Even though Trinidad and Tobago’s energy sector is dominated by natural gas, oil production continues to play an important role in the economy. For many years the state-owned oil company, Petrotrin, accounted for the majority of oil produced in Trinidad
Just over a year ago Petrotrin was closed down amidst serious concerns about its financial viability as an integrated oil company and a long-term downward trend in crude oil production.
A brand-new state-owned entity, Heritage Petroleum, was established to take over the upstream exploration and production part of the business, primarily focused on oil, though the company also has investments in gas production. This new upstream focused company is now being led by industry veteran Arlene Chow.
EnergyNow caught up with Arlene Chow to get her thoughts on the state of oil production and some of the challenges facing the new company.
The past year has been mainly about building and resourcing the organisation, according to Chow. She told EnergyNow that “2019 was a good year for Heritage with 39,000 bopd production and we are on target to replenish 99.3% of reserves. It is also the first year Heritage marketed its own crude and our marketing campaign has resulted in growth in customer base and has promoted its Molo crude and its market visibility.”
Chow said that the core strategy for Heritage Petroleum is to maximise the strategic value from oil, realise the potential of gas, and grow reserves for a sustainable future.
According to the CEO, “Offshore production has been stabilised and has increased steadily since December 2018.” She has indicated that Heritage offshore production has gone from a low of 10,582 bbls in December 2018 to a peak of 18,264 bbls in November 2019. She said that there has been a concerted focus on growing production at Heritage in the first year of operation, with several projects in the works. Short to medium-term, Heritage expects to be producing over 20,000 bbls of net oil per day in the offshore with the introduction of a compression and gas lift in South West Soldado as well as ongoing heavy workovers, well servicing and debottlenecking of the surface network.
Land operations on the other hand produce approximately 10,500 bopd. Significant workover and drilling operations have arrested the decline, and land has shown small production increases over the past year. The Lease Operators and JV and Farmout operators also produce approximately 11,000 bopd.
One major ongoing project is the onshore field optimisation project which aims to review and possibly reactivate 4,800 inactive wells on land.
There are, however, many challenges that continue to face Heritage.
The company has very mature fields and the infrastructure is aging. Chow told EnergyNow that, “We need to do several projects to improve our infrastructure while growing production at the same time. There is a need for significant investments in asset integrity management as well as a need for investment in production-increasing activities. Where significant capital expenditure is needed Heritage will need to partner with companies to support these activities, she added.
But according to Chow, “We are confident with our significant resource base and the expertise of our people we will be able to continue the growth and profitability.” Senator the Honourable Franklin Khan recently announced the unaudited financials for the company. He indicated that Heritage Petroleum earned revenues of $5.4 billion and made a net profit of $725 million.
Major ongoing projects
Subsurface work is ongoing to develop FDPs (Field Development Plans) for all the major oil fields in the Heritage acreage. This is the first step to understanding Heritage’s resources and to plan for systematic development. Chow sees this as vital to being able to optimise infill drilling programmes, to maximise recoveries, to extend boundaries of current fields to increase recoverable reserves and to reduce risk.
In terms of base decline, Chow said, “We intend to continue an ongoing well servicing programme to perform expense-type workovers on an as-needed basis and review all existing improved oil recovery (IOR) projects for increased injection and production opportunities.”
Heritage at the same time is undertaking several activities aimed at increasing oil production in 2020.
One of the most significant projects to increase production is the installation of the Modular Offshore Production Unit (MOPU). This will provide for gas lift in the South West Soldaldo field and reduce the back pressure on the wells. The MOPU is currently being commissioned with a significant increase in production anticipated by Q1 2020.
Opportunities for improved oil recovery (IOR)
Improved oil recovery (IOR) projects have successfully been implemented in Trinidad and Tobago in the past and will continue to be an important part of the company’s future, according to Chow. She added that Heritage has low primary recovery factors of approximately 10% to 20% in many of their fields, so there are significant remaining reserves. Onshore Trinidad, Heritage operates very mature oil fields and IOR will help to increase the amount of recoverable oil beyond what could be recovered by primary means.
Steam-floods and waterfloods will continue to be the main type of IOR but there may be potential for chemical flooding like CO2 injection.
Heritage has nine existing IOR projects on land and offshore. Some are being restarted and optimised and scoping studies are also being conducted for implementing new projects.
In 2020, the Offshore Business Unit will be studying the potential of reactivating the Main Field Water Flood which has been inactive since 2016 when it was injecting below capacity. They are also investigating the possibility of executing a CO2 EOR pilot project in the East Field.
Once studies are completed and potential opportunities are identified, Heritage will evaluate which of these would-be IOR projects are viable. IOR projects are capital intensive so they must be sure of the value proposition.
Heritage needs to ensure the projects are of scale to ensure commerciality. Heritage will also be encouraging all their onshore JV partners to implement IOR projects.