Gas Boost May Fall Short at Atlantic LNG

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The recent start-up of Royal Dutch Shell's offshore Barracuda project heralds an upturn in Trinidad and Tobago's gas fortunes. Further production increases should follow courtesy of other developments by Shell, BHP, BP and Repsol that could add nearly 1.2 billion cubic feet per day (12.4 billion cubic meters per year). But these may not be enough to avert the permanent mothballing of the first of Atlantic LNG's four trains (WGI Apr.28'21). While the government wants to boost production to 4 Bcf/d by 2024 from a six-year low of 2.6 Bcf/d in April, natural field declines may keep the target out of reach. Much of the additional gas will be destined for the 15.3 million ton per year Atlantic LNG, in which Shell and BP are the biggest shareholders. Chronic gas shortages saw LNG exports tumble over 19% last year to 10.1 million tons, according to the GIIGNL importers' group, and led to the shutdown of the first 3.3 million ton/yr train last December. Shell owns 46% of Train 1, BP 34%, National Gas Co. of Trinidad (NGC) 10% and Chinese Investment Corp. 10%. NGC shareholder National Enterprises recently wrote down its interest in the train by 77% due to the continued inactivity. Around 47% of gas production was dedicated to Atlantic LNG in the first four months of 2021, down from 56% in 2020, according to the energy ministry (WGI Jun.30'21). Feedstock allocations have been complicated by the trains' varying ownership. Trains 2 and 3 are controlled by Shell (57.5%) and BP (42.5%), and Train 4 by Shell (51.11%), BP (37.78%) and NGC (11.11%). The government wants to restructure ownership, but talks have yet to bear fruit. The economic importance of gas to Trinidad means the twin-island nation remains a destination for the majors' upstream investment dollars, despite lack of fiscal incentives, generally lackluster drilling results and the requirement to sell some gas significantly below market rates to subsidize electricity prices. Decarbonization pressures are another potential deterrent. On the other hand, the country offers political, economic and currency stability -- a rarity in Latin America -- existing infrastructure and a developed service sector. Shell’s Block 5C Barracuda is a backfill project for Atlantic LNG. It says production will start at 140 million cubic feet per day, peaking at 220 MMcf/d. Other upcoming projects include the Cassia-C development of bpTT, a joint venture of BP (70%) and Repsol (30%). It is the country's largest producer, accounting for 49% of output in the first four months of 2021, down from 55% in 2020, according to the energy ministry. BHP's Ruby project in the Greater Angostura field should begin producing in the third quarter and could reach 80 MMcf/d and 16,000 barrels per day. Next year, Shell is eyeing start-up of a four-well development in Block 22 and the North Coast Marine Area 4, known as Colibri. Working with Heritage Petroleum, Shell expects initial Colibri production of 250 MMcf/d. BPTT forecasts initial output of 400 MMcf/d from its Matapal subsea development, which will tie back to the Juniper platform. Beyond 2022, Trinidad’s most ambitious project straddles the maritime border with Venezuela, struggling under US sanctions designed to topple President Nicolas Maduro. The cross-border Loran-Manatee field holds an estimated 10 trillion cubic feet of reserves, of which 2.7 Tcf are in Trinidad's Manatee, where Shell owns 100%. The major is talking to the Trinidad government about a production-sharing contract for Manatee and a company spokesperson tells Energy Intelligence it is optimistic agreement will be reached. MEEI says initial output could range from 300 MMcf-750 MMcf/d in 2025. Pietro Pitts, Houston

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