Energy and Energy Related Industries
October 19th, 2020
Writer: Kay Baldeosingh-Arjune
NGC President Mark Loquan is cautiously optimistic of improvements in the not too distant future, and that the many significant positive developments taking place in energy will boost investor confidence and ensure a bright future for the industry.
Notwithstanding this optimism, it is given with the presumption that there are no unforeseen production and reliability issues in existing fields which could result in higher decline rates, and that the planned development projects are delivered on time and achieve their desired production targets.
Loquan noted that the supply side issues that were negatively impacting the sector over the last decade certainly have changed over the last few years with developments announced and being executed for future supply to maintain stability. In addition, he is heartened by the positive degree of communication, co-ordination and collaboration that has been taking place among stakeholders, made necessary because of COVID-19 and the lockdown, and he is optimistic that this will carry forward as the industry plans for the future.
Pre-COVID Challenges…Adjusting to a New World
The world has changed in recent years, with a number of market factors, both pre and post-COVID, impacting the domestic oil and gas industry, Loquan said. These include the rise of shale oil; the change in markets for local LNG, ammonia and methanol to more distant Asian customers; the emergence of new international energy players; increased global production which has driven prices sharply down for oil, gas and associated commodities; tight and more expensive domestic gas supply as a result of depleting reserves; and a lack of timely investment in exploration and production.
“The collective outcome of these factors has been reduced margins and challenged economics for energy producers, NGC as aggregator, and downstream companies – which has an overall impact on the country’s revenues that depend on rents from the sector, causing NGC to rethink value across the entire gas value chain and opportunities regionally and internationally.” Loquan said.
Big Investments…Big Opportunities
But industry and investor confidence have been reinvigorated with announcement after announcement of new finds, new contracts and new initiatives. “It remains heartening for the local energy sector that there has been little change in execution of developments by the upstream producers in the last 12 months regarding their planned upstream investment and development activities. New projects were sanctioned such as Block 3(a) Ruby Development (NGC having 11.41% participating interest) in August 2019 and Shell’s Block 5(c) Barracuda Development in February 2020, and corresponding commercial agreements were signed, which augurs well for the sustainability of the local energy,” Loquan said.
Other significant developments include:
- BPTT’s announcement in December 2019 of a gas discovery in the Ginger exploration well off Trinidad’s southeast coast, as well as commencement of work on its Cassia compression and Matapal projects which were both sanctioned in 2018;
- Touchstone Exploration’s announcement of a significant hydrocarbon discovery in the Ortoire block onshore Trinidad in September 2019;
- In January 2020, the National Energy Corporation (National Energy) launched its ttEngage Online Investor Platform, a one-stop shop for investors, where potential investors can submit project ideas, access pertinent information and be guided through the approval process in real time from anywhere in the world;
- National Energy opened an office in Guyana in 2019, providing an avenue for greater co-operation, and strategically positioning T&T to provide logistical services to Guyana and Suriname’s burgeoning energy industries;
- Commencement in June 2020 by the Ministry of Energy and Energy Industries (MEEI) of a vital Gas Value Chain Study A number of green initiatives in various stages of implementation.
Greater use of technology, more synergies, stronger relationships and improved energy efficiency are some of the defining characteristics of the New Normal created by COVID-19, according to the NGC President. Across the industry, “I think we went into a very responsive and responsible mode of sharing information coherently,” Loquan noted. “During this challenging time, I would like to thank the people in the control rooms and all employees and contractors who faced the situation and continued to be innovative and adaptable to new protocols to reduce risk,” he added.
While the energy sector has always been the leader in adopting technology, COVID has accelerated the pace and Loquan believes many of those changes are here to stay, including negotiations via online platforms, virtual employee meetings, use of AI to collect data from the field, and using all these technologies to make decisions real time. “The thrust to cleaner fuels and a green agenda is part of the new normal,” he added. “It’s quite a different world, where we can play our own part.”
Value Chain Analysis
One of the most significant initiatives that NGC and the industry keenly await is a Gas Value Chain Review commissioned by the MEEI that commenced in June 2020 and which Loquan described as “absolutely critical for the future of the energy sector.”
He explained: “NGC, located across the gas value chain, saw the significant challenges and concerns raised by the upstream producers and the downstream sector and strongly advocated for a long range energy sector gas value chain review, to develop a plan for the maximisation of value to the country from its gas resources and its gas-based industries.”
Stressing that “clean energy must be a front-burner priority for the country,” Loquan said: “Renewable energy and energy efficiency present important opportunities for us to reduce our national carbon footprint and to divert natural gas away from power generation into more productive economic and unsubsidised activity.”
Green projects underway or in the pipeline in 2020 include:
- An NGC EnergySmarTT app – a new green energy app launched in June 2020 that enables consumers to measure their energy consumption and carbon footprint and assess energy efficient and renewable alternatives;
- A pilot SuperESCO project to help downstream companies audit their energy consumption patterns and implement fixes to make their operations more efficient. The outcomes of this pilot will inform a broader project across the Light Industrial and Commercial sector;
- An NGC project to measure and reduce methane emissions throughout its pipeline infrastructure using infrared cameras and working with the University of Trinidad and Tobago;
- The conduct of feasibility studies by National Energy for a commercial-scale wind farm and solar photovoltaic (PV) manufacturing facility;
- A feasibility study involving National Energy and the BP/Shell consortium which had won its bid for two solar projects that will generate 92.2 MW of electricity from solar PV sources “at a cost on par with the current electricity prices in T&T.”