Steadfast commitment

Trinidad and Tobago

TOGY talks to Norman Christie, regional president of BP Trinidad and Tobago (BPTT), about ongoing and slated activities, the importance of developing competitive local content and the viability of Trinidad as a regional hub for international companies. BPTT produces 60% of the nation’s oil and gas with 13 offshore platforms.

Specialising in offshore activities, BPTT operates as Trinidad and Tobago’s largest hydrocarbons producer. The company has exploration licences covering 7,284 square kilometres in waters off Trinidad’s east and northeast coast. Trinidad and Tobago continues to experience complications as a result of the continuing low price of oil and natural gas shortages. However, BPTT has made strides in addressing the needs of the country through its involvement with the newly approved Angelin development, the Trinidad Regional Onshore Compression (TROC) project and the Juniper project, which has recently come online. Over the next five years BPTT has pledged to invest USD 5 billion in Trinidad and Tobago’s hydrocarbons market.

• On TROC: TROC is an example of industry collaboration, without which the project could never have been achieved. [The development] involves [the installation of] a compressor at a land-based facility that drops the pressure through the pipelines to the fields. Because the others aren’t availing themselves, the BPTT fields are benefitting. This grants access to resources that couldn’t have made their way through a system with higher pressures.

• On Trinidad and Tobago hydrocarbons market: Politics and local content considerations aside, Trinidad and Tobago is a natural hub because it has significant infrastructure and expertise in place as well as significant players, including those in downstream. The case for the country being used as a hub is easily made, as it’s easy to understand why you would utilise infrastructure that already exists, with capacity, rather than duplicating expenditures. The only caveat is the need to ensure that services facilities are competitive, with productive, cost efficient and in the right places.

Christie also discussed key achievements made by BPTT in the past six months and expectations for 2017. Most TOGY interviews are published exclusively on our business intelligence platform TOGYiN, but you can find the full interview with Norman Christie below.

What are some key achievements of the past six months?
[One of BPTT’s accomplishment] relates to increasing the production capacity outside of major projects. We’ve continued our three-rig programme: one rig that had been dedicated to the Juniper platform was used to drill the first exploration well dug in several years, the Savannah. The other two rigs continue to be developed for drilling where we’ve had success in the past. We’re beginning to see the results of our investments in new well delivery, in terms of increased production.
We’ve also launched the second phase of our seismic programme. For the past several years we’ve been focusing on the front-end of exploration, in terms of seismic studies. This second phase is primarily being conducted over the Teak, Samaan and Poui oilfields. Although BPTT divested its Teak, Saman and Poui oilfields to Repsol (now Perenco) BPTT retained its rights to E&P of resources in the deeper horizons below the existing, producing fields. The depths vary depending on the block.
In the last few months we’ve also made good progress on the Trinidad Onshore Compression Project (TROC), which is scheduled to begin in April.
At the end of last year our joint project with EOG [Resources], the Sercan gasfield, had a startup. The first well began producing in December, which was another operational milestone.

Could you describe your expectations for 2017?
In terms of projects that have already been sanctioned, we’re now executing the Juniper platform as well as TROC. We have a partner working on our EMZ gas development and first gas has occurred. We also have the ongoing activities with our rigs.
Then there are the possible activities, which are not yet sanctioned. They include the Angelin project, offshore compression, the Savannah well, which needs to be successfully explored, SE2B [the Solar Energy to Biomass project] and the Macadamia [a second exploration well], which will be drilled in Q3 of 2017. These are scheduled in our long-term development plans, but are awaiting sanctions due to issues with policies and negotiations with NGC [the National Gas Company of Trinidad and Tobago].
Third, we have the long-dated projects, which are scheduled but could be put on hold, depending on commercial terms. These are largely related to exploration.
Angelin is the next project in line. Juniper comes into production in spring 2017, but it will come off its plateau in 2019. To maintain a stable level of production, you need a project of scale to come onstream and pick up any slack. The timing of Angelin is critical, because you want it to be available when decline is about to occur.
In addition, two contracts will expire in 2018. Here Angelin is also important, so that gas is available for these contracts to be renegotiated or renewed.

How can Juniper be a model for subsea development in the country?
Subsequent subsea developments can benefit from pre-investments in Juniper. However, we have Angelin, then an offshore compression project to complete before we’d consider getting back into subsea work.
However, what we’ve learned from Juniper can apply to other developments, subsea or otherwise. One lesson concerns efficiency, which we have had to push for in this country, in order to be competitive. The TOFCO [Trinidad Offshore Fabricators] yards have to be focused on competitiveness, because the country is competing with other providers.
In terms of commercial viability, Juniper is different from the projects that will follow it. In order for it to be sanctioned, taxes were changed to allow for a faster capital recovery rate. The other projects I’ve mentioned require commercial, rather than fiscal arrangements, but the lesson learned is that you can’t get investment until your projects are competitive. Companies wait until their projects can compete in a global portfolio before investments are sanctioned.
Also, we learned to always be focused on creating opportunities for sustainable local content. This content has to be sustainable because it is competitive, not because it is sustainably subsidised.

