Kevin Ramnarine
I have great regard for many of the people who have served our country as either as Minister of Petroleum and Mines (as the job was once known) or as Minister of Energy and Energy Industries. My respect transcends the political boundaries that often blind us from seeing the good in others.
In 2010 while I was a Parliamentary Secretary in the Ministry of Energy, I asked the late Barry Barnes what he thought about the future of the T&T oil and gas industry. His reply was “we must surge into the deep.” He was of course talking about the exploration of the deepwater province that lay to the north east of Tobago and to the east of Trinidad which many of our best geologists believed held great potential for new discoveries. As far back as the early 1980s T&T began to consider the potential of its deepwater. Over the years, advances in technology and the establishment of maritime borders with Venezuela (1989), Barbados (2006) and Grenada (2010) helped pave the way for exploration.
I am sometimes asked what my greatest accomplishment was at the Ministry of Energy. I could speak of the significant increase in drilling activity under my watch, the more than threefold increase in petroleum related foreign direct investment, attaining country compliant status in the Extractive Industries Transparency Initiative (EITI), the Natural Gas Master Plan or the Phoenix Park IPO. These were all great accomplishments.
However there is one achievement that stands out more than others. For me it’s special because it could be a massive game changer for T&T. I speak, of course, of the opening up of the deepwater province to investment and exploration. The facts are irrefutable. Between 2012 and 2014 the Ministry of Energy finalized nine production sharing contracts (PSC’s) for exploration and possible development of potential hydrocarbon resources in our deepwater. All nine contracts bear my signature.
These contracts were all signed with BHP Billiton and its partners BG, BP and Repsol. They are worth at most US$1 billion in investment for various stages of the work commitments. This was therefore a huge achievement for T&T and one that is unappreciated outside of energy sector circles. It is an achievement for which the resource management, commercial and legal teams of the Ministry of Energy deserves commendation. Prior to 2012, we had not signed a deepwater production contract since 1999. In 2005/ 2006 the Ministry of Energy launched a deepwater bid round that ended in failure. That failure set us back many years.
Earlier this year I wrote a column captioned, The 2016 Deepwater Silver Lining (Guardian January 3, 2016). It was written at the start of the year because I knew that the drilling programme in the deepwater could be the defining event of 2016. As you read this column, BHP Billiton is drilling the first well in their 2016 T&T deepwater drilling campaign. By ever measure this has been an extraordinary effort and achievement. The first of the nine PSCs was signed in June 2013. It therefore means that it took three years from date of the first signing of contracts to commencement of drilling. The other remarkable thing was the 3D seismic survey that preceded the drilling campaign.
This survey was the second largest in the history of the world’s oil industry and the largest ever done by an International Oil Company (BHP Billiton). It covered 20,199 square kilometers and used the most advanced seismic vessels ever built. It should be noted too that while BHP has just commenced a deepwater drilling programme in T&T, in other countries companies are cancelling such drilling programme because of low oil prices. Evidence of this is the fact that Chaguaramas has become a parking lot for drill ships that have no work to do because of the cancellation of deepwater drilling contracts in places like West Africa. PWC has surmised that globally capital expenditure in the worldwide oil and gas industry would be cut by 30 per cent in 2016 with some $200 billion worth of projects already being canceled or postponed.
Against this backdrop and with depressed prices BHP has endured with its plans to explore T&T’s deepwater acreage. Some might say that BHP is crazy to be searching for oil in deepwater when prices are low and everyone is running for cover. Deepwater exploration is not for the faint of heart.
I suppose when a company has been around for 156 years old they tend to take the long view of events and commodity prices. This is why I never expected BHP to be fazed by the falling oil price. Their endurance and focus should tell us that they have great confidence in the potential for major new discoveries in our deepwater. They plan to drill three exploration wells first and then pause before drilling another five. I suspect that in the coming months we may have some initial indication of the outcome of the first of these eight wells. The T&T oil and gas story is far from over. Keep your fingers crossed while we “surge into the deep.”
Kevin Ramnarine is a former
Energy Minister of Trinidad and Tobago
