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‘All the gas that T&T needs’

Thursday, June 7, 2018

Prime Minister Dr Keith Rowley made a significant announcement about the energy sector which could have far reaching economic consequences for T&T but which, unfortunately, did not receive much news coverage.

On his return from China, Rowley said the Government had all but reached agreement with BHP Billiton to fast-track its 5 trillion cubic feet natural gas discovery with a view to solving the natural gas curtailment that has significantly hurt the country’s downstream and LNG sector, causing billions of dollars in lost revenue.

For those who do not know, a 5 tcf field is enough to support one LNG train (plant) for 20 years, or six methanol plants for the same period.

The Prime Minister said Cabinet is considering ways to have the field off the east coast developed as a matter of priority.

“What we are discussing—and its close to conclusion—is because of the country’s need for gas at this time. We can’t follow the same template we used to before, which is you have an exploration programme and you go and test here and test there and you see what is good and what is not good, but that is all exploration.

“We want to move from exploration to production as quickly as possible because we are not producing as much gas as we consume bearing in mind the number of plants we have on the ground,” Rowley said.

“What we discussed with BHP is to change the production sharing contract arrangements that we have now and not focus solely on exploration in the area where we have already seen success, but to remodel our contracts so that BHP can move very quickly into development of the Le Clerc wells.”

Rowley sought to explain further that what he was talking about is development of the Le Clerc prospects rather than immediately further exploring the block.

“So that the gas that has been found at Le Clerc can be brought to market as quickly as possible. The company has agreed to do that and so we are going to have to work out the technical details. These are very technical and legal matters and we are very advanced in those discussions and we are told in anticipation of the conclusion of those discussions with the government there are rigs on the way to delineate the Le Clerc field and to move as quickly from the Le Clerc field to go from exploration to production.”

Le Clerc is the first deepwater discovery in the Caribbean and is mainly natural gas although it is thought that there will be discovery of more condensate and black crude.

The announcement could mean that all the plants on the ground may be able to operate at their name plate capacity. This is particularly important in the context of gas utilisation which shows that the country continues to be hurt by contracts that do not ensure the gas goes to where it gets the highest reward in a curtailment situation.

Numbers from the Ministry of Energy demonstrate that while for the first quarter of 2018 the country’s gas production averaged 3.768 billion cubic feet per day, actual gas available for use in the mid and downstream sectors was 3.469 bcf/d.

In other words, 300 mmscf/d was used to re-inject into oil wells and was not available for use to make methanol and ammonia which brings more revenue to the country than LNG.

The figures show that LNG accounts for a whopping 58 per cent of the gas consumed while, according to the 2016 EITI report, returns less than ammonia and methanol which use 30 per cent of gas and returns almost twice that of LNG.

The Prime Minister recognised the dire situation noting that the soon to come onstream petrochemical plant in La Brea could be without gas if new sources are not developed. The Mitsubishi/Massy/NGC plant is the only investment in the petrochemical sector for almost ten years.

“We have a new plant coming in which will have a consumption of gas which we do not now have, so we have to move quickly to ensure that when that plant comes on towards the end of next year, that there is gas for that plant, otherwise the whole investment into that plant would have been a non-starter,” Dr Rowley said.

If it works out, most experts believe Le Clerc could add close to one billion cubic feet per day to the domestic production and maybe finally allow the downstream and Atlantic to get the gas they need and bring some much needed revenues to the country.


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