bpTT ramps up exploration activity, Atlantic LNG sees opportunities for existing trains

bp Trinidad and Tobago (bpTT) plans  to resume drilling two wells in the country by next July, after a one-year absence.

“We took a time-out from exploration, that will change in 2004,” bpTT’s Chairman and Chief Executive Officer, Robert Riley said at the third IBC Energy Conference on “Oil, Gas and LNG” held earlier this week in Port-of-Spain. “ We expect to begin exploration again in July and will complete two wells before year’s end,” he said. During the one-year absence from drilling, bpTT created the country’s first and largest regional seismic data-set from which all major structures, shallow and deep, can be mapped. Among those also speaking at the two-day conference were Des Norris,  Resident-Manager of the Calgary-based Talisman, and Richard Cape, President of Atlantic LNG who also shared 2004 prospects.

bpTT’s first well will be into the Triana/Chachalaca prospect south of its Mahogany field. The second will be drilled into the Coconut Deep prospect that exists near the Flamboyant Field. The fields are located off the country’s east coast. Riley said exploration activities will continue in 2005 followed by another “time out” to learn from the new wells and replenish its portfolio. bpTT’s oil production has declined slowly over the years and is now being surpassed by gas in barrels-of-oil-equivalent terms. “The shift from oil to gas has brought the company’s hydrocarbon business into greater alignment with the national agenda because of the more sustainable nature of the gas business,” he said.

Over the past three years, bpTT, one of the BP’s global six top profit centres, has doubled gas production to two billion cubic feet per day and has achieved 60 percent growth in crude and condensate production. Riley said growth in Liquified Natural Gas (LNG) drives his company’s gas demand. The Atlantic LNG company of which bpTT is a shareholder is the world’s fifth largest LNG exporter and is currently into its fourth train expansion. bpTT’s total current gas demand of 1.7 billion cubic feet per day is expected to grow to around 2.3 billion cubic feet by the end of 2006. Gas for LNG, supplied by bpTT and which currently stands at 1.2 billion cubic feet per day, is expected to grow to 1.7 billion by the end of 2006.

In terms of oil and gas production, Trinidad and Tobago will add around 365,000 barrels of oil equivalent daily (boed) to the Upstream and this is expected to plateau at over 500,00 barrels of oil equivalent daily with four trains of LNG by the end of 2006. Riley said the long-term nature of gas supply contracts means that the plateau will have to be sustained for many years to come. “Growth options exist to extend the plateau to 600,000 barrels of oil equivalent daily and more by the end of the decade,” said the bpTT chief. Riley said as part of its strategy for satisfying long term gas supply commitments, bpTT’s focus over the last four years has been on the installation of infrastructure for gas delivery.

Talisman’s Des Norris told the conference that the Eastern Venezuelan Basin in which Trinidad lies, has great opportunities for new discoveries using state-of-the-art technology. He referred to two recent world-class onshore discoveries made using state-of-the-art subsurface imaging technology (3D Seismic), which afforded better interpretation of structural setting. He said 3D Seismic has only recently been utilised as an exploration tool to help unravel some of the geological complexity. “Trinidad lies in the prolific Eastern Venezuelan Basin and most explorers believe that the best place to find new hydrocarbons is to look in areas where large fields have already been found. “We at Talisman agree. We also recognise that although exploration is a high risk and high cost activity, it is absolutely essential to increasing hydrocarbon reserves,” Norris said. “ Talisman sees Trinidad, particularly the Eastern Block which it now operates, as a world class opportunity.”

He said Talisman is about to start phase 2 of a 360 sq km low-impact 3D seismic survey in the eastern block with its joint venture partner, Trinidad and Tobago’s state-owned oil company, Petrotrin. Phase 1 was completed mid-year. Norris said even after 150 years of exploration, discoveries are being made in areas that have been already been explored. “Well, for one thing we are exploring for the deeper horizons that have not been a significant producer to date,” he said.

Talisman, which is headquartered in Calgary, Canada came into existence in 1993 and its production has grown from 50,000 barrels of oil equivalent per day to about 400,000. The company is also listed on the Toronto and New York stock exchanges. Giving an update on progress on Atlantic LNG’s Train 4 which recently received approval from the Government, Cape said construction has already started and much progress has already been made. “We have poured concrete in an amount equivalent to re-paving both sides of the Hochoy highway from the Butler intersection to Chaguanas. We have driven 26 kilometres worth of piles on the construction site, and erected 1600 metric tonnes of steel. We have mobilised 1300 construction  workers. We have added 91 permanent staff members. We’ve been busy,” he told the global conference.

The fourth LNG train has been designed for a production capacity of 5.2 MTPA, making it the largest LNG train currently under construction in the world. Cape also said that there are some highly interesting opportunities to expand the existing trains via “debottlenecking” projects which are narrowly focused capital projects to remove constraints in the process flow, thus enabling additional throughput. These could well generate the equivalent of one train worth of production at some time in the future,” he said.

Speaking about local content in Atlantic LNG construction activities, Cape said in Train 1, goods and services procured from local companies amounted to US$ 173 million while local content in the Train 2/3 project, reached US$ 195 million. “The Train 4 project represents a more powerful model for local content, in that the focus shifts to increasing the depth and breadth of locally provided goods and services by committing to local content on the basis of line items rather than only an over-all dollar quantum, “ he said. “Train 4 will benefit from more linear metres and larger diameters of locally-supplied pipe than any previous train, for instance.” Another breakthrough in local content at Atlantic LNG is the unprecedented level of engineering that will be done in country.