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Expansion of energy sector output builds momentum

Thursday, February 22, 2018

The energy sector continues its turn around with increased natural gas production and usage, slightly improved crude production and higher commodity prices according to latest data from the Ministry of Energy and Energy Industries.

In a Cabinet Note the Ministry reported that as of December last year there was a one per cent increase in crude production with the country recording 72,465 barrels of oil per day (bopd).

That is up from 71,566 in November and significantly better than the 66,438 recorded in October.

According to the Ministry of Energy, the growth was due to significant improvements in production from BHP Billiton and bpTT.

The Cabinet Note—which Business and Money obtained a copy of—reads, “BHP recorded a 33 per cent or 1,543 bopd increase in crude and condensate production due to a water reconciliation exercise, which was conducted on its storage tank and the reintroduction of the second associated gas compressor, while bpTT had an increase of approximately 900 bopd, due to several wells in the Mahogany and Immortelle fields being brought online. However, due to decreases in production by other operators, the net effect was a nominal increase (one per cent) in overall production.”

It noted that companies such as Petrotrin’s IPSC, lease operators and farm outs had a decrease in production, but this was overshadowed by a 1,543-bopd increase in output by BHP and 911 bopd by bpTT.

“Production was higher from BHP because of the re-installation of its second associated gas compressor in November. Since both compressors were in operation, the high gas to oil ratio (GOR) wells were able to flow to its potential resulting in increased levels of oil production.

“Furthermore, on December 10, 2017, BHP conducted a water reconciliation exercise on its storage tank, which affected the level of production during the month. In addition to BHP, production from bpTT also increased as several wells in Mahogany and Immortelle were brought back online, after being offline for valve servicing/testing.”

The increase crude production could not come at a better time because prices in December increased and while there was a dip earlier this month, both West Texas Intermediate (WTI) and Brent Crude remained over US $60 a barrel as of end of trading Tuesday.

The Cabinet note said that the prices of WTI and Brent crudes increased by 2 per cent to US$58.09 per barrel and US$64.15 per barrel respectively for December 2017.

It noted that EIA projections were that WTI would average US$50.79/bbl in 2017 and US$55.33/bbl in 2018.

Brent was expected to average US$54.15/bbl in 2017 and US$59.74/bbl in 2018.

Galeota Mix, which is all the oil and condensate from bpTT and Perenco, fetches a higher price than Brent and in December averaged US$66.88 a barrel.

BHP’s Calypso crude averaged US$62.27 and Petrotrin’s local crude US$56.30 in December.

It must be noted that Finance Minister Colm Imbert has based his revenue projections on crude process averaging US$50 a barrel but that has been exceeded so far in fiscal 2018.

Importantly, natural gas production in December was the highest it has been in two years averaging 3.81 billion cubic feet per day.

The significant rise is as a direct result of bpTT’s Juniper field.

“Natural gas production increased by 4 per cent to 3,816 MMscf/d due to increased output from bpTT and BHP. Similarly, natural gas sales increased 3 per cent to 3,520 MMscf/d due to increased sales from NGC and bpTT. Liquefied Natural Gas (LNG) remained the largest user of natural gas for the month, accounting for 59 per cent of gas usage, followed by ammonia and methanol, both at 15 per cent. Increased supplies by bpTT resulted in a 10 per cent increase in LNG production to 58,078,658 MMBtu,” the Cabinet note read.

On the petrochemicals, side ammonia production decreased because Tringen I, CNC and the AUM plants were negatively affected by maintenance works on the plants, while Tringen II was offline for two days due to plant trips.

Methanol production increased as TTMC II and Atlas Methanol had less downtime in December than in the previous month and the Methanol IV plant resumed production on December 24, 2017 after being offline for six months.

Urea production increased while UAN production decreased because the AUM plant was down for 49 days due to maintenance works.

In terms or Petrotrin, its refinery throughput decreased by 717 bpd or 0.51% in December to 140,750 bpd.

Refinery unit cost, inclusive of overheads, decreased from US$6.62/bbl in November 2017 to US$5.68/bbl in December 2017 due to lower operating expenses.


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