A Deepwater Gas Field Development Strategy for T&T

Abstract

Abstract The phrase "a cleaner and environmentally attractive fuel," describes why the gaseous hydrocarbon, natural gas, is a favored fuel choice compared with other hydrocarbon fuels and coal. Its emergence as a preferred fuel has grown throughout the years and as such worldwide consumption and production have escalated. Trinidad and Tobago is the top natural gas producer in the Caribbean with an average 2014 daily production of 4,069 MMscfd. With a vibrant upstream, midstream and downstream sector, Trinidad and Tobago makes maximum use of the natural gas value chain. Further maximization through growth in Trinidad and Tobago's downstream sector requires an adequate supply of natural gas in addition to the shallow water gas fields offshore Trinidad and Tobago which are currently the main supply source. Deep water gas fields have the potential to increase supply but unlike oil, the ease and economics of development are challenging. As a thriving gas sector, a myriad of infrastructure already exists which may aid with any further development. An understanding of the magnitude of investment, its return to both operator and government and the well head price to economically produce natural gas from deep water fields is critical especially for potential domestic and Caribbean markets. For Trinidad and Tobago, an economic option to develop potential gas resources in deep water fields would bolster further downstream investment and by extension the economy. Regionally, potential markets can also be served via this supply. This paper therefore focuses on a deep water gas development strategy which utilizes Trinidad and Tobago's existing infrastructure. It presents a technical and economic evaluation of a deep water gas field based on three (3) recoverable resource sizes, one price structure and a production range of 500 mmscfd to 750 mmscfd. The development strategy along with associated capital and operational expenditure, Net Present Value (NPV) discounted at 6%, 8% and 10% nominal to January 2015, Government and Operator share percentages and internal rate of return (IRR) are highlighted. The paper concludes that initial investment for a resource size of 3tcf to 5tcf would be between five (5)-eight (8) billion USD. Economic returns to both Operator and Government for these deep water, dry gas developments requires a well head price of greater than USD 3.50 per mscf. Government share % ranges from 19 % to 35% and for the operator, an NPV of USD 1.2 Bn to USD 2.3 Bn can be achieved.