Saturday, September 23, 2017

‘Future investment opportunity that can’t be ignored’... Tar Sands

businessM-11

Energy Minister Kevin Ramnarine

Mark Fraser


Our Energy and Energy Affairs Minister, Kevin Christian Ramnarine, was strongly urged by me in ‘Energy Insider’ on January 8 this year to move with some haste to decide whether he supported, or opposed, the idea of extracting the very heavy oil resource known as tar sands (think Pitch Lake) in order to add to Trinidad and Tobago’s crude production, which is currently way below its potential.

As far as I am aware, the minister has not yet reacted, one way or the other.

But he can not continue to avoid doing so indefinitely because the lobby for tar sands retrieval is strong, led by one of our distinguished geologists, Herbert (Billy) Sukhu.

The latter has been trying to encourage MEEA to take a stand on the matter for many years but to no avail.

Why? Sukhu’s theory is that the People’s Partnership (PP) government does not relish having to face another environmental issue during its term in office, having had enough controversy over the Point Fortin highway project.

Ironically, while MEEA has displayed little enthusiasm for an initiative that, in time to come, could add between 30,000-50,000 b/d to crude output by Sukhu’s reckoning, its fellow Ministry of Trade, Industry and Investment (MTII), through its InvestTT agency, has.

Indeed, the latter has gone as far as to sign a memorandum of understanding (MOU) with Sukhu’s company, Geominex Resources Ltd, designed, as it says, “to lead InvestTT to facilitate the approval to conduct a full socio-economic and environmental impact assessment on the development of Trinidad and Tobago’s tar sands south of the region of La Brea for the production of crude oil.”

The “comprehensive social, economic and environmental study” would constitute phase one of the process that Sukhu, at least, hopes will, in due course culminate in the green light being given for tar sands retrieval in Trinidad (Tobago doesn’t have any).

The outcome of this phase (the other two, according to the MOU, will be “drilling to define the resource” and “demonstration of the extraction process in a pilot plant”) should go a long way to eliminating Minister Ramnarine’s environmental concerns.

How so?

Because if the results of the study show that there are “fatal environmental flaws,” as Sukhu puts it, then he and the Canadian group collaborating with him, will “pull ourselves out of the project.”

Although the MOU was signed with Sukhu’s own company, Geominex Resources, the tar sands initiative is actually being pursued by another company, Geominex Tcos, in which Geominex Resources holds 20 per cent and Trinidad Canada Oil Sands (the Tcos part), 80 per cent.

The people behind Tcos, Ray Morley and Barry Davis, should be well known to Petrotrin, since it was their former firm, Western Oil Sands, that 14 years ago had its own MOU with the state company for investigating the feasibility of tar sands extraction.

Western Oil Sands actually conducted a coring exercise in the Parrylands/Guapo area. Samples of oil sands were recovered from depths of 550 feet and Western Oil Sands evaluated them in a laboratory in Calgary, Canada. From all accounts, it concluded that an extraction and conversion project could be viable in south Trinidad.

In fact, Petrotrin was actually awarded a licence by the energy ministry in early 2009, to undertake what was described as “exploration” for tar sands deposits. The word “exploration” may be a slight misnomer here, because it implies drilling for a resource that will afterwards flow naturally. Tar sands, of course, don’t flow, they have to be extracted, as in a quarry-type operation but some drilling will have to take place for resource definition purposes, which, as noted, will be phase two in the steps outlined in the MOU with InvestTT, should that be reached.

Western Oil Sands was subsequently sold for about US$6 billion, according to Sukhu, which is presumably why Petrotrin did not proceed any further with tar sands activity. But this means that the people who then established Tcos are very rich indeed and quite capable of funding the Trinidad venture (the social, economic and environmental study is expected to cost around US$15 million, says Sukhu).

It seems odd that MTII, through InvesTT, which is responsible for general investment strategy, would show

more interest than MEEA itself in an initiative that is energy-based.

Sukhu thinks this is because “it sees tar sands as a future investment opportunity that can’t be ignored.”

As conceived, the project is no small potatoes and could eventually end up costing US$5.2 billion by Sukhu’s estimate.

But he is careful to emphasise “there is no project yet and we are not moving forward with developing Trinidad’s tar sands (estimated by MEEA at around 300 million tonnes) at this point in time.”

The result of the phase one study is crucial in this respect, since it will enable Geominex Tcos “to make informed decisions and put in place formal and structured outputs.”

Sukhu explains the phase one assessment will involve “looking at the impact, environmentally, of the tar sands and its immediate and surrounding environment. The impact, really, would be a small footprint mining operation.”

Geominex Tcos will adopt the “progressive restoration model” if it gets into actual extraction. “It will be a strip mining operation,” Sukhu explains. “A small footprint model where we will strip certain areas, extract the usable tar sands and fill back the waste material.”

Tar sands projects elsewhere, such as in Canada, have received a bad press because of the earlier processes employed but Sukhu is anxious to stress that what he and his colleagues are proposing is a much more environmentally friendly approach.

“We do not intend to use the Clarke hot water process but to apply small footprint mining, tailings that are dry, with no water in the product, nor any traces of benign components. It will be a proprietary solvent process and a proprietary retort process.”

It may or may not, help carry the project forward to an eventual positive decision but the Canadian government itself has weighed in on the side of Geominex Tcos.

The former Canadian High Commissioner to Trinidad and Tobago, Karen L McDonald, had written to Prime Minister Kamla Persad-Bissessar in mid 2012, speaking favourably of the Canadian-TT company’s credentials, pointing out “this innovative project for the mineral exploitation, extraction and processing of Trinidad and Tobago’s tar sands would have an estimated total life span of 50 years and create 2,500 technical and semi-skilled fulltime jobs.”

We shall see, in due course, whether this gentle diplomatic pressure has any chance of bearing fruit.



David Renwick was awarded the Hummingbird Medal (Gold) in 2008 for the development of energy journalism in Trinidad and Tobago.