The Energy Years

Leading Trinidad and Tobagos energy sector in a

time of global change
By Kevin C. Ramnarine
KBH Center, University of Texas at Austin
January 24 2017

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 Structure of Lecture
The global energy context and megatrends in 2010 -
present
Trinidad and Tobago energy sector overview
Major policy decisions 2011 to 2015
High points 2011 to 2015
Low points 2011 to 2015
Lessons Learnt / Conclusion

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 Whats the big idea ?

Oil and gas producing countries must have a

competitive investment environment that attracts
capital and strikes a balance between fair returns to
the State for extraction of its resources and fair
returns to the company for risks it has taken.

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 The global energy context and megatrends in
2010 - present

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Major energy trends driven
by .
Technology ( 3D seismic, microprocessing,
fracking)
Globalization ( access to acreage)
Climate Change debate ( decarbonization)
Geopolitics
Increased energy demand driven by Asia
(China & India, population and economic
Texan George Mitchell
growth) Father of Fracking
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The Climate Change debate has dominated the global policy agenda for this
decade and impacted on energy policy in most countries.

There are persons who question that the burning fossil fuels has caused climate
change ( anthropogenic climate change)

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 Key oil supply trends 2010 to present
Supply Country 2010 2015 % change
production / production/
Growth in supply outstrips bopd bpod
growth in demand in 2014.
United States 7550 12704 68%
Iraq 2490 4031 62%
Increased American and Iraqi
production of shale oil. Colombia 786 1008 28%
Saudi Arabia 10075 12014 19%
Oil prices collapse.
OECD 18535 23534 27%
OPEC 35149 38226 9%
Same trend for natural gas
World 83283 91670 10%

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 Oil Production in USA, Russia and Saudi Arabia
1996 to 2015
14000

12000

10000
Barrels of Oil per day

8000
Saudi Arabia
Russia
6000
USA

4000

2000

-
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
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C. Ramnarine
 Natural Gas Production 1996 to 2015
80.0

70.0

60.0

50.0
BCFD

40.0

30.0

20.0

10.0

-
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Axis Title

Russia Iran Qatar USA

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 Primary Energy Consumption
Millions of Tonnes of Oil Equivalent (MTOE)
14000

12000

10000

8000
MTOE

6000

4000

2000

0
1984

1993

2002
1976
1977
1978
1979
1980
1981
1982
1983

1985
1986
1987
1988
1989
1990
1991
1992

1994
1995
1996
1997
1998
1999
2000
2001

2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Total North America Total S. & Cent. America Total Europe & Eurasia
Total Middle East Total Africa Total Asia Pacific
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 United States' Oil , Gas and Coal Consumption
1965 to 2015
1000

900

800

700

600
MTOE

500

400

300

200

100

0
1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
Oil Gas Coal
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 MTOE

1500
2000
2500
3000
3500
4000
4500
5000

1000

500

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1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991

Gas
1992
1993
1994
Coal 1995
Kevin C. Ramnarine 1996
1997
Oil

1998
Oil remains king of the world

1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
In 2011, the IEA asked Are we entering a
Golden Age of Gas ?

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 Carbon Dioxide Emissions / millions of tonnes
1965 to 2014
12000.0

Millions of Tonnes of Carbon Dioxide

10000.0

8000.0

6000.0

4000.0

2000.0

Japan USA Germany China

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 Global Wind and Solar Capacity 1995 to 2015
250

200

150
MTOE

100

50

0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
OECD Solar Non OECD Solar OECD Wind Non OECD Wind
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 Trinidad and Tobago energy sector overview

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 Trinidad and Tobago Overview

Commercial Oil production started in 1908

Currently producing 71,000 bopd ( peak
1978)
One Refinery capacity 165,000 bopd
Currently producing 3.3 billion cubic feet
of gas per day ( similar to UK and
Argentina and West Virgina)
Most gas produced from offshore /
continental shelf by multi-nationals

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 T&T Overview continued

Eleven Ammonia plants ( first 1959)

Seven Methanol plants ( first 1984)
One Natural Gas processing plant.
Four LNG Trains ( first export 1999)
Five Gas Fired power plants ( 2 GW)
Main State players: Petrotrin, NGC
Main MNCs: BP, Shell, BHP Billiton, EOG
Resources and Repsol
LNG exported mainly to South America
Ammonia, methanol exported mainly to the USA
Refined petroleum products exported mainly to
Caribbean and USA.

