warning to the wise
Like every national of Trinidad and Tobago, we were happy to learn last week that bpTT struck a new gas find that is estimated to hold one trillion cubic feet (tcf) of natural gas. When this strike is added to Trinmar's discovery of an estimated 48 million barrels of light crude in the Soldado field last March, and Bayfield striking 32 million barrels of oil and 69 billion cubic feet (bcf) of gas, one could say that 2012 has not been a bad year for the exploration component of the country's' energy sector.
We however hasten to point out that implicit in hailing bpTT's one tcf gas find as "the biggest since 2005" is a major defect in our oil and gas industry—not adding sufficient proved reserves to our dwindling resources. New gas found this year will barely replace the gas utilised over the same period: this country produces and utilises around 1.3 tcf of gas a year. In other words, simply to maintain the 12-year cushion of proved reserves that we have, we need to add at least as much as we utilise every year.
To be fair to successive governments, the shortfall in new gas (and oil) discoveries over the past decade has not been for want of trying. Almost every year, sometimes several times a year, government puts up "blocks" for bidding—meaning it invites local and international firms to drill in mainly offshore fields that, based on seismic studies, are believed to hold oil and gas. Often, many "blocks" do not attract bidders. Reality is we are no longer the most attractive hydrocarbons country in the hemisphere. Indeed, many Caribbean countries (Cuba, Barbados, Guyana, Suriname and French Guiana) have wooed exploration companies, although they are yet to make big strikes.
Trinidad and Tobago, with a rich record of successes in all aspects of oil and gas, has little choice but to continue with an aggressive exploration and production programme. The energy sector is our economic lifeline, and there are some worrisome signs that must concern us all. The one tcf find may make for good politicking: in hailing the discovery, the Prime Minister spoke of expanding the downstream energy sector and other government spending that would flow from the find.
She could not be serious. Over the past year, natural gas production has been somewhat erratic, causing several petrochemical plants to operate below their capacities. To add to the production side woes, two weeks ago power generating plants and some downstream users discovered that their gas supplies were contaminated with condensate. The NGC had to undertake a costly exercise to remove the contaminant even as several plants shut down operations.
The PM and Government, through the relevant ministries and agencies, need to rectify these nagging problems before they speak of expansion in the energy sector or spending revenues yet to be earned. We are too mature an oil and gas economy to be making a song-and-dance over the discovery of 1 tcf of gas. In 2011, some 433 tcf of new gas was added to take proved global reserves to 7,335 tcf (BP statistics). Our reserves are around 14 tcf. Given our size and resources, though, we are a big player in the global LNG trade (ranked 6th, with seven per cent of the world market) and in the production and sale of ammonia, methanol and refined oil products.
But we will not retain this enviable status if we do not find substantial new gas, and improve oil production levels soon. Based on current gas production (4.2 bcf/d), government should not even consider new downstream plants. Of immediate concern is ensuring a reliable supply to the existing plants. Government ought to have noted that Methanex, a big operator here, decided to relocate its plant in Chile to the USA because of "gas pains" it suffered in the Latin American country—a warning to the wise.