David BORDE

The approach that the National Hydrocarbons Agency of Colombia and Pemex take toward reserves and resources is a fantastic model for Trinidad. Their number-one priority is to organise their data so that the investors talking to the group would be able to make better decisions, and understand the risk and the value of the data.

David BORDE Managing Director PetroCom Technologies

in figures

Production increase possible through Blue Spark technology:20-100%

Number of wells tested with Blue Spark:500

The next stage of development

June 22, 2016

TOGY speaks to David Borde, managing director of PetroCom Technologies, about the company’s activities in 2015, Trinidad’s goal of setting up a regulatory organisation to oversee the hydrocarbons industry and localisation issues. PetroCom is set to become the sole representative of a new reservoir stimulation technology called Blue Spark that allows operators to affordably increase well productivity.

What were the company’s key milestones in 2015?
Fortunately, one of our major milestones was that even though we are a small company, we extended our services to West Africa and to more international activities.
We completed a project for Equatorial Guinea. The actual paying project was an evaluation of the existing acreage and independent assessment to help the country have a better feel for what acreage is as well as the potential in that sector.
I would also add another important milestone. It wasn’t a major revenue producer, so to speak, but it was really important, because of the support we had from the Energy Chamber of Trinidad and Tobago. Our data initiative, the Petroleum Intelligence Centre, was endorsed by the Energy Chamber.
Their membership understood the value of Trinidad developing a much more modern data structure and an ability to share data. Then there was a change of government in September 2015 so we had to regroup and start again. It’s accelerated more with the new government. The whole idea of Trinidad taking charge of its data, making it transparent, allowing for global competitiveness and really repositioning the country is a good idea. When it comes to our data and reserves, we as a country can do a lot more.
In 2015, we started working on a reserves workshop in conjunction with Deloitte. The work done on that in the last quarter of the year has proven to be very important because we are now working and meeting independently with different players in the upstream, midstream and downstream sectors. The realisation is that we really do not have a full grasp of our reserve situation, the different reporting systems or the different measuring techniques being used. There is plenty of confusion when it comes to oil reserves here and we have to get it straight.

Why is it essential for Trinidad and Tobago to set up a standardised independent body to oversee and audit the oil and gas industry?
The organisation would be the equivalent of the US Securities and Exchange Commission [SEC] for Trinidad and Tobago. It would open up a lot of employment and career opportunities, but it will be tied to global standards. We don’t want to come up with another thing that makes sense to nobody, because whatever results come from this – and it’s ongoing – it’s not like your reserves are fixed. The reserves depend on so many variables that can never be fixed.
That’s important because different operators report to different bodies. Everyone is doing their independent audit. That information isn’t shared with the government authorities; these are private audits. What does Trinidad have? What are Trinidad’s assets?
When the ministry does their gas audit, the auditor goes to different companies and gets information, but the information that we get is from the operator. They don’t use it. They don’t trust the numbers because that number doesn’t really mean anything and that is double the work because they and their partners report to the SEC.
There is a lot of confusion and a lot of time, energy and financial wastage because those numbers have to be reconciled. If there was one local body that was facilitating the standardisation across the boards, any company that had an internal auditing system could report to the proper authority. But in this country, that translates to something real across the board. Everyone knows what the figures are and Trinidad knows what the figures are.
Yes, we can operate independently because in a company obviously if you do the internal audit, the numbers are going to be boosted. It happens that we wanted to be independent and local so that we could build the local capacity of understanding how to do this as well as ensuring that proper auditing practices are maintained or they need to be changed and redefined.
It’s not currently done like that in Trinidad. We don’t have an oil and gas audit currently done in Trinidad every year, these are standard things that should be done. We’ve gotten feedback from the majors that that’s in their interests as well.
This is a major issue at a national and governmental level. We are making progress and the fact that we have the companies on board, the Energy Chamber and some key government officials is helpful. It would be a lot easier if the companies have a single audit. And then you can have a structure where the government and the companies can have input into how the reserves and resource processes are facilitated.

How important is educating the society to bring about a change in the outlook of the country’s oil and gas industry?
That has to be ongoing, because when you think of it after 100 years in this business, there are too few Trinidadians that really understand the sector. You may think even people in the industry have a good feel because they have worked in it for 30-40 years or whatever and if you ask them some pointed questions, they just know about their specific area of expertise.
We would like to see locals being engaged at higher levels of the oil and gas pyramid in terms of value added. A lot of the locals don’t get exposed to managerial expertise, for example.
Our banks do not invest in the industry. And that’s an education problem. They just don’t trust the industry, they don’t understand the risk and they don’t understand the uncertainty. And that is why our goal at PetroCom, as small as we are and because we have been out there in the bigger world, is to come back and try to get to a higher level of the oil and gas pyramid.