Trinidads Point Lisas industrial estate at night

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 107 years of oil and gas production
Trinidad and Tobago
800,000

700,000

600,000

500,000
BOED

400,000

300,000 Nat Gas

200,000

100,000 Marine Oil

Land Oil
0
1908
1911
1914
1917
1920
1923
1926
1929
1932
1935
1938
1941
1944
1947
1950
1953
1956
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
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 Oil and Gas Production 2000 to 2015
( The emergence of the gas economy of Trinidad and Tobago)
160,000 5,000

4,500
140,000

4,000
120,000
3,500

mmcfd of natural gas

Barrels of Oil Per day

100,000
3,000

80,000 2,500

2,000
60,000

1,500
40,000
1,000

20,000
500

0 0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Oil Prod Natural Gas Prod

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 With the Amoco deal we got Trinidad and Tobago
which turned out to be one of the combined groups
crown jewels

Lord John Browne former CEO of BP plc, Beyond Business

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GDP Per capita US$ current prices 1960 to 2015
( Trinidad and Tobago vs LATAM and Caribbean)

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 Millions of USD

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-500
500
1000
1500
2000
2500
3000
3500

-2000
-1500
-1000
0
3/1/1995
8/1/1995
1/1/1996
6/1/1996
11/1/1996
4/1/1997
9/1/1997
2/1/1998
7/1/1998
12/1/1998
5/1/1999
10/1/1999
3/1/2000
8/1/2000
1/1/2001
6/1/2001
11/1/2001
4/1/2002
9/1/2002
2/1/2003
7/1/2003
12/1/2003
5/1/2004
10/1/2004
3/1/2005
8/1/2005
Kevin C. Ramnarine 1/1/2006
6/1/2006
11/1/2006
4/1/2007
9/1/2007
2/1/2008
7/1/2008
12/1/2008
5/1/2009
10/1/2009
3/1/2010
8/1/2010
1/1/2011
6/1/2011
11/1/2011
4/1/2012
9/1/2012
2/1/2013
7/1/2013
Current Account of Trinidad and Tobago 1995 to 2016 / US$ Mn

12/1/2013
5/1/2014
10/1/2014
3/1/2015
8/1/2015
1/1/2016
6/1/2016
Series1, -659.7
 LNG Production vs Real GDP
2000 to 2015
16.00 100

95
14.00
90
Millions of Tonnes Per Annum

12.00

REAL GDP ($TT Billions)

85

10.00
80

8.00 75

70
6.00
65
4.00
60

2.00
55

- 50
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

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 PROVEN RESERVES OF NATURAL GAS
TRINIDAD AND TOBAGO 2002 TO 2015
22
20.76

20
18.81 18.78

18 17.05 17.00
Trillion Cubic Feet

16 15.37
14.42
14 13.46 13.26 13.11
12.24
12 11.50
10.60
10

4
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

1/24/2017 Proven Natural Gas Reserves are in decline

Kevin C. Ramnarine
 Guiding Philosophy and Policy Framework

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 My Guiding Philosophy
1. Maintain the integrity of the Ministry of
Energy ( respect is earned).
2. Appreciated that the oil and gas business
is high risk and capital intensive.
3. Never compromise safety for production
or results.
4. Companies will invest if they think they
can get the minimum return that
satisfies their shareholders.
5. Capital is mobile, it does not have to
come to Trinidad goes where it is
treated the best.
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 My Guiding Philosophy
6. We should be doing business with the best
companies in the world.

7. Recognize the companies that have

demonstrated long term commitment to
Trinidad.

8. The Government is in a partnership with

the companies we are not adversaries.

9. The public directly should own part of the

energy sector.
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 Policy Direction
Simplify petroleum taxation regime
Reduction in levels of taxation.
Increase cost recovery rates in PSCs.
Restructure capital allowances to improve project economics.
Simplify bidding process ( only 2 biddable items)
Get ride of taxable PSC
Vertical integration of the National Gas Company
Initial Public Offerings are great vehicles to transfer wealth
Empowerment of private sector partners of Petrotrin.
Communicate effectively with the public and stakeholders.

