Professor Andrew Jupiter Chairman of Petrotrin, Trinidad & Tobago’s national oil company and Professor of Petroleum Studies at the University of the West Indies, has suggested that the government needs to reduce profit taxes for small and marginal gas fields if these are to be brought into production. Prof Jupiter was speaking at a recent forum organised by the University of Trinidad & Tobago in which he further elaborated on a presentation first made the Trinidad & Tobago Energy Conference earlier this year.
Pointing out that Trinidad & Tobago was blessed with hydrocarbon deposits off the north, east, south and west coasts as well as onshore, Jupiter emphasised that the country continued to have significant opportunities for both oil and gas production, but that many of the resources were in smaller reservoirs that are often uneconomic in the current environment. These fields are usually described as marginal fields, typically defined as one that is uneconomical for development and production using conventional technologies based on the current fiscal terms, being applied to the size of the reserves. Jupiter suggested a working definition of a marginal gas field in Trinidad & Tobago was one with a reservoir size of less than 500 billion cubic feet (bcf ), though many factors would determine if the field was marginal.
Using this definition and Ministry of Energy data, Jupiter explained that the majority of undeveloped gas fields in Trinidad & Tobago could be considered marginal. Without mentioning specific fields or companies, Jupiter presented Ministry data showing a total of fourteen undeveloped gas fields off the east coast, four of the north coast, two off the west coast and two onshore, with the vast majority of these falling within his marginal field size definition.
In a statement to Energy Now, bpTT the country’s biggest gas producer confirmed that they had many “small pools” within their existing acreage. The statement from bpTT explained that “resources that sit in small pools are very strategic to bpTT’s future and to maintaining our existing production profile. There is a significant quantity of small pool opportunities in our existing fields which can be developed through our existing infrastructure and also through future new field developments.”
In his presentation, Jupiter explained that there were many factors that needed to be taken into account when considering if a marginal gas field could be developed, including the proximity to existing infrastructure, the ratio of condensate to gas, the pricing arrangement for gas sales and the overall commercial terms for the field. He emphasised that data acquisition was key to determining a strategy and that Trinidad & Tobago needed a detailed understanding of resource estimates, reservoir definition and reservoir complexity indices in order to develop the right strategy to bring marginal fields into production.
Echoing Professor Jupiter’s sentiments on the need for a thorough understanding of the data, bpTT explained how they have an active programme in place to examine the potential of small gas fields. The bpTT statement on small fields sent to Energy Now explained that “currently this portfolio has a high development cost however we have dedicated teams working to fully define the small pools with the use of the OBC seismic data, and understand the types of well designs, access methods and technology required to efficiently develop the small pools in the existing fields. We believe there is a material prize in going after these smaller pools and they are an important part of our future field development plans. Currently we are developing some of these resources with wells on existing facilities; through recompletions and using multizone technology and comingling reservoirs in one well.”
In his presentation to the UTT forum, Jupiter outlined some of the measures that other countries have taken to encourage the development of marginal fields, citing examples from Pakistan, Indian and Malaysia. Turning to Trinidad & Tobago, Jupiter recommended that the government should relook the fiscal terms for small and marginal fields. Specifically, he recommended that there should be a reduction in the rate of petroleum profit tax (PPT) for small & marginal fields. He also pointed out that some existing producing fields could also become marginal over time given changing economic conditions and that this discouraged reinvestment to increase production. He therefore suggested that the government could also look to reduce the PPT rate applicable to additional production from an existing producing field.
Emphasising that past major changes to the country’s gas production profile had been stimulated by government decision-making, Jupiter said that the time was right for a review of the existing fiscal terms if we are to take full advantage of the rich hydrocarbon resources that we have available. Jupiter emphasised the need to industry collaboration and for a strong dialogue and partnerships between all stakeholders. Professor Jupiter’s central message was one of confidence that the Trinidad & Tobago gas sector had a long life ahead, despite the current challenges.