President of bpTT Norman Christie said yesterday that the company’s production in 2011 declined by 15 per cent to 402,000 barrels of oil equivalent compared with 2010, which was a record year. Speaking at a media briefing at bpTT’s Port-of-Spain head office, Christie said the reduced production was due to the company’s implementation of an enhanced maintenance programme, following the Gulf of Mexico oil spill in April 2010. Production also declined because the company “intentionally lessened” the amount of its so-called ‘cushion’ gas, that was kept in inventory for use in situations of tight supply, because the economics were not in the company’s favour given escalating costs, lower natural gas prices and “lower-margin requests.” BPTT’s “cushion” gas reached up to 400 million standard cubic feet a day—or about 60,000 barrels of oil equivalent. He also said the expectation that there would have been extra supply from other upstream gas producers also caused bpTT to adjust its production. He said last year both the Point Lisas industries and Atlantic LNG received 15 per cent less natural gas from bpTT than they could take. Christie predicted that bpTT’s 2012 production would be similar to 2011. He said the company, which is T&T’s largest single tax revenue contributor, remains committed to the long-term future of the country, but he expressed concern about the potential impact of rising local costs on the energy giant’s development of prospective blocks.
Christie said T&T was a “challenging environment” for upstream developers, including BP, for three reasons:
• Low natural gas prices in the US market and for T&T’s LNG exports that have been contracted for the US market;
• The fact that the cost of doing business has increased as costs are tied to crude oil prices that have gone up. He said that bpTT has found that costs have a way of escalating and “being very sticky at the top.”
• bpTT is faced with smaller and smaller hydrocrabon pools in T&T with geology that is of increasing complexity, both of which increase the cost of finding and developing oil and natural gas.
“We do see a challenging environment for upstream gas producers. Of course, why we are here as a company is to deal with challenges, but it’s important that the country recognises the challenges and the implications of those challenges,” said Christie. He cited as an example of the challenging environment bpTT’s Juniper development, located off Trinidad’s south-east coast, which has the potential to produce up to 1.3 trillion cubic feet of natural gas.
“The previous developments that we have done over the last few years—from Cannonball to Serrette—were much easier to reach final investment decisions on because you were dealing with larger pool sizes and lower costs than we are experiencing with Juniper, which would have been a slamdunk a few years ago with lower costs.” He said the development of T&T’s near-shore energy resources “requires the collaboration between industry players and the Government.” Christie said the company plans to invest US$900 million on new capital expenditure in T&T in 2012, including a considerable portion of US$250 million that has been allocated for seismic work throughout bpTT’s acreage.