Big gas find off T&T won't satisfy demand: Expert

A Canadian energy company operating in Trinidad and Tobago on Wednesday announced a “significant” gas discovery in one of its offshore drilling platforms. It’s the second major discovery this year by Superior Energy Inc and its partners in the “Bounty” exploration well located in the “Intrepid” Block 5(c) approximately 60 miles off the east coast of Trinidad.

The news pushed up shares in the Calgary-based energy company by 19 per cent on the Toronto Stock Exchange.

Chairman Greg Noval said, “We are very pleased with the results of the ‘Bounty’ well and production testing indicates that we have drilled one of the best natural gas wells offshore Trinidad.”

The company said in a statement that initial test results indicate that the “Bounty” well is capable of producing “at a rate of approximately 200 million metric cubic feet per day (mmcf/d) from this high pressure zone.”

It said the results from the “Bounty” well and “interpretations of extensive 3-D seismic data and other data indicate a natural gas resource potential of up to 2.6 trillion cubic feet (TCF) of natural gas from the tested structure.”

Superior Energy said the gas find presents “tremendous opportunities…in the oil and gas industry in Trinidad and Tobago.”

That would be good news for Trinidad and Tobago if all the factors point to a reliable long-term supply to fuel much of the emerging energy-based enterprises in the country.

But one expert has told Jyoti Communication that gas supplies are not going to last as long as officials estimate.

At a recent media briefing to discuss the findings of the Ryder Scott report for the year ending December 2007 experts presented an upbeat and optimistic picture of the energy sector with respect to proven gas reserves.

Senior government minister Conrad Enill told the media he was very pleased with the data, noting, “We could not have expected a better result.”

The consensus from the experts was that the ratio of reserves to production means that the country can expect gas supplies to be constant and stable for the next 13 years.

That projection is based on proven reserves of 17 TCF (Trillion Cubic Feet), with a daily use of over 4.0 BCF (Billion Cubic Feet) per day. That works out to be annual natural gas usage of 1.46 TCF.

But the math doesn’t add up based on the official figures since 17 divided by 1.46 equals 11.6 years.

“This should not be taken to mean that there is any abundance of gas around relative to our consumption, and the reserves to production is certainly not 13,” the expert said noting that any gas or oil reservoir starts to decline long before it is exhausted.

“Hence long before the 11.6 years have passed, if we do not confirm more proven reserves, our gas fields will not be able to deliver the gas rate required by industries presently operational in Trinidad.”

He predicted that despite all the optimism, industries that depend on gas for survival would have to begin shutting down within six years unless truly significant new discoveries are made.

If the analysis is correct it means that existing industries cannot have the assurance of 20 years of future gas supply and newer ones like Essar Steel and Alutrint would be in the same predicament.

The analysis raises this fundamental question: if existing industries cannot have the assurance of 20 years of future gas supply, how can this government possibly sign up Essar Steel and Alutrint with this same assurance?

Does it mean the government plans to shut down other industries whose continued existence is not as "attractive" to government as the new kids on the block?

The expert believes that all the new finds from Superior Energy and Petro Canada won’t make much difference to the picture since they would amount to only one year’s supply based on the present consumption rate.

If new projects come on stream, they will add to the demand for gas and the 11.6 years estimates based on official figures would drop even lower.

New areas for exploration are in deep water where any discoveries will be very expensive to produce and have long lead times.

BPTT has cautioned that future discoveries are likely to be smaller, suggesting that the whole gas-based industrialization program could be in deep trouble in less than a decade. That would have a devastating effect on the national economy, which is largely dependent on the energy and industrial sectors.