Chief executive officer of the Energy Chamber, Thackwray Driver said he does not expect the first gas to come from the Loran/Manatee field before 2020.
In an interview with the Business Guardian, Driver said that the decision was good news for the country but that it will take some time for first gas to reach Point Fortin. He explained: "I expect that any development will be in the medium-term (5 years) as there are still many commercial agreements that will have to be negotiated, including gas sales contracts and specific field development agreements. The intended purchase of BG by Shell means that there will probably be a new entity entering into the discussions for the first time in 2016. "
Last week, the BG exclusively reported that the Venezuela government has agreed to send some of its portion of the natural gas in the Loran/Manatee cross-border field to T&T to be processed as Liquefied Natural Gas (LNG).
Multiple sources in both Caracas and T&T confirmed that the South American country has decided that it made sense to have the gas liquefied in Point Fortin and last Tuesday a delegation from the Bolivarian Republic led by its new Minister of Oil Eulogio Del Pino met with Prime Minister Keith Rowley and a technical team to provide further impetus to the development.
Dr Driver said the additional gas will ensure that the country has the natural gas to extend the life of the downstream petrochemical sector.
"Obviously it is excellent news for Trinidad & Tobago that the Venezuelan government has indicated its agreement that gas could be exported from Venezuela to Trinidad. This is a major shift in their historical policy and offers an excellent opportunity for Trinidad & Tobago to extend the life of our petrochemical and LNG industries."
In the first five months of 2015 natural gas production averaged 200 million cubic feet a day less than in 2014. For the period January to June 2015, natural gas production stood at 3.8 billion cubic feet per day (bcf/d). In the period period last year, it stood at just over 4 bcf/d.
A further examination of the lower production statistics indicate that the fall in production has been mainly due to lower output from bpTT. In fact, bpTT's production moved from 2.18 bcf/d in January 2015 to 1.85 bcf/d by June this yea, a decline of 18 per cent. In 2014, bpTT averaged natural gas production was 2.165 bcf/d.
To put it in perspective the loss of 200 million cubic feet of natural gas per day is almost all the gas needed to power the entire country on a daily basis. It is also enough to service an ammonia or a methanol plant.
The fall in natural gas production has had a ripple effect on the sector because a reduction in the production does not just mean less money for the government at the wellhead, it also means lower production of other gas-based products.
For the first five month of 2015, LNG production was down by 178 mmcf/d averaging 2 bcf/d down from 2.178 bcf/d in 2014, a decline of 9 per cent. This is a major decision that is likely to lead to either the construction of a new LNG facility in Point Fortin or the redirection of gas from LNG to domestic use. Sources indicate that there is a shortage of between 400 to 600 million cubic feet of natural gas per day and once production is flowing from the Loran/Manatee field that gap will no longer exist.
The Business Guardian has been informed that while no decision has been taken on this issue, the Government is favouring the redirection of the natural gas rather than the further expansion of Atlantic LNG. This, the BG was told, would ensure that the high cost of building a new plant and the length of time it will take for the construction is reduced.
Dr Driver said the decision on whether there should be a new LNG train built or if the gas should go to the existing train was one for the respective Governments, the companies - PDVSA, Chevron, BG and Shell (assuming the purchase goes ahead) � and potential customers in T&T. He said: "I think it is too early to make any firm comment at this time."
According to the CEO of the LNG Chamber, the news also means opportunities for local service companies to do more work on both sides of the border.
As he explained: "It is certainly positive news and does open up the possibilities for further investment in the energy sector, including for energy service companies and contractors based in Trinidad & Tobago who could provide services to a new development in the Plataforma Deltana region."
Negotiations between Venezuela and Trinidad and Tobago have continued for the last 12 years starting in 2003 with the signing of a memorandum followed by five years of technical studies of several reservoirs to determine if they crossed and to what extent they crossed the border.
A framework treaty was then signed and a unit operator selected. The operator is now working on a development plan and after then approvals will have to be sought and the financing determined.