Sample News Story
Trinidad and Tobago LNG study launched
28/02/1993
In a deft move which may propel it ahead of the prestigious LNG project of its neighbour Venezuela, Trinidad's National Gas Company (NGC) has signed up a complete gas chain of partners to study launching a neat little LNG project of its own. Although in these days of mega projects a one train, 2 mtpa project doesn't seem much to shout about, the interesting assembling of interests may give this project a push its bigger brethren will envy. Two of the LNG world's pioneers, British Gas and Cabot of Boston, have agreed to investigate the feasibility of an export project based in the Caribbean Republic of Trinidad and Tobago, along with state-owned NGC and Trinidad's main gas producer, Amoco. The four companies are evaluating a project with an initial output of about 3 Bcm a year, just about right for a 2-2.5 million tonne a year (mtpa) train plant, targetted at markets in the north-east US (through the LNG import terminal owned by Cabot's subsidiary, Distrigas), the Caribbean and western Europe. The Trinidad and Tobago Government has given its provisional approval to the use of offshore gas reserves in the East Coast Marine area for the project and more reserves could be assigned if demand takes off.
A Memorandum of Understanding was signed, on December 16, 1992, by Cabot and NGC with BG joining one month later and Amoco following suit a few weeks later. Prior to the signings, Kellogg had been retained as an engineering consultant for Cabot and Bechtel had been retained by BG. It seems likely that both companies will continue to be retained for further studies. However, the partners have yet to decide who will undertake the joint feasibility study. Evaluation is likely to take around 12 months, but this does not mean the partners are going to wait that long to position. Themselves to launch a live project. Detailed discussions with the Government will of course be required before final decisions are taken on finance and development, but the scaled down size of the project and the presence of a key buyer in the group means that it can move faster than a large, seller only, project. Whether the Government realises this yet remains to be seen.
The partners are planning "a nominal 300 MMcfd equivalent capacity plant" initially, with a second train soon afterwards, depending on market demand. To greater ensure reliability, one idea being considered is using mini-trains of just over 1.1 mtpa each and the partners will no doubt want to investigate whether this will improve their chances of serving regional market niches without too much loss of scale economies. Much will depend on how much LNG Distrigas plans to take, a decision which should be easier to make once the fate of the Nigerian LNG project is known later this year. According to the promoters, the proposed ING project would require an investment of "about $1 billion" (which seems a bit low to me) and it could be in production by 1997, which is not as silly as it first appears, assuming the project and the Government do enough commercial and political work in parallel with the technical efforts now underway.
Studies have been carried out on three potential sites for the LNG terminal in Trinidad (see map): Chaguaramas in the north west of the island, Brighton/La Brea in the south west and, located mid-way between the two, Point Lisas. Although all three sites are potentially suitable, NGC is strongly in favour of Brighton/La Brea, which is earmarked to be Trinidad's second port/industrial energy park (Point Lisas was its first).
Trinidad has been considered as an LNG source several times in the past. A Trinidad to Puerto Rico ING trade was the subject of an aborted project involving Marine. Gas Transport and Amoco about three years ago. Four years ago, BG discussed the possibility of a joint LNG project with the Venezuelans, after it acquired Tenneco's licences in Trinidad. (The prospect of negotiating with, not one, but two host governments proved too daunting for some of the participants and the idea was dropped.) Trinidad's location in the Caribbean gives it a natural advantage in shipping to the US east coast. There is growing and potential demand for long-term, secure supplies of natural gas in the northeast US, the Caribbean Basin and Western Europe, though I think the project may surprise those who think the latter market is its best bet. The immediate interest in the Caribbean market is directed at Puerto Rico. In the longer term, energy-hungry Cuba (while presently also cash-strapped) could also be a very good prospect as a market for the LNG.
Using the philosophical image much admired at Distrigas of "The Little Engine that Could," each of the participants thinks it can bring value to the multi-phase project. Cabot ING, through subsidiaries and affiliates, owns the LNG import terminal in Everett, Massachusetts, and the ING carrier Gamma. It is the largest and oldest ING importer in the US. It would be instrumental in providing the most likely market for the LNG. British Gas would provide both upstream and downstream expertise. In addition to being an early pioneer in LNG (but somewhat less active over the past two decades) BG owns two 71,500 cm LNG carriers, the Arctic Tokyo, Polar Alaska, and the 27,400 cm Methane Princess. Amoco is Trinidad's largest current gas producer and is thus a natural partner. Also on the production front, BG Trinidad is the operator of three E&P licences in Trinidad and Tobago. In the East Coast Marine Area, it has an interest in Block 6, with Texaco as a 50% partner. This block contains the large undeveloped Dolphin gas field, with total reserves estimated to be 2 Tcf and BG and Texaco are in discussions with the Government regarding development. There is already an extensive offshore and onshore pipeline infrastructure in the east.
In the North Coast Marine area, BG operates the so-called DAB and DABO licences. The DAB partners are Deminex, Agip and BG, each with one-third. The DABO partners are Deminex, Agip and BG, each with 20% and Occidental with 40%. Proven reserves in this area are about 2 Tcf but ultimate reserves could be several times larger. NGC is owned by the Government and is responsible for the purchase and resale of all natural gas on the island, a 700 MMcfd business expected to grow to 900 MMcfd by 2000. NGC also has equity interests in ammonia, urea, methanol and LPG processing plants. Given its other calls on gas, Trinidad and Tobago's reserves are not massive, but are more than adequate for this project, and appear to have good potential for expansion. They amount to about 8.4 Tcf of proven reserves and at least 12 Tcf of probable and potential reserves.
Wherever this project's chosen market lies, its launch schedule and location puts it in direct competition with Venezuela's proposed Cristobal Colon project. It is a competition in which politics looms large and where the giant reputations of the Venezuela promoters (including Shell, Mitsubishi and Exxon) are pitted against the rather more modest LNG profiles of the Trinidad promoters. The Trinidad promoters may feel the absence of an LNG producer of status (see Heart of the Matter) is a blessing in disguise, given the unseemly rows amongst its Venezuelan rivals. But I can't help thinking that Trinidad would be even more attractive were it to have a respected LNG liquefaction plant operator in its midst.