Can Trinidad and Tobago continue to be a viable option in the Atlantic Basin for LNG?

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Timmy Baksh, Senior Planning Officer, Ministry of Energy - Trinidad and Tobago.
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Article by Timmy Baksh, Senior Planning Officer, Ministry of Energy - Trinidad and Tobago.

Trinidad and Tobago is one of the oldest oil and gas provinces in the world, producing oil and gas for over 107 years. With respect to natural gas, Trinidad and Tobago is one of the global pioneers having started petrochemical production in 1959 while natural gas to electricity started as early as 1953.

In the early 2000’s Trinidad and Tobago positioned itself as the world leader in the production of ammonia and methanol from a single site and has to date the only Liquefied Natural Gas (LNG) facility which has ever come in under the production cost and before the scheduled time for completion. This LNG facility has the designation as a LNG facility with one of the world’s lowest capex/ton (2012 dollars).

In 2008, apart from the global financial crisis and the plummeting oil prices from US$145/ bbl in May 2008 to approximately US$40/bbl by the end of 2008, there was to be a new world order with respect to the commercialization of the fracking process for the economic extraction of shale gas and its proliferation in the United States. In 2008 the global oil and gas dynamics, as we the producers knew it, was put into a tail spin.

The way in which oil and gas is harnessed from the earth was revolutionised when the fracking process became an economically viable option. Since then the Henry Hub Price has plummeted and the West Texas Intermediate (WTI) bench mark crude price is being reported to be lower that the Brent North Sea Crude prices, traditionally WTI always held a premium to Brent Crude.

In the United States the demand for LNG imports has reduced drastically, with the US imports of LNG falling from US$3.8 billion in 2008 to US$1.2 billion in 2014. While Trinidad and Tobago remains the primary foreign supplier of LNG to the US market, in 2014 the US imported 18% of Trinidad and Tobago’s LNG exports when compared to 80% in 2008.

Trinidad and Tobago has been and will continue to be one of the most important and strategic suppliers in global LNG. In 2016, there has been some issues with respect to the availability of natural gas and the allocation for LNG, however, these issues are being addressed and it is expected to eventually be resolved in 2017.

When the gas constraint issues are regularized, there must be a sensible drive for the future expansion of the LNG sector, key initiatives can include: a Caribbean LNG market by providing new technologies for the region, e.g. endeavor to provide floating re-gas terminals for groups of islands and “spur off” LNG supply from the re-gas facility; the consideration of LNG as the fuel of choice for bunkering; the use of compressed natural gas or LNG as a fuel for mass transportation domestically.

With respect to downstream and further downstream projects: the possibility of natural gas to pharmaceuticals and the use of conventional energy for the manufacturing of components for renewable energy capture, i.e. manufacture of solar and photovoltaic panels or turbines and other wind farm components. The processes for the manufacture of these components are energy intensive and Trinidad and Tobago has one of the lowest cost per kilowatt hour in the world.

Trinidad and Tobago through deliberate policy initiatives is positioned to be a permanent fixture in global LNG market. As such, policy makers need to be vigilant in monitoring the fortunes of the global economic drivers while making prudent decisions in order to be first movers in the turbulent global LNG market.

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Wednesday, April 5th from 1pm to 5:20pm – Key industry leaders including Prabhat Singh, Chief Executive Officer of Petronet LNG Limited and Philip Olivier, Chief Executive Officer of ENGIE LNG will be discussing "The Future for Gas in the New Dawn of Tighter Economics and Lower Carbon Emissions" at Gastech 2017 in Chiba – Tokyo. View the Gastech conference programme.

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Image: The Atlantic Facility located in Point Fortin, Trinidad and Tobago. Atlantic LNG operates four liquefaction units (trains). Train 4, has a 5.2 million metric tonnes per annum (mtpa) production capacity and is among the world's largest LNG trains in operation. With a total production capacity of 15.4 mtpa, Trinidad and Tobago ranks 6th globally with respect to LNG exports.