Bad weather and ‘usual construction delays’ are being blamed for the two-week delay in first gas flowing from Touchstone’s Coho discovery which has now been pushed back to the middle of June, according to Paul Baay, the company’s Chief Executive Officer.
In an interview with the Business Guardian, Bay was asked if Touchstone will meet its proposed date to deliver natural gas to the National Gas Company (NGC) of May 30. He said, “We are not. We are probably going to be a couple weeks late. We are shooting for around the June 14 or 15.”
Once gas starts flowing from Coho it will be the first on land natural gas development since the then British Gas started producing from its Central Block.
Initially the gas coming from Touchstone will only by 10 million standard cubic feet per day (mmscf/d) but that is expected to be ramped up to 100 mmscf/d by the time it brings on its Cascadura development by the end of 2022.
“The next facility coming on, we’re looking at October and that will start at 60mmscf/d and should get to 90mmscf/d by the end of the year, that combined with the 10 mmscf/d that’s coming on in the next two to three weeks will get us to the 100mmscf/d,” Baay added.
This will be welcomed news for the country which is in dire need of natural gas and when it is fully ramped up in 2023 could provide enough gas for half of the country’s requirement for electricity generation. It must be noted this is a new development and will be a net addition to the country’s oil and gas production.
Baay explained that Touchstone is awaiting environmental clearance and when that occurs he is hoping the production out of its Ortoire block will get to as high as 200 mmscf/d, with sustained production over three to five years of at least 150mmscf/d.
“We are only bringing on the first two wells at our Cascadura, that’s 90mmscf/d. We are in the midst of putting in an application for an environmental impact assessment which should come down in a little while, which should allow us to drill eight more wells and those wells should allow us to add another 100 mmscf/d. That should take us to about 200mmscf/d. But certainly we can maintain at 150mmscf/d,” he said.
Touchstone’s CEO is hoping the company gets is environmental clearance soon and expects to drill the wells in early 2023 and have the additional gas by the end of 2023.
He said, “Basically the ideas is to get up to that 180/200 mmscf/d and then basically what you have after that is we just drill to fill.”
What price will NGC
pay for Touchstone gas?
But while the shortage of natural gas is a major issue, so too is the issue of price. Baay said the price negotiated with the NGC was not as high as gas is being sold for at the moment, with no clause linking it to commodity prices like ammonia and methanol.
“We have negotiated a price, we can’t disclose this because of confidentiality agreements but yes we have negotiated a price.....Well it was negotiated during Covid so it is certainly lower than the gas price we are seeing right now, but that was the deal and that’s the benefit of a long-term price that you get. You get the certainty of the fixed price over four or five years, which is important to us, because we got a lot of capital to spend, so it allows us to budget for that capital.”
Not only will the country benefit from more gas but it is rich in liquids leading to higher crude production via 2,000 barrels of condensate a day and more opportunities for TTNGL.Asked about the Royston discovery which is light sweet crude oil, Baay noted that the company needed the funds from its gas production to drill out the oil discovery.
“If we could, we would like to drill it right away, but we want to wait until we got the gas on production before we move the rig. Just because we need that capital. We need revenue from the gas side to help us drill the oil side,” said Baay.
He added, “We think over the next couple of years we should be able to get at least 5,000 bo/d. If combined with the condensate and oil it will take us to 7,000 bo/d.”
In an interview earlier this year Baay told the Business Guardian, “If you look at Penal block, it has produced over 100 million barrels of oil, and this is 1938 and it is basically a look alike to what we found at Royston, like similar depths, similar type of crude, so I am not sure people fully understand how significant the Royston discovery was.”
He was asked about the extent of the faulting in the area which has made T&T notorious in its inability to recover a lot of the oil it has discovered with rates that range between five per cent and 10 per cent on-land and offshore between 15 and 20 per cent, when the global standard is often over 40 per cent.
“There is, and that is one of the beauties that we have of the seismic. We have got really good resolution on it, there are some big faults but that structure overall, it’s kind of the same, again if you look at Penal/Barrackpore it is split into, call it seven different fields, but it is still all in that same horizon, in that same geology structure.
Royston may end up being that way where it is five or six different fields but where it is overall the oil we have encountered both in the overthrust and in the intermediate sheet are just fantastic, its beautiful low 38 Api oil, there is a huge development play on it, when I say hundreds of millions of barrels, that’s oil in place so whether you want to put a 5 or 10 or 20 per cent recovery factor on it, it kind of gives you a recovery factor,” he added.
Jobs being created
Baay said the development will lead to jobs being created in the Rio Claro area with opportunities for operating both the Coho facility and the Cascadura facility. There will also be a need for security services, maintenance and operation.
Baay estimates at least 28 people will be employed.