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Experts: Future in smaller gas pools
The recent signing of a gas sales agreement between the National Gas Company and DeNevo Energy has, once again, raised the issue of small pools of gas and whether the larger companies are doing the country a disservice by not developing them.
For sure, it makes economic sense for the large companies like bpTT and Shell, because of their cost structure, to go after their biggest prospects, often over one trillion cubic feet of gas. But, in doing so, is there room for smaller, nimble players like DeNovo to come in and produce the smaller pools and, in the process, help end the present natural gas shortage and even provide room for further expansion of the downstream sector?
The NGC seems to think so and in the latest edition of its magazine it said working in collaboration with the Ministry of Energy and Energy Industries (MEEI), NGC undertook a feasibility study of small pools and marginal fields. This study was the first phase in the larger project of getting these fields brought into production. It was completed in the second quarter of 2018.
“Based on the team’s preliminary analysis, it was estimated that some of these fields or small pools could be brought on stream as early as 2019/2020 if conditions favour their development. That is, with timely investment decisions and approvals, more thorough field evaluation and prompt mobilisation, T&T could start receiving gas from select small pools and marginal fields in the near term” the report read.
NGC describes marginal fields as fields that may be considered uneconomic or just marginally economically positive under current fiscal terms.
For years, an energy consultant has railed against what he has seen as companies holding on to acreage and not developing them in the timeframe and the spirit of the licenses because of their lack of interested in smaller pools of gas.
Helena Innis, also an energy consultant and who was once responsible for the selection and award of blocks, said she believes that the smaller pools can and will be developed if there is a market for the gas.
She told Business and Money, “First of all I never consider any gas in T&T as stranded. It is a question of ownership of facilities to develop these smaller pools in which the largest companies have no interest but controls the infrastructure. I have said in another forum that I think the law/PSC should be amended to read that as soon as the capital costs for facilities are recovered or written off against taxes that the State should be able to have a 20 per cent use of the production facilities. This should enable the development of small pools of gas close to these facilities. These pools of gas should be awarded to interested parties who would partner with a local entity.”
Innis is convinced that there are many credible companies with the capacity to come in and produce the gas. She said the strength is that the gas is already proven and there will be little infrastructure cost. Therefore as long as a market exists for the gas there will be interest. She thinks, however, part of the cost of doing business would be keeping enough gas behind pipe to service the market in case of unexpected disruptions.
Innis said she expected more companies to do what the Proman Group was able to pursue, that is, having significant investment downstream and, therefore, a ready market for gas to then go upstream and develop it.
“Repsol did that. They came in to Trinidad in the LNG market and then proceeded upstream so it’s not a new model. If you follow Amoco’s path, they developed the downstream market and then went on a prolonged exploration campaign to find gas. It all comes back to the fact that for gas to be commercialised there must be a market. Examine what happened to Centrica,” Innis said.
Centrica was unable to bring its gas to market and has since sold its assets to Shell Trinidad.
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