Prime Minister Kamla Persad-Bissessar has been ordered to rest after spending yesterday afternoon at the Cross Crossing Medical Centre, San Fernando, due to a high blood sugar level.
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Oil and gas analyst: T&T production set to increase
Brian Gallagher, an oil and gas equity analyst, says predictions about T&T becoming an exciting exploration destination for oil and gas companies are rapidly becoming a reality. In a report published online by Investors Chronicle, Gallagher noted that “exploration activity across Trinidad has rapidly accelerated while interest from speculative investors is exploding.” He noted that one energy company, Leni Gas & Oil, has seen its share price rise four-fold following successful drilling at its Goudron field onshore Trinidad.
“Shares in rival onshore operator Range Resources (RRL), meanwhile, have doubled in value since May, as have shares in Toronto Stock Exchange-listed Touchstone Exploration (TSX: TXP). This is despite the wider Aim oil and gas sector retreating a miserable 20 per cent over the past six months,” he said.
Gallagher attributed these developments to changes to T&T tax regime which include cost recovery measures as well as exploration and development tax breaks designed to reward companies seeking to increase onshore oil production. He said: “Reductions in royalty rates have also been successfully negotiated on a case-by-case basis.
At the same time, there has been early progress toward redeveloping major onshore oil fields previously operated by the likes of Texaco and state-owned Petrotrin. Onshore fields have largely been left alone for the past 40 years but rising oil prices, technological advances and the proposed changes to Trinidad’s tax regime have caused oil executives to look at them with fresh eyes.
The analyst said key issue facing T&T’s energy sector is that, just like in the UK North Sea, oil and gas production has dramatically declined over the past decade as new discoveries have failed to keep pace with depleting reserves. “While it will undoubtedly take time for the new stimulus measures to take full effect, they have already spurred several Aim-traded oil juniors to ramp up drilling. As a result, hydrocarbon production on the islands should quickly increase,” Gallagher said.
He said investors are excited by Leni’s flagship Goudron field which still has “about 100 old, inactive or poorly producing wells on site, along with decent enough infrastructure and direct access to an export pipeline.”
“By reactivating previously shut-in wells, completing well work-overs and using new equipment, Leni has grown production from around 40 barrels of oil per day (bopd) in 2012 to a high of 388 bopd in October 2013. Eventually, it hopes to unlock further reserves using more expensive enhanced recovery techniques such as waterflooding.” He said Range Resources has been focusing its efforts on Trinidad where the company is the largest private onshore acreage holder.
“Like Leni, its flagship Morne Diablo, South Quarry, and Beach Marcelle properties are old onshore fields that have been producing on and off since the early 1900s; their current output is a meagre 630 bopd from around 165 producing wells, mainly in the Lower, Middle or Upper Cruse formations. “Field improvements on existing assets should continue to boost production incrementally, but a step-change in production will likely come from two planned activities: drilling new wells or implementing a wide-reaching waterflooding programme.”
Gallagher also noted exploration activities by Touchstone Exploration and Trinity Exploration & Production He said: “The new fiscal incentives in Trinidad should make it more profitable to develop small oil and gas fields on the island. We expect drilling activity to continue to ramp up and the recent positive share price momentum to continue.”