardian has been told that BHP’s second phase of its exploration programme has been delayed.

Poten and Partners noted that for the life of the Point Lisas estate to be extended between 5 and 11 years, the government will have to convince Venezuela to allow all of the 10 tcf of cross border gas in the Loran/Manatee field to be produced in T&T.

The Natural Gas Master Plan reads, “Supply from cross-border fields which extend into Venezuelan territory relies on the outcome of government to government discussions. Only 27 per cent of the largest field (Manatee Loran) lies in T&T waters but for any significant extension of plateau production the entire field would need to be processed through T&T infrastructure. A combination of moderate deepwater success and some gas production from cross border fields would provide some support to extend plateau or reduce the rate of production decline post 2025.”

Poten and Partners added, “The entire field volume estimated by the Joint Working Group (JWG) in the production profile extends the production plateau out to 2030. While this offers the possibility of a five-year extension of plateau production and life of the downstream gas industry it should be remembered that this scenario depends not only on Venezuela agreeing to development of the entire gas field (of which they own 73.06 per cent) through T&T infrastructure, but also on the realisation of the reserves estimate carried by the JWG which is still subject to some uncertainty.”

It must be noted that the report does not take into account the recent announcement by bpTT that it has discovered an additional two tcf of natural gas in its Columbus basin which it says will allow it to maintain production of two bcf/d beyond 2026.

Poten and Partners recommend that in order to improve the chances of production from deep water fields coming on stream within the notional development timeframe, the award of further acreage blocks with firm exploration drilling work programmes should be pursued by the Ministry of Energy.