Range Resources increase asset rangeSeptember 29, 2017
Karlene Ali, Range Resources Trinidad deputy general manager, talks to TOGY about the future outlook for 2017 and 2018, as well as the recent developments onshore and offshore including the acquisition of the West Coast assets. Range Resources Trinidad is the local E&P subsidiary of the Australia and London-listed E&P company, Range Resources.
Range Resources has the largest private onshore acreage in Trinidad and Tobago, having entered the country with the 100% acquisition of the Morne Diablo, South Quarry and Beach Marcelle onshore licences. Ali also discusses the importance of advanced technologies and EOR as well as the local services industry in terms of unlocking the full potential of the newly acquired assets for the island nation. The company is eager to be a positive for in implementing IOR techniques in Trinidad and Tobago that will both increase production and maintain the markets relevance in modern oil recovery methodologies.
• ON EOR APPLICATION: “Our onshore oilfields in Trinidad and Tobago are located in mature basins, with some of the fields having produced for over 100 years. Therefore, the application of secondary recovery techniques is key for increasing production from these fields. In fact, the majority of our reserves are also in waterflood projects. We are currently undertaking waterflood programmes on two areas of our field, with approximately 25% of current production attributed to these projects.”
• ON TT’S SPT: “This has been a topic of discussion for some time now and Range believes that a small number of measures could be undertaken to change the fiscal regime that would significantly increase the activity among operators on small and marginal fields. These changes would include the calculation of the SPT [supplemental petroleum tax] in a more linear and gradual approach.”
Ali also discussed the availability local content and how demand for domestic labour is likely to increase as development increases. Most TOGY interviews are published exclusively on our business intelligence platform TOGYiN, but you can find the full interview with Karlene Ali below.
What are the supporting details to Range Resources’ Trinidad development programme laid out for the end of 2017 and 2018?
Our plan for 2017 is to continue with the full implementation of the two waterflood projects, drill three development wells and continue with workover operations. In 2018 /2019 onwards, we plan to expand the waterflood programme to new areas of the fields with the main objective of increasing production.
What is your assessment of the company’s QUN 161 development well that was recently spudded?
The well is located on our Morne Diablo field where we already have almost 90 wells in production. It is a low-risk, low-cost development well targeting the Lower Forest and Upper Cruse horizons with total depth of 2,300 feet [701 metres]. Oil shows were encountered during drilling operations, and once we have completed log interpretations, we will be looking to bring the well into production.
What is the impetus behind Range Resources’ decision to purchase two producing licenses offshore, Brighton Marine and Point Ligoure-Guapo Bay-Brighton Marine?
The acquisition of the West Coast assets in Trinidad is in line with our stated acquisition-led growth strategy and was seen as a great opportunity to add to our existing producing assets in Trinidad. The additions will substantially lift our current production level by more than 30%; we see significant potential within these assets to grow production further.
This acquisition, once again, demonstrates our continued commitment to Trinidad. It not only provides additional production, cash flows, reserves, drill targets and EOR potential, it is also expected to result in further improvements to the cost structure across our business in Trinidad and Tobago. The West Coast assets are profitable at current levels, and we believe that the acquisition price of USD 1.75 per 2P barrel represents a very attractive deal.
How important will advanced technologies and EOR be in generating additional production on these blocks?
Our onshore oilfields in Trinidad and Tobago are located in mature basins; some of the fields have produced for more than 100 years. Therefore, the application of secondary recovery techniques is key for increasing production at these fields. In fact, the majority of our reserves are also in waterflood projects. We are currently undertaking waterflood programmes on two areas of our field, with around 25% of current production attributed to these projects. We expect significant production growth increase once the full implementation has been completed.
In addition to these developments, we are carrying out injectivity testing on other areas of our fields in order to evaluate the waterflooding potential. Testing results have been encouraging with plans underway to implement waterflooding activities on the areas that have shown the most potential.
How important are strategic partnerships and acquisitions compared to organic growth in Range Resources’ business strategy in Trinidad and Tobago?
Having signed acquisitions of two new assets in Trinidad during 2017, we place great importance on growth through the acquisition of new projects. Our first announced acquisition in March 2017 was an agreement to acquire RRDSL [Range Resources Drilling Services], an established services provider in Trinidad and Tobago with one of the most efficient and modern drilling fleets in the Caribbean. There is potential to capitalise on this and to substantially increase the existing levels of business with other upstream companies in Trinidad and Tobago and the Caribbean. Following the acquisition, we will aim to take steps to establish RRDSL as a profitable oilfield services company, providing onshore operations to Range and other operators in Trinidad and Tobago as well as internationally.
With regards to the acquisition of the West Coast assets located offshore Trinidad, which was signed in August 2017, we see significant potential for production growth, through low cost workovers and EOR potential.
Having said that, our strategic focus has not changed. We continue to focus on growing production from our current asset base through the implementation of waterflood techniques and low-cost production activities. We are hopeful that we will see a substantial increase in production from these assets in the next two years, which will be the largest contributor to our production and revenue growth in Trinidad.
How crucial is Trinidad’s local services industry in terms of unlocking the full potential of the newly acquired assets?
We are very fortunate to be operating in Trinidad and Tobago which has a large pool of talented and skilled workforce in our industry. We are highly committed to working with local suppliers and employing local citizens, and we are proud of the relationships that we have established in Trinidad where 97% of our suppliers are locally based and 98% of our employees are citizens. We are looking to continue this trend with our newly acquired assets, by offering local employment opportunities and growing and strengthening the social and economic relationships within the communities where we operate.
What is the current outlook for lease operators working with Petrotrin in Trinidad and Tobago given the recent turmoil surrounding oil deliveries to Petrotrin?
We have a good long-standing relationship with Petrotrin and we hope that it continues into the foreseeable future. We are looking to work with Petrotrin on any improvements monitoring and reporting production.
What further fiscal and structural changes could be made to the country’s current tax code to enhance production on small and marginal fields?
This has been a topic of discussion for some time now and Range believes that a small number of measures could be undertaken to change the fiscal regime that would significantly increase the activity among operators on small and marginal fields. These changes would include the calculation of the SPT [supplemental petroleum tax] in a more linear and gradual approach. This method of taxation recognises the long-term nature of investment into oil and gas projects and an increase in the period beyond one year under which investment tax credits can be carried forward and offset in arriving at the SPT liability. Additionally, the government should extend the investment tax credit to all capital expenditure on projects rather than just development activities or EOR projects as it currently stands. Range has been fully supportive of various initiatives, including collaboration with the Energy Chamber of Trinidad and Tobago, to get the attention of the government on oil winning fiscal and structural changes to increase productivity in Trinidad and Tobago.
What is the importance of the recently signed Local Content Charter and what are the key challenges in re-examining the issue of local content from an operator’s point of view?
We expect that the Local Content Charter will aim to provide all businesses with full, fair and reasonable opportunities for procurements as well as bring significant social and economic benefits to communities and stimulate economic activity to attract further investments to Trinidad and Tobago.
The main challenge that we could see arising is the ability of the domestic market to supply the range and level of services required, particularly given a scenario where all the companies would be looking to increase their local content.
For more information on Range Resources USD 4.55-million acquisition of the Brighton Marine asset and a 70% stake in Point Ligoure-Guapo Bay-Brighton Marine play, see our business intelligence platform, TOGYiN.
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