GASCO NEWS July 2018, Vol 28 No. 2

One of the primary objectives of NGC’s Strategic Plan is to restore balance to the gas supply scenario in Trinidad and Tobago. With supply currently below demand, the Company has been looking at different ways to bridge the gap. Measures have included partnering with Venezuela to monetise the Dragon field, lobbying for renewable energy uptake so molecules could be diverted from electricity generation, collaborating with upstream operators to bring new fields into production and continue their exploration thrust.

Also receiving attention are small pools and marginal fields in Trinidad’s offshore acreage (Figure 1). Marginal fields refer to fields that may be considered uneconomic or just marginally economically positive under current fiscal terms. NGC’s intentions in this area have been shared at a number of business forums and the project has since progressed past a key milestone. This article takes a closer look at these fields and their potential to impact domestic supply.

Working in collaboration with the Ministry of Energy and Energy Industries (MEEI), NGC undertook a feasibility study of small pools and marginal fields. This study was the first phase in the larger project of getting these fields brought into production. It was completed in the second quarter of 2018.

Based on the team’s preliminary analysis, it was estimated that some of these fields or small pools could be brought on stream as early as 2019/2020 if conditions favour their development. That is, with timely investment decisions and approvals, more thorough field evaluation and prompt mobilisation, Trinidad and Tobago could start receiving gas from select small pools and marginal fields in the near term.

By Definition

Accumulations of oil and gas may be found in subsurface reservoirs called fields. The size of a field is determined by the amount of hydrocarbons it contains. With respect to gas fields, reservoirs can hold trillions of cubic feet (tcf) of gas, or they can be considerably smaller (billions of cubic feet or bcf). For the purpose of this work, marginal field recoverable reserves sizes ranged from 40bcf to 700bcf.

The decision to develop a field is usually based on an economic case – the market value of the gas in the field must justify investment in its extraction. For this reason, large accumulations are generally prioritised for development, as more gas can be produced from them to offset overhead costs. However, as these fields mature and output declines, or in instances where it is not logistically feasible to develop larger reservoirs, producers may look to extract hydrocarbons from smaller fields.

In Trinidad and Tobago, proven gas reserves are declining after decades of gas extraction. With larger deposits being depleted, the quantum of gas held in small pools assumes greater relative importance. Also critical are pools with sizeable quantities of gas which have not been monetised because of their location and other technical or economic considerations.

Both small pools and marginal fields are valuable in the context of the current supply-demand imbalance, where available volumes cannot adequately meet downstream gas needs. For this reason, NGC initiated the study in 2017 to identify these fields and evaluate the economics and feasibility of monetising some of these offshore fields.

Challenges

Due to the infrastructural requirements of exploration and production, mobilisation and operational costs can be prohibitive when fields are far from shore or far from infrastructure. In addition, the deeper the well to be drilled to access gas, the more complex the field development, or the longer the pipeline needed to bring it ashore, the greater the costs for the producer. Also, fields in deeper water will have higher development costs. Many fields that are considered ‘marginal’ have these limitations. In the case of small pools of gas, the expenditure associated with seismic exploration, drilling, extracting and transporting gas can surpass the value of the product itself when it gets to market.

Often, the larger, multinational operators relegate small pools and marginal fields in their priority list, because the economics of developing a field are assessed relative to other opportunities that exist in their international portfolio. If more gas can be extracted at cheaper or comparable costs elsewhere and derive more value, then investment attention will be so directed. Opportunities Despite these challenges, NGC’s internal study identified possibilities for feasible development of some small pools and marginal fields in Trinidad’s offshore region. It was determined that fields located off the southeastand east coast have greater probability of being successfully developed because of their proximity to existing infrastructure. An operator wishing to monetise a small pool or marginal field could potentially drill from platforms in nearby fields and access the supply network with short pipeline tie-ins, incurring minimal overhead costs.

This would of course require collaboration between infrastructure owners and operators. In some instances, the infrastructure owners may be larger producers focused on bigger projects, while the parties interested in developing the small pools or marginal fields may be smaller, independent operators. Such partnerships could occur through direct negotiation or may need to be brokered by the ‘landlord’ – the MEEI – but they are vital to the successful development of smaller fields.

There are also cases of fields being located in blocks leased to operators who are unwilling or unable to develop them. The MEEI will need to consider options such as sub-licencing or fiscal incentives to ensure able operators have the access and inclination to bring those pools into production. The MEEI can also encourage new operators from outside the region to participate in the gas development programme through 'Invitations to Bid' for marine acreage. The entry of international entities could help accelerate production by bringing more partners and potential investors. It would also be a means to introduce new methods and technologies for gas extraction that have proven successful in other regions.

Indeed, the application of more advanced exploration and production technologies would be of great value in the development of small pools and marginal fields. The use of ocean bottom node (OBN) seismic technology, for example, can make exploration and evaluation more effective, by increasing the resolution of the subsurface and reducing the need for exploratory/appraisal drilling to determine field size. Any technology or process improvement that can bring costs down for producers – such as cheaper wells, platforms, pipelines and subsea infrastructure – will enhance potential earnings and encourage investment.

The Way Forward

The process of monetising a field, moving from appraisal and development to the final stage of production can take years, depending on the logistics and complexity of the project. NGC will continue to work very closely with the MEEI towards the development of small pools and marginal fields. The analysis indicates potential for early production in the near term, but timely investment decisions will be required.