After a year highlighted by an Ibis Deep failure, a Ryder
Scott Hydrocarbon audit which put reserves to production
ratio at 12 years and a general consensus among energy executives
that the Government needs to review its tax and fiscal incentives,
the energy industry is once again regaining momentum.
Maybe it has to do with natural gas discoveries offshore
Tobago and the North Coast by Petro-Canada and Canada Superior
Or maybe it was Energy Minister Conrad Enills detailed
agenda which he presented to energy executives at an energy
luncheon hosted by BG T&T at the Hyatt Regency Trinidad
hotel, Wrightson Road, Port-of-Spain, two weeks ago.
When energy executives gathered at the Hilton on Monday
and Tuesday for the South Chambers Petroleum Conference
to discuss the Future of Energy, the general
mood was one of optimism.
Enill first outlined his agenda which included:
n A new bid round scheduled for shallow blocks in the North
Coast Marine Area and South East Coast Area in late 2008
and for the Deep Atlantic in 2009.
n The establishment of an integrated oil company
n The establishment of a Natural Gas Governance Framework
n The continued focus by the National Energy Corporations
to develop its industrial estates and port facilities funded
by the State
n Review of its fiscal regime
n An oil audit
n An updated gas audit
It was comprehensive enough.
Enill, who has consistently maintained that the Ryder Scott
audit was just a guide to manage the countrys energy
future, was pleased with Petro-Canadas and Canada
T&T also got a pat on the back from Richard Hurburt,
Minister of Energy of Nova Scotia, Canada, for its incentives
for local content and its subsidised education to create
a well-educated workforce.
course, a well-educated local workforce is the key to a
strong local market. That is a commitment T&T has clearly
made, starting programmes like Petroleum Geoscience at the
University of the West Indies and creating the University
of T&T in 2004 to build talent in the energy sector,
But it was South Chamber president Rampersad Motilal who
added a touch of sobriety.
stock market needs energy listings
development of LNG (liquefied natural gas) spurred on by
the extremely successful gas exploration and development
programmes of the past two decades has resulted in a world-class
LNG industry here in T&T.
our limited proven natural gas resource pool and over 54
per cent of gas produced being utilised by this sector,
we must now examine whether LNG in our current portfolio
has also reached or exceeded its proportional limit,
Delving further into the job creation potential of metal
industries, Motilal noted that T&Ts success has
raised questions about sustainability given limited gas
addition, with industrialisation comes other concerns such
as environmental and social issues. The challenge for all
stakeholders will be to find the appropriate balance,
He noted that in 2008 demand for natural gas is expected
to rise marginally at 4.1 billion cubic feet a day (bcfd).
By the end of 2010 the demand will rise to 4.7 bcfd as the
four new projects which are currently under construction
come on stream: MTHLs AUM Complex, Essar Steel, Alutrint
and Petrotrins Gas to Liquids plant.
existing stock of petrochemical plants is relatively new
or well-maintained and one can only assume that the owners
will look forward to stable operations over the next 20
years. When LNG is included, we will require approximately
34 trillion cubic feet (tcf) of gas for stable operations
over the next 20 years. If a lesser horizon of 15 years
is considered we will still require approximately 25 tcf
of gas to satisfy industry, he said.
Viewed from this perspective, one can well understand the
urgency to stimulate exploration activities, he said.
And while the Government is re-examining the fiscal regime
this cannot come too soon given our limited proven
reserves and the changing characteristics of the sector
which now includes maturing assets, smaller gas fields and
deep water interests.
He called on the Government to consider the plight of farmed-out
wells which today face rising costs, royalties and payment
to bonuses to the Ministry of Energy such that they are
under threat of becoming uneconomic.
Motilal pointed out that there was a noticeable absence
of energy companies on the local stock exchange.
wish to encourage the Government to establish the appropriate
framework of local energy industries to be placed on the
local stock exchange so that citizens can participate directly
in sharing the risk and the rewards of the energy sector.
can be a useful mechanism for the divesting of mature assets
which may no longer meet the returns criteria of larger
players but could still be profitable to a smaller, publicly-traded
company, he said.
Then there was Central Bank Governor Ewart Williams admitting
that the countrys inflation rate, now at ten per cent,
was a symptom of the Dutch Disease.
Williams said, While the factors behind the increase
in inflation are many, at least two of them could be traced
back to the buoyancy of the energy sector. These are:
the expansion in domestic demand in the context of capacity
constraints (reflected in the public utilities, the transportation
sector, etc) and
sluggish agricultural production, as farm incomes stagnate
relative to other non-farm incomes.
He said that, as a result, fiscal policy provides special
challenges for natural resource-based economies.
oil revenues provide these governments with the opportunity
to increase public spending on priority economic and social
goals. However, the fortunate governments are faced with
the trade-off between pressing developmental needs and the
limits of the countrys institutional and absorptive
capacity, he said.
A successful history in oil production
Raphael John Lall
Vice president, business development at the National Energy
Corporation (NEC), Andrew Jupiter, has said that Trinidad
has had an illustrious history in the energy sector over
the last 100 years.
Jupiter was making a presentation at the South Trinidad
Chamber of Industry and Commerces (STCIC) Petroleum
Conference at the Hilton Trinidad and Conference Centre,
St Anns on Tuesday.
Jupiter walked the audience through the 100 years of oil
production in T&T.
He said that Merrimac Company drilled the first oil well
in La Brea in 1857.
However, it was not until 1908-1910 that commercial oil
Shells first commercial well was drilled in Point
Fortin in 1912.
1911 we had the first shipment of oil from Brighton. In
this context the operation at Brighton can be considered
as the first commercial well in the western hemisphere.
Jupiter said in 1913 Shell entered into a very unstable
Shell entered, they met a very unwilling and untrained workforce
and met with malaria and yellow fever. That was the challenge
and they conquered all.
He said that by 1916 there were two refineries, one in Point
Fortin and a smaller one in Tabaquite.
In the same year the worlds first recycling system
was used in the oilfield in Tabaquite.
He said this put T&T in a very strong position in the
world oil market during the early 20th century.
was the worlds eleventh largest oil producer... ahead
He said by the pre-World War Two period T&T had entered
a period of industrial unrest which shook up the oil industry.
Tuber Uriah Butler led protests for better working conditions
in the oilfields which led to his imprisonment by the then
Jupiter said things improved after the war and in 1954 the
Soldado field was discovered in the Gulf of Paria.
He said 1960 was a pivotal year which saw the birth of the
Organisation of Petroleum Exporting Countries.
In 1961, the first exploratory well was drilled off the
The post-Independence period saw the nationalisation of
a large part of the energy sector.
saw the acquisition of Shell, the birth of Trintoc...1972
saw the formation of the National Petroleum Marketing Company,
1975 saw the birth of the National Gas Company.
He said the 1985 to 1998 period saw the return of involvement
of the private sector in the energy sector in a large way.
Jupiter said the history of energy in T&T has been a
successful one and it is up to the Government, academia
and industry to work together for the future good of the