While Trinidad & Tobago has been struggling to reverse the long-term decline in oil production, with gas production, the struggle has been to maintain the plateau of production after the spectacular increases of the previous decade. This struggle continued in 2014.
The issue of gas supply has been a major topic of conversation at the past four Energy Conferences and will surely be a major discussion point again at the 2015 conference, taking place on 26 – 28 January 2015 at the Hyatt Regency Hotel, Port of Spain.
Overall gas production between January and October 2014 averaged 4,088 mmscf/d, down slightly on the 2013 average of 4,145 mmscf/d. This figure however represented an overall decline of about 6% compared to 2010, before the current period of frequent gas curtailments commenced. What has also been a major concern for the downstream gas customers has been the variability in supply on a day to day basis and the need to cut back production at short notice.
The impact of gas curtailments on the downstream petrochemical producers and on Atlantic has been well documented in the Trinidad & Tobago and international industry media. The impact has included not just the lost production but also increased maintenance costs due to the frequent start-ups and shut-downs of production.
The Minister of Energy and most industry observers expect that the current shortfalls in production are not going to be solved in 2015 and will most likely continue until the Juniper development comes on-stream.
The key objective for the gas industry is to maintain the current high levels of investment into upstream gas production each and every year so that similar problems do not occur in the future. The current low price environment makes this objective all the harder to achieve and Trinidad & Tobago therefore needs to be highly focused on being as competitive as possible, in order to be able to continue to attract direct foreign investment into gas exploration and production.
Given the gas supply problems, the expansion of the Trinidad & Tobago downstream industry and the move into more diversified secondary and tertiary petrochemicals has been moving very slowly over the past few years. The major project on the drawing boards has been the methanol to DME project being undertaken by a consortium of Mitsubishi, Massy and NGC. While work on this project has progressed in 2014, including environmental clearance, there has yet to be an announcement of the final investment decision.
The other new midstream project that has been announced is the Gasfin mid-sized LNG export facility to target the Caribbean market. While there was a lot of discussion in 2014 about gas as the fuel of choice in the Caribbean, including a major Inter-American Development Bank funded study, there is yet to be a final announcement on the Trinidad & Tobago Caribbean LNG project.
Venezuela and cross border gas
There also seemed to be little progress on discussion on cross border gas with Venezuela during 2014, or at least progress that could be shared with the general public. The assumption is that after the agreements reached in 2013, the individual companies involved in the detailed discussions (namely PDVSA, BG and Chevron) will have been quietly negotiating on the specifics of field development plans, but no news has been forthcoming on progress.
The falling oil price has certainly changed the economic and political dynamics in Venezuela. It is yet to be seen how this might influence the cross border gas discussions.
Gas master plan
The gas supply problems that continued through 2014 helped focus attention on the need for a new Gas Master Plan for Trinidad & Tobago. The United Kingdom based Poten and Partners was announced as the firm that would undertake the study and it is anticipated that this plan would be ready by mid-2015. The Gas Master Plan is expected to outline a strategy for the next 10 years for the natural gas sector. The plan will consider critical policy areas including allocation of acreage; development of concepts of deep-water gas, contractual arrangements as well as other key areas. The development of such a plan comes at a crucial time when there is the need for long-term planning and strategizing for the continued development of the natural gas sector.
The Energy Chamber has been closely involved in the conversations around the gas master plan process and we will continue to support the process over the next few months. We anticipate that the discussions at the Energy Conference will provide good and relevant input into the gas mast planning process.