Is there room for local services providers to pursue projects in Guyana?
The short answer is yes. We have a cross-border field that will be developed in the coquina well.
More broadly, for any project the question becomes: how can we co-operate and collaborate with local companies to deflate costs and make the country more competitive? We have formed an upstream operating group that targets these issues, and we’re beginning to see significant traction. The industry is seeing that the opportunities for local companies and multinationals are making Trinidad more competitive.

Has Trinidad become more receptive to new technologies since the introduction of major projects such as Juniper?
There has always been high receptivity to innovation and the inclusion of new technology here. A good example of this is the Ocean Bottom Cable (OBC) survey and more recently the Ocean Bottom Node (OBN). The OBC used Independent Simultaneous Source (ISS) technology. This represented the first time that BP used ISS technology outside of a test environment. The technology uses multiple vessels to collect data, making the process more complex but allowing for improved seismic imaging. As an example of the benefits of the OBC, the development of Angelin was fast-tracked because of improved imaging.
The OBN, which was conducted between December 2016 and March 2017 used nodes instead of cable which greatly reduced the time spent conducting the survey. This led to cost savings and reduction in exposure to risk through reduced vessel times.
We have always had a policy of allowing companies to bring in that kind of expertise. There’s also tax recovery for that kind of thing, so the system incentivises innovation. All hydrocarbon producers are entitled to carry forward and write off any rolling balances of tangible and intangible capital expenditure on a systematic basis in accordance with the tax legislation.
Not a lot of R&D is done in the country, so one benefit to working with multinationals is that a lot of it [technology] is brought in. Is there a need for more innovation? Absolutely, and we’re pushing to employ more new technology. Nodal ocean-bottom seismic imaging is just one example of an expensive technology brought in by a multinational that we’re learning about and benefiting from.

What is the importance of TROC for BPTT and the country?
[TROC] is an example of industry collaboration, without which the project could never be achieved. [The development] involves the installation of a compressor at a land-based facility that drops the pressure through the pipelines to the fields. Because the others aren’t availing themselves, the BPTT fields are benefitting. This grants access to resources that couldn’t have made their way through a system with higher pressures.
It is a relatively cost-effective way of bringing production to market in a relatively short time span, so getting it sanctioned and started will likewise take less time. The project is also important because it will test dropping pressure across more fields. We will later do it from an offshore facility on a much larger scale.

Will Trinidad become a hub for international players to serve neighboring markets?
I see it as a distinct possibility. Politics and local content considerations aside, Trinidad and Tobago is a natural hub because it has significant infrastructure and expertise in place as well as significant players, including those in downstream.
The case for the country being used as a hub is easily made, as it’s easy to understand why you would utilise infrastructure that already exists, with capacity, rather than duplicating expenditures. The only caveat is the need to ensure that services facilities are competitive, with productive, cost efficient and in the right places.

Where do you see room for the development of local content?
We’re a signatory on the local content charter. One important thing is that upstream, downstream, midstream and services companies were all represented on it, and they worked together to come up with something they could sign. At its heart is the common belief that a country should benefit from its own resources, and that this happens through the utilisation of local content.
You usually find debate around the notion of competitiveness. The chamber agreed that local companies should benefit, but should not be excused from being competitive in the long term, even if this involves a time to develop for sustainability.
Local companies being competitive makes good business sense; it makes sense to use resources that are close by and competitive. It doesn’t make sense to use these resources if they aren’t competitive, because this would be another form of subsidy.

What is preventing Trinidad from being competitive at a global level?
It is broadly accepted that productivity isn’t where it needs to be. Other complicating factors are bureaucracy and the pace at which things get done.

How important is Trinidad and Tobago in the BP portfolio?
Historically Trinidad and Tobago has fared well in our portfolio. However, heritage contracts have made it less competitive, which is the nature of 20-year contracts. As we look at the markets that we sell our gas to, we see a return regime that has suffered over a 20-year period, during which costs have grown and terms in contracts don’t allow BP to access commodity prices. There are also things that worked when gas was new, but are now kind of a nuisance.
For Trinidad to fare better, attention has to be paid to those contracts. We want to ensure that our portfolio is competitive, and we must lower costs.

For more information on BPTT in Trinidad and Tobago, including the company’s three-rig development programme, see our business intelligence platform, TOGYiN.
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