4 months ago

ENERGY Caribbean Yearbook (2013-14)

independents Small and

independents Small and medium-sized petroleum enterprises in Trinidad and Tobago, the “independents”, are expected to play a key role in the revival of oil production. There is no formal definition of an “independent” in terms of assets or reserves, though when companies producing up to 3,500 b/d were exempted from petroleum production levy payment nine years ago, this was generally taken as an indication of independent status. It’s only a rough guide, however, because some “independent” upstreamers are already close to that level or beyond it. A more reliable definition of an independent in the Trinidad and Tobago context might be an operator which is not state-owned, and does not belong to a major international group like BHP Billiton or Repsol (oil), bpTT, BG T&T or EOG Resources (condensate). On that basis, independents were responsible for about 10,241 b/d of crude output on average in 2012, out of 69,062 b/d from all companies (another 12,673 b/d was condensate, taking the liquids total up to 81,735 b/d). Petrotrin’s contribution was 34,818 b/d (oil) from its onshore and offshore fields. Nobody is likely to challenge Petrotrin in the future, unless some major discovery of crude is made in deeper geological horizons or in the deep water. Petrotrin’s dominance is secure, given the extent of its acreage compared with that of the independents. But 10,241 b/d out of 69,062 b/d (almost 15%) is a good performance, when you consider that most of those companies are lifting crude from wells Petrotrin itself abandoned or from very small tracts of farmed-out land. 18 Energy issues A key contribution to oil revival Independents could be pioneers in the application of carbon dioxide (co2) injection for enhanced oil recovery There are about 17 independents active in the local petroleum sector today, occupying different niches. Some are lease operatorships (in 1989 Trintopec Companie independent of all, straddles the whole Countries handed over idle and low-producing wells to smaller independent operators who might do a better job with them). Others are farm-out operators, who have obtained larger areas on which to sink new wells if they want. Joint venture arrangements involve whole blocks, where the independent company is obliged to undertake seismic surveying and exploration. Incremental production service contractors are a new breed invented by Petrotrin in 2009 to help generate more production from its southeastern onshore fields, which had found themselves neglected over the years. There is also one standalone independent, Mora Oil Ventures (Moraven), which only operates offshore, not on land at all, unlike the rest of the independent sector. Trinity, shaping up to be the biggest spectrum, being simultaneously a lease operator, farm-out operator and joint venturer. All knowledgeable observers of the Trinidad and Tobago energy scene expect the independents to enlarge their contribution to crude production in the years ahead. Energy minister Kevin Ramnarine has begun regular meetings with the sector to hear and try to resolve its problems. David Borde, managing director of PetroCom Technologies, the company promoting a “smart pumping” system that could help independents improve well productivity, sees their role in oil revival as “absolutely critical”. Geologist Dr Krishna Persad, a farmout operator through his company KPA and Associates, has just acquired Trinidad Exploration and Development in southwest Trinidad, and strongly believes the independents could be pioneers in the application of carbon dioxide (CO 2 ) injection for enhanced oil recovery. Minister Ramnarine has mandated the National Gas Company to examine the feasibility of a CO 2 pipeline from the Point Lisas industrial estate to the oilfields of the southern basin. Trinity Exploration and Production is aiming for production of 5,000 b/d by the end of 2013. Range Resources is targeting 4,000 b/d, and Touchstone Exploration 3,300 b/d. Independents were responsible for about 10,241 b/d of crude output on average in 2012, out of 69,062 b/d from all companies

Energy climate change issues What should the Caribbean do? Caricom’s 15 member nations have pledged to measure and reduce the level of greenhouse gas emissions in the region, in keeping with the Caricom Energy Policy (CEP). Targets will be influenced by Caricom’s “international obligations and voluntary commitments under the United Nations Framework Convention on Climate Change and the Alliance of Small Island States’ climate change negotiating strategy and objectives.” This initiative is part of the agenda of Caricom’s Caribbean Sustainable Energy Road Map and Strategy (C-SERMS). Determining the baselines for greenhouse gas emissions has become more urgent with global emission levels reaching their highest point in over two million years. Carbon dioxide (CO 2 ) emissions, by far the major contributor to global warming, hit 400 parts per million in May, a jump of 85 ppm in 55 years. The world is now pumping 38.2 billion tons of CO 2 into the Compani atmosphere every year, China being the worst offender with 10 billion. The United States, the second worst offender, has actually been lowering its CO 2 discharges, which are now down to 5.9 billion tons a year. The reasons are said to be the rapid switch to gas-fired power generation and the growth of fuel-efficient vehicles. The 400 ppm reading augurs badly for governments’ goal of holding the rise in average temperature below two degrees Celsius. Beyond that, it is feared that catastrophic warming becomes unstoppable, with all the predicted weather threats such as more intense hurricanes, rising sea levels, floods and drought. The Caribbean, being mainly composed of small island developing states, is more vulnerable to the results of global warming than most. Indeed, according to an Inter-American Development Bank survey, “extreme events” already cost US$135 billion in losses in 14 Caribbean countries between 1970 and 2008. Some hoteliers in the region are seriously thinking of moving to higher ground because their beach locations leave them completely exposed to rising sea levels, flooding and storms. As noted elsewhere in this YEARBOOK, Caricom’s contribution to resisting global warming is to develop renewable energy sources and to use fossil fuels more efficiently. These are the twin pillars on which C-SERMS is mounted. But with the outlook for mitigation so bleak and Caricom’s likely effect on it so minuscule, the region will have to embrace climate change adaptation more vigorously. Countries and Tobago’s Institute of Marine Affairs is Trinidad developing a vulnerability and risk agreement for southwest Tobago based on climate change scenarios. The idea of moving hotels further inland could be one element of adaptation. The CEP focuses on adaptation initiatives in energy, particularly electricity, the key factor in regional states without indigenous oil or natural resources. Hurricanes can cause “catastrophic damage to the overhead transmission and distribution facilities in the region,” CEP points out, urging member states to “support the development and implementation of a regional rapid response strategy for the restoration of electricity facilities.” On the wider energy front, Caricom is supposed to create a plan for “maintaining regional reserves of crude oil and energy products to be accessecy or crisis.” Grenada is among those already seeking assistance from multilateral bodies for climate change adaptation. The German Agency for International Cooperation and the United Nations Development Programme are funding a four-year, US$6.5 million programme to “increase the resilience of vulnerable communities and ecosystems to climate change risks through integrated adaptation approaches.” Contribution to climate change Trinidad and Tobago (2009) • CO 2 emissions per capita • CO 2 emissions per unit of GDP • Total CO 2 emissions • Breakdown: 40 tonnes per person* 1.9 kg per dollar* 52 million tonnes** Petrochemical plants 58% Power generation 23% Landfill 7% Transport 6% Process emissions (oil & gas) 3% Agriculture 2% Domestic cooking 1% * second highest in the world that year ** 54th highest in the world that year Source: Dr Donnie Boodlal, University of Trinidad and Tobago energycaribbean YEARBOOK 2013/14 19

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