 

Do you think the initiative for that should come from the governmental side working together with the companies?
Yes. It should be a collaborative effort. The government can play their role in terms of the local content, and regulations and insisting that in the tendering processes for companies whereas more companies will compete based on costs, technical efficiency, and local content should be a factor that’s in there as well. If you don’t have a certain amount of local content and not just a certain amount of numbers, specific local content requirements are going to facilitate higher value-added objectives.
These local-content initiatives are good for businesses and good for their bottom line because they have the initial period when they have to train people. But in the long term, it will be less money to bring expats down here when you employ locals and you have the facilities and local services industry. Once you are able to set the standards that the locals have to raise themselves to, then you have your international standards in the country. It’s a lot cheaper and this is good for business.

What do you think makes Trinidad an attractive investment destination today?
The quick answer to that is that the oil and gasfields are prolific. You almost have to try to miss. There is plenty oil and gas in Trinidad. That is not the issue really, because some of the fields of Petrotrin are significant and Petrotrin does not have the capital to go and do things properly. It’s very hard in a country that has experienced a lot of state ownership to say that.
Let’s keep it simple. Reserves are what you absolutely have qualified by technology, by a contract. You know your whole mechanism for getting it and using it. All of that is absolutely certain and ready to go. Resources are where you have identified some strong possibilities that you don’t have in the contract and there are a lot of outstanding issues. For example, if we were to find a massive oilfield far offshore Trinidad you cannot call that reserves, because where is the pipeline? Where is the contract? Centrica finds itself in that situation. They found all this gas off of Tobago.
Your reserve is supposed to be one-tenth of the resources because the resources is the big pool that you are going to be bringing on stream.
But if you were to speculate on some of the reports of the government, the reality is more like 50%-50%, which is not a good situation. But the risk factor associated with not reporting properly or conveniently or politically is big, because that does not make you globally competitive. There is also an advanced risk in what is happening but this is quite detailed.
The budget is based on reserves. If the SEC changes its decision in Trinidad, you find now that the price drops and what was commercial no longer is and your reserves are taking a huge hit, whereas five years down the line spending on what you thought you had as reserves.
Suppose there is an existing oilfield here, right? And you can make money on it at USD 50 per barrel. Anything above USD 50 can be profitable. Right? The price drops to USD 30, like it did. This is no longer your reserve base, because it’s not profitable. You are now in a different place because you might have to abandon this field. There hasn’t been only one company in Trinidad whose reserves have dropped in the last five months.
Because of the price of oil, it makes 10 fields become non-commercial as the lifting costs become higher. What are reserves at a higher price return to being resources at a lower price; 99.9% of the population does not understand that concept because they think of the physical field as being reserves. Reserves is an economic term only. It is related to what is in the ground but it’s not the only driving factor. It never really is that we are running out of oil and gas as you would hear, it’s always economics and technology.
The approach that the National Hydrocarbons Agency of Colombia and Pemex take toward reserves and resources is a fantastic model for Trinidad. Their number-one priority is to organise their data so that the investors talking to the group would be able to make better decisions, and understand the risk and the value of the data. We have been talking to SEC about it but there is a resistance to change the current system here.

What exactly can PetroCom’s smart pump technology bring to the table in Trinidad? What other technologies is the company looking at?
The technology that we have is called Seisnetics, which is a tool for the analysis of seismic data. I met with the senior people in the ministry and they are now thinking that it would be a really smart idea, now that technically we have to rebuild the industry, to use our Seisnetics capability along with our geotechnical skills in the group to help better re-evaluate the acreage around Trinidad. Seisnetics could play a very dynamic part in getting a better feel for what we have locally.
Seisnetics is a technology used in Equatorial Guinea. It’s not just a technology that helps you better evaluate. The work can be done rapidly. It makes it a lot easier to screen and interpret that data, whether it is for exploration or feasible appraisal or production purposes. You get down to the reservoir level. You can have different teams of geoscientists working with the same 3D volume, some looking at producing shallow ones and some that can adapt from my exploration standpoint. That is a very powerful tool.
We also came up with this new technology called Blue Spark, which is a reservoir stimulation technology. This has been tested in over 500 wells for a Canadian company. It’s French technology and Blue Spark Energy is very keen on bringing it to Trinidad.
The reception for this tool is extremely high because it allows you to go into the existing wells and use this special technology, which is an electro hydraulic method, and get the well cleaned up so the production could increase anywhere from 20% to 100% in some cases because it’s removing all the junk in a very effective, very surgical manner from around the well bore. It is a technology that does not affect the area. It doesn’t have much impact or much footprint, which is important.
The energy source required is a 110-V plug. It takes it down to the well bore and increases to 15 kV. It’s an impulsive high-voltage system.
What is interesting about the product is that every company wants to increase production without spending much money. Blue Spark can help you to do that and they know they have problems with the existing well. Sometimes they were producing 16 bpd and now they are down to 10 bpd. They know the well has potential, but there are blockages.
Companies would make that sacrifice and use this Blue Spark technology because it gets into the matter. It speaks for itself. If you find out that you have a health issue and you know the doctor can address it, you are going to find the money. If you have three relatives, you can borrow it. We brought them down and had meetings with quite a few companies and the reception is very good. PetroCom is going to be the exclusive representative of this technology, which is new around the world. It’s not just new to Trinidad.

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