Trinidad & Tobago - Oil & Gas
Trinidad’s natural gas sources are drying up. The country is exporting less and less. The energy sector accounts for around on third of the country’s GDP. Although it is no longer the top natural gas exporter to the US, Trinidad and Tobago remained the top liquefied natural gas (LNG) supplier. There is natural gas under the Gulf of Paria between Trinidad and Venezuela's eastern coast. All it takes to sort of ensure that Trinidad is an LNG and methanol producer for the long, long term is for those two countries to strike a deal. Those reserves are not being developed.
T&T's proved reserves have been falling over the last 15 years. T&T's proved gas reserves are at 13 Tcf, down from a peak of 26 Tcf in 2006, according to U.S. Energy Information Administration data. That leaves just 8.6 years left of production, given T&T's 2013 production rate. Production has plateaued in the last four years, running between nearly 1.5 and 1.511 Tcf three of the last four years. Trinidad and Tobago has been involved in the petroleum sector for over one hundred years undertaking considerable oil and gas exploration activity on land and in shallow water with cumulative production totaling over three (3) billion barrels of oil. As the largest oil and natural gas producer in the Caribbean, Trinidad and Tobago’s hydrocarbon sector moved from an oil dominant to a mostly natural gas based sector in the early 1990s.
Trinidad’s production of LNG was down 7 percent in 2015 to 28.9 million cubic meters when compared to the year before. The United States (US) has traditionally relied on imports for its natural gas needs. Emerging shale gas production has brought prices down, encouraging the revival of some idled ammonia and methanol plants and the construction of new facilities that will commence operation over the next few years. This represents a threat that can negatively impact Trinidad and Tobago’s traditional gas markets in the US.
Liquefied Natural Gas (LNG) is simply natural gas in its liquid form, and continues to be the most economical way to move natural gas from key production areas to importing countries. LNG tankers are built with heavily insulated tanks to maintain the LNG at -161 degrees Celsius. The LNG which evaporates during the voyage is compressed and used as fuel to propel the carrier.
Converting natural gas to a liquid reduces its volume by around 600 to 1, making it much easier and economical to transport over large distances and store in large quantities. It is also an economical alternative to piped gas (natural gas transported from its country of origin through pipelines), and a convenient way to get gas to countries which do not have access to gas pipelines. Since LNG occupies only one-six hundredth (1/600) of the volume of natural gas, and takes up less space, it is more economical to transport over large distances and can be stored in larger quantities. As a result, gas importing countries can flexibly source energy from a large number of gas producing countries.
The presence of oil in quantities in Trinidad had been suspected for many years. The existence of petroleum deposits in Trinidad had long been recognized. As far back as 1864 the Trinidad Petroleum Co., promoted by Mr. H.B.Sheridan and the 11th Earl of Dundonald, started drilling for oil at La Brea. Oil was struck, but competition with the new oilfields in the United States proved too formidable, and this and other causes forced the company into liquidation. Two years later, a civil engineer, named Derwent, started boring at Aripero. He too struck oil, but failed to make a financial success of the venture.
No further steps were taken toward winning oil until about 1900, when Mr. Randolph Rust, a local resident (Mayor of Port of Spain in 1921), imported modern oil-boring machinery and successfully struck oil at Aripero in 1901. Early in the 20th century the government undertook a geological survey to determine the probabilities of an industry. This survey revealed the presence of a series of anticlines at payable depths in the southern division of the island, and experimental borings by three companies at La Brea and Point Fortin in the south-west and Guayaguayare in the south-east proved the presence of oil in large quantities.
In 1910 the commercial exploitation of Trinidad oil was being rapidly pushed forward. Other prospectors came on the scene, and in 1910 followed the success of the Trinidad oilfields, and Trinidad enjoyed such a boom as no West Indian colony had experienced, at any rate for many a long day.
Atlantic was often described as “The Trinidad Model”, which referred to the unique partnership between four energy majors and the Government of Trinidad and Tobago to form an LNG company. The Model was unique too in its objective to target two dedicated primary markets at that time: the US East Coast and Spain, capitalising on Trinidad and Tobago’s geographic proximity to these markets and therefore competitive delivery costs.
On July 20, 1995, the company known as Atlantic LNG Company of Trinidad and Tobago was formed. The Cabot Corporation and the National Gas Company of Trinidad and Tobago (NGC) purchased equal shares in the company – 10% each. Initially the shares between AMOCO and BG constituted 80% of the total shares offered – with AMOCO claiming 46% and BG claiming 34%. With the entrance of Repsol, in late 1995, the distribution of shares at the end of the final negotiations saw AMOCO with 34%, BG with 26%, Repsol with 20% and 10% each for Cabot and NGC. Bechtel was selected as the Engineering, Procurement and Construction (EPC) contractor for the LNG plant. Cabot signed a 20-year sales contract to purchase LNG, while AMOCO Trinidad Oil Company, signed a 20-year supply agreement.
The original scope was for a single LNG train on reclaimed land in Point Fortin. Construction of the Atlantic LNG plant began in July 1996 and Train 1 was completed in 1999, with Atlantic shipping its first LNG cargo to Boston in May, 1999. Almost immediately after the plant began processing LNG, the company’s shareholders were once again in negotiations for an expansion of the plant to include two additional trains. On March 13, 2000, the Government of Trinidad and Tobago and Atlantic LNG signed an agreement, paving the way for a two-train expansion. It was a major capacity upgrade with Trains 2 and 3 boasting LNG output of 3.3mtpa and 6,000 bpd of NGLs. Train 2’s first loading was on August 12, 2002 and Train 3’s was on April 28, 2003.
In 2003, construction began on a fourth train, and Train 4 was completed in December 2005 – the largest train in the world at the time. With an LNG capacity of 5.2 mtpa and 12,000 bpd of NGLs, Train 4 was designed to solidify Trinidad and Tobago’s position as the largest exporter of LNG to the USA.
Today, the facility’s total production capacity is 15 mtpa. Over the years, there have been shifts in ownership. The company is owned by BP, Shell, China’s sovereign wealth fund CIC unit Summer Soca and Trinidad’s state-owned company NGC. On September 22, 2010, the company launched a new corporate identity, moving from Atlantic LNG Company of Trinidad and Tobago, to Atlantic, in recognition of a role not only as a global LNG producer, but as a corporate entity committed to creating sustainable opportunities for Trinidad and Tobago.
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