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 Govt Revenue

Reserves &
Production

Drilling

Investment

Correct
Incentives

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 High Points 2011 to 2015

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 Govt Revenue

Reserves &
Production

Drilling

Investment

Correct
Incentives

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 FDI 2000 to 2015 / Petroleum Related ( TT Central Bank Data)
2500.0

2000.0

1500.0

1000.0

500.0

0.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
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 Upstream Activity on Steroids
Signed twenty one (21)
production sharing contracts
and/ licenses for exploration
and production.

This is the largest number ever

signed by any Minister of
Energy and Energy Affairs.
These agreements constitute
an investment of up to $US 2.0
billion and creates an active
upstream programme for the
remainder of the current
decade.

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 Rig Days ( Trinidad and Tobago)
2000 to 2016
Took initiatives that led to a 4,000

significant turnaround in
3,500
3,409
upstream activity as 3,331 3,274
evidenced by an increase in 3,000
2,788 2,765
rig days from 1132 rig days 2,500
2,600 2,472
2,501
2,690
2,369 2,443
in 2010 to 2443 rig days in 2,486

Rig Days
2,214 2,189
2,000
2014.
1810
1,500
In addition, there was a 1,132
1,000
significant increase in 744
acquisition of 2D/3D seismic 500

data during the

-
aforementioned period. 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

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 BPs Rig Days
800
742

700

600
514 519
500
BP Rig Days

400
330
307
300 279 265
235

200

100

0
2009 2010 2011 2012 2013 2014 2015 2016

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 January 2017
August 2014

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 Initial Public Offering (IPO) of Phoenix Park

Phoenix Park Gas Processors

Limited Initial Public Offering (IPO)
or TTNGL IPO (August 2015).

This was the first time an energy

company was listed on the Trinidad
and Tobago Stock Exchange. This
IPO was successful and was
oversubscribed by 1.5 times.

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 PDVSA Head Office, Caracas - July 2013

Between 2012 and 2015 three

agreements were negotiated and
signed with the Venezuelan
Government on the development of
cross border natural gas reserves.

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 Port of Spain, Trinidad February 2015

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 Mitsubishi of Japan invest in methanol plant
Presided over the progress to Final Investment Decision
(FID) of a Methanol to Di- Methyl Ether petrochemical
complex by a consortium led by Mitsubishi Gas Chemical of
Japan and including the Trinidad based conglomerate
Massy.

This investment is valued at $US 987 million and will create

2000 construction jobs and 200 permanent jobs in a
depressed community in south Trinidad.

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 Low Points 2011 to 2015

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 Looking forward and Conclusions

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 T&T supply demand balance 2016 to 2022
4500

4000

3500

3000

2500
mmcfd

2000

1500

1000

500

0
2016 2017 2018 2019 2020 2021 2022
DCQ Total Sales
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 Deepwater Exploration
Opened up Trinidad and
Tobagos deepwater acreage to
exploration.

In total nine production

sharing contracts were signed
with BHP Billiton and its
partners.

Arising out of these nine

contracts, in 2014/2015, BHP
Billiton conducted the largest
3D seismic survey ever
conducted by an International
Oil Company (20,199 square
kilometers).

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 Deepwater Area
Estimates of the
Ministry Of Energy of
the potential of the
deepwater for oil
resources range from
2.2 billion to 8.2 billion
barrels of oil initially in
place.

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 Conclusion.the bad news
Trinidad is past its peak gas production of 4.3 billion cubic feet per day in 2010.

The industry will struggle to keep production above 3.5 billion cubic feet per day
beyond 2017.

Oil production is in continual decline due to issues around the no longer relevant
business model of Petrotrin.

There will be a need to rationalize Point Lisas and / or Atlantic LNG ( shut down
plants).

New natural gas projects beyond 2017 will not produce enough gas to offset the
decline of mature gas reservoirs.
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 Areas of potential..a leader is a dealer in hope
Potential for big deepwater discoveries ( BHPs drilling campaign in progress technical and
geological risk)

Potential for Venezuelan gas to come to T&T ( political risk).

Potential to apply technology to increase oil production. ( commercial risk).

There is an urgent need to privatize Petrotrin ( political risk) .

Partnerships with Guyana and Suriname ( political risk).

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 The world is what it is
The world is what it is; men who are
nothing, who allow themselves to become
nothing, have no place in it.

From A Bend in the River by Sir V.S

Naipaul ( Nobel Prize, Literature 2001)

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