Trinidad and Tobago has plans to offer six offshore deepwater blocks in June to interested bidders as the competitive bid round for three onshore blocks continues.

The lease sales come as the country experiences increased drilling activity, as natural gas production has more than tripled in the past decade.

However, oil production has steadily declined. And the country’s position as the largest exporter of LNG to the US is slowly fading with export volumes dropping. So Trinidad and Tobago has taken steps to lure E&P companies. Changes have included reduced taxation terms, no state carry-on participation, an optional signature bonus, and an increased cost recovery, which went from 60% to 80%, according to the Trinidad and Tobago Ministry of Energy and Energy Affairs.

The government also is working with Petrotrin to hasten the approval process for drilling onshore.

The response has been positive based on comments from the country’s energy minister.

“The level of drilling and workover activity in the oil and gas industry has significantly increased in the last two years. We expect this trend to continue in the medium term,” Kevin Ramnarine, minister of energy and energy affairs, said in a prepared statement. “This is as a direct result of government policy to use the fiscal regime to incentivize companies that invest in [E&P]. In the last two years we have applied a progressive policy with regard to the fiscal regime that has seen Trinidad and Tobago’s upstream sector become more competitive.”

Activity picks up

The ministry touted recent E&P activity in a news release issued in May. Eight drilling rigs have been used for various operations onshore, the ministry reported. At the time, three rigs were being used for operations in the Forest area, two in Quinam, one each for Petrotrin in the Forest Reserve area and Touchstone, and the last in the Fyzabad district, the release stated.

Recent offshore activity included BP Trinidad & Tobago’s (BPTT) West Jaya and Rowan XL II rigs in the Immortelle and Savonette fields, respectively; EOG Resources’ Rowan Gorilla III in the Osprey field; Petrotrin’s Well Services Rig 110 in the Trinmar field; and Trinity’s Trinity Rig 2 in the East Galeota block. The sixth rig, a semisubmersible, is in the Chaguaramas being prepared for a drilling campaign for Centrica, Niko Resources, and BGTT.

“The current heightened level of activity in the marine areas is in stark contrast to what [was] obtained in mid-2010 when there was one drilling rig operating offshore: the Constellation I drilling for BPTT,” the release said.

In addition, Petrontrin had two workover rigs in Trinmar – one dedicated to the South West Soldado reactivation project, which aims to reverse falling oil production.

“The heightened level of activity is impacting positively on the demand for energy services and overall levels of optimism in the energy sector,” the release said. “The result of all this activity will serve to arrest the decline in oil production and ensure deliverability of natural gas in the coming years.”

Output is mixed

Data from the US Energy Information Administration (EIA) show that oil production in Trinidad and Tobago has steadily declined for the past few years, partly due to maturing oil fields. Production reached nearly 178,000 b/d in 2006; however, the figure dropped to about 135,000 b/d in 2011.

However, the story is the opposite for natural gas production, which has climbed substantially.

“Since the Train I LNG facility began to operate in 1999, natural gas production in Trinidad and Tobago has climbed dramatically,” the EIA said. The country produced 1.5 Tcf of natural gas in 2010 – over three times the level seen in 2000.

Currently, Trinidad and Tobago is the largest exporter of LNG to the US.

“The country has benefited from substantial foreign investments, with [BPTT] accounting for almost 60% of the country's natural gas production,” the EIA said. BPTT announced in November 2013 that it discovered an estimated 1 Tcf of gas offshore Trinidad. The find doubled the estimated gas in place of the Savonette gas field to 2 Tcf.

“British Gas is the second leading player in the industry, operating nearly a quarter of the natural gas production in the country,” the EIA said. “National companies participate in the sector as small shareholders in operations.”

However, the US agency noted that rapid production, combined with a lack of new discoveries, has resulted in a drop in proven gas reserves. Gas reserves have plummeted by more than 50% in only five years, going from 25 Tcf in 2006 to 14.4 Tcf in 2011, the EIA reported, citing Oil & Gas Journal figures.

The trend is something the country hopes to reverse, considering it has one onshore bid round in progress and another – for offshore – in the works for this month.

Blocks are available

The onshore bid round, which is the country’s first since the 1990s, makes available three blocks totaling at least 130,000 acres in the Southern basin. To participate in the round, each company must pay a US $40,000 bid participation fee, which gives the bidder access to a data package.

The deepwater bid round, which opens in June according to the Ministry of Energy and Energy Affairs website, offers up to six blocks. The acreage, east of the country’s currently producing oil and gas fields, covers 40,000 sq km (15,444 sq miles) in water depths ranging from 600 m to 3,500 m (1,969 ft to 11,483 ft).

The blocks were first offered in 2006, but the ministry pointed out several changes made since then. For starters the blocks are larger – 800 sq km to 1,000 sq km (309 sq miles to 386 sq miles). Also, an additional seismic survey (PGS 2-D) has been conducted along with reprocessed 12,300-line-km TTDAA 2-D by Spectrum, a comprehensive deepwater study by DGA Consultants was commissioned, new GXT reprocessing of span lines was completed in February 2012, and there are increased data package contents.

The deepwater round closes in November, while the onshore round closes Aug. 30.

Contact the author, Velda Addison, at vaddison@hartenergy.com.

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