Trinidad’s onshore gas potential

Trinidad and Tobago

Paul Baay, president of Touchstone Exploration, talks to The Energy Year about the significance of the company’s production of the first onshore gas in Trinidad in more than 20 years and its approach to well optimisation. Touchstone Exploration is a Canadian upstream company operating in Trinidad and Tobago.

This interview is featured in The Energy Year Trinidad & Tobago 2023

What does producing first gas from the Coho facility represent for Touchstone and the diversification of your product mix?
On the corporate level, our production from the Coho-1 well takes us from being a 100% oil producer to having our production comprise 50% oil and 50% gas. When our Cascadura project comes on line, our production mix will be 80% gas and 20% oil.
It’s a big change for us but it wasn’t an intentional shift – it’s because of the nature of the basin and the prospects we’re looking at in Trinidad. The Ortoire block sits in the middle of a big turbidite deposit in the Herrera formation, which is our main target, and the bigger prizes in Trinidad are in gas production. For us, it’s a step change. We go from 1,400 bopd to 14,000 boepd over the course of a year.

What does the production of the first onshore gas in Trinidad in more than 20 years represent for other independent producers?
Ortoire was not only a big discovery for Touchstone, but a big discovery for Trinidad as a country. The main reason is that there are still world-class sized deposits of oil and gas to be found here, even onshore. With the shortage in gas supplies for the petrochemicals business, these onshore wells are the kind that can be brought on line fairly quickly with benefit to the producers, their offtakers and the country.

What approach are you taking to optimise production from the wells?
Our optimisation approach starts more from the geological and geophysical, the front end of things – identifying the right places to drill. A lot of the drilling on these deposits took place with Shell back in the 1950s and ‘60s, and we are drilling right next to those old wells. Technology and the way data is interpreted has changed since back then. So what we’re doing is reinterpreting that old data to help us further produce from the wells.
There is some amount of new data involved. We are utilising new seismic data as we go along, but most of it is a new set of eyes on old data.

How would new gas production impact your sales agreement with NGC?
Simply put, the arrangement is that NGC will build their own pipelines to the wellheads on the Ortoire block and buy the gas at a fixed price. It will therefore require no capital on our end, and they will be the offtakers for all the gas produced. If we were to discover natural gas from any other block outside of Ortoire and drill wells, the sales contract could be renegotiated, with the biggest variable being pricing.

Do you see Trinidad and Tobago having the potential to meet some of the LNG demand in Europe as local LNG projects increase?
Trinidad needs to meet its own demand before it can start looking offshore. The country is 1.5 bcf [42.5 mcm] per day short of feed for the local petrochemical plants. It would be irrational to use the LNG being produced here to meet the needs of a European market without first finding more gas and oil and taking care of the local petrochemical sector. Now, the government needs to get the right fiscal regime in place to attract that kind of capital.

What impact could the adjustments made to the Supplemental Petroleum Tax (SPT) regime in September 2022 have on incentivising new investments?
There is a lot of focus on the SPT alone, and that’s the wrong approach. I would say the best approach is to look at the overall tax burden – the corporate tax rate, the levies, everything that’s there in addition to the SPT. The whole Petroleum Taxes Act needs to be adjusted. And until the government does that, they’re not going to attract new investors and capital for Trinidad.
The lack of incentivisation was evident in the last bid round for the deepwater blocks. They all went to the same consortium of BP and Shell, and there were no new entrants to the market. The same thing will happen for onshore blocks. It’s going to be the same players, unless there is an overall revision.

Besides geology, what are the factors that make Trinidad an attractive zone for E&P players?
What makes Trinidad an attractive place for us is that there’s a built-in consumer of your product. Everything that is discovered can be sold right here.
The workforce here is also remarkable as there has been more than 100 years of oil and gas production, so all the engineers, geologists and relevant skills are already present. Some have even trained and worked for internationals like BP and Shell.

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