Halting the slide in oil production

Permit me however to suggest that, with regard to the energy sector at any rate, that the short-term situation as it applies to oil production can be remedied. We can halt the slide in oil production and reverse the decline within two to three years. But first let me recall how oil production was turned around in the early 1990s.

The minister may recall that when the oil price crashed in late 1986, the economy went into a tailspin and the oil industry into sharp decline. Workover rigs fell from 55 to five and drilling rigs went from 15 to two.

A small group of industry professionals led by me had a vision which we felt could remedy the problem. Essentially, we recognised that the State oil companies Trintopec and Trintoc had thousands of wells which were idle for decades and lots of undrilled acreage.

We lobbied for the start of a programme of giving out some of these wells and blocks of idle acreage to a new breed of entrepreneur “independent producers”.

We reasoned that this would utilise the idle rigs and resources and increase oil production.

Fortunately, people listened and acted. Dr Trevor Farrell, then chairman of Trintopec, got that company to institute a lease operatorship and farmout programme, with ten blocks and three blocks, respectively.

That programme was an instant success and today the independent producers account for 9,532 barrels of oil production per day (bopd) , out of a total oil production (excluding condensate) of 61,731 bopd. Much of this is from acreage held by Petrotrin.

I might add that this is from acreage totalling less than ten percent of that held by Petrotrin.

Quite a few of these projects, the incremental production sharing contracts, are relatively new and I expect that with time production from the independent producers will increase.

There is however another way in which we can dramatically increase oil production and do it very quickly. In a nutshell, it is by enhanced oil recovery (EOR ) using existing wells and infrastructure in our mature producing fields. And they are all mature.

Essentially, primary methods will recover a maximum of 25 percent of the original oil in place in the reservoir. EOR can recover up to 30 percent more.

To the present time except for thermal EOR conducted in shallow onshore heavy oilfields there has been essentially no EOR done in Trinidad and Tobago. And thermal technology is limited to this theatre of operations.

EOR using water and carbon dioxide, both proven technologies world-wide, and both used extensively world-wide today, have no such limitations. CO 2 particularly can be used in any reservoir at any depth to improve production of any type of oil onshore or offshore.

Incidentally, we have a huge resource of CO 2, mainly from the industrial plants at Pt Lisas, currently all being vented to atmosphere (200 MMC FD of essentially pure CO 2 and a further two billion per day of flue gas).

To the present time, cumulative oil production is around 3.5 billion barrels, of which 2.5 billion is from onshore and Gulf of Paria fields, all under the control of Petrotrin.

This means that Petrotrin could essentially double oil production using EOR , ie, get another 2.5 billion barrels at a rate of up to 60,000 bopd. But Petrotrin is cashstrapped and does not have the manpower resources to do this.

So I suggest we now do something similar to what we did in the late 1980s but on a much larger scale.

A programme can be started where Petrotrin gives out its large mostly idle mature fields to independent producers specifically to implement EOR projects.

There are many ways in which this can be done, but we must ensure that the structure of any method we use benefits the State by increased revenues and of course the producers who are taking the risk and Petrotrin which will be contributing well and infrastructure, albeit old and in poor shape.

One way that can work is based on incremental production. This ensures that Petrotrin retains its base production and any concessions given are for increased production so everyone wins.

A caveat is that a CO 2 collection and distribution system, ideally via pipeline, must be constructed.

There is no reason why this cannot be started immediately. In fact a group of investor companies is working with me in talking to Petrotrin. While they have been encouraging, the pace is painfully slow. Perhaps the Minister of Finance can consider these suggestions and if he thinks they can work, act on them.

As always, these thoughts and ideas are being offered in the best interest of the country.

* Krishna Persad is a petroleum consultant