Shell profit down
The Hague-based LNG giant Shell reported a nearly 50 percent drop in profit for the fourth quarter of 2019 on lower realized oil, gas and LNG prices.
The company reported a net profit of $2.9 billion for the quarter under review, 48 percent down on the $5.6 billion reported in the corresponding quarter of 2018.
Profit for the year 2019 was 23 percent down on the previous year, to $16.4 billion, Shell said in its quarterly report.
The fourth-quarter earnings reflected lower realized oil, gas and LNG prices, weaker realized refining and chemicals margins as well as negative movements in deferred tax positions, compared with the fourth quarter of 2018.
Fourth-quarter Integrated Gas Earnings slipped 47 percent for the quarter under review, compared to the corresponding quarter in 2018.
Compared with the fourth quarter of 2018, Integrated Gas earnings excluding identified items primarily reflected lower realized LNG, oil and gas prices as well as higher operating expenses and depreciation, partly offset by stronger contributions from LNG, gas and power trading and optimization. The segment reported earnings of $1.9 billion which compares to $2.3 billion in the fourth quarter of 2018.
Compared with the fourth quarter of 2018, total production decreased mainly due to the transfer of the Salym asset into the Upstream segment and divestments, largely offset by field ramp-ups in Australia and Trinidad and Tobago.
LNG liquefaction volumes increased mainly as a result of additional capacity from the Prelude floating LNG facility and the Elba LNG facility compared with the fourth quarter of 2018.
Volumes reached 9.21 million tonnes in the quarter under review, up from 8.78 million tons in the fourth quarter of 2018.
LNG sales volumes have jumped 16 percent, reaching 20.09 million tonnes, compared to 17.39 million tonnes in the fourth quarter of 2018.
Shell’s LNG volumes for 2019 reached 35.55 million tonnes, 4 percent above the 34.32 million tonnes reported in 2018. LNG sales volumes for 2019 reached 74.45 million tonnes, 5 percent above the 71.21 million tonnes reported in 2018.
TOUCHSTONE
Cacadura-1ST1 production testing commenced on February 4, 2020, with the first stage testing the lower most 162 feet of a total of 777 feet of identified pay in the Herrera formation.
- Average flowback rate during the final 14-hour test period was 5,180 barrels of oil equivalent per day (‘boe/d’), including 26.9 million cubic feet per day (‘MMcf/d’) of natural gas and 694 barrels per day (‘bbls/d’) of natural gas liquids.
- Peak flowback rate of 5,736 boe/d, including 30.2 MMcf/d of natural gas and 710 bbls/d of natural gas liquids.
- A total of 28.6 million cubic feet of gas (4,770 barrels of oil equivalent) and 680 barrels of natural gas liquids were produced during the testing period.
- Field analysis indicated liquids rich gas with no hydrogen sulfide and no produced water.
The well is expected to be shut-in for a two-week pressure build-up test, following which we anticipate completing and testing an additional 450 feet of identified pay.
Paul Baay, President and Chief Executive Officer, commented:
‘The Cascadura production test results represent a dramatic change for Touchstone, as it confirms the monumental resource potential of the Ortoire exploration block following the earlier success of our Coho-1 well. Furthermore, the test results are only attributable to the lower most portion of the well, and with 450 feet of contiguous sand to be tested, the full potential of the structure is yet to be defined.
To put these results in context, our average daily oil production for the three months ended September 30, 2019 was 1,729 bbls/d. The modelling from the final test results at Coho-1 supports initial gross production rates between 10 to 12 MMcf/d per day (approximately 1,667 to 2,000 boe/d) with Cascadura now set to provide a further step change.
Given these results, the Company will focus on multiple tie-in scenarios in order to maximize economic value. The Ortoire exploration block continues to consistently and dramatically outperform expectations and presents an exciting new opportunity for both Touchstone and the onshore oil and gas industry in Trinidad.’
Cascadura-1ST1 Testing
As previously announced, the Cascadura-1 exploration well on the Ortoire exploration block, onshore in the Republic of Trinidad and Tobago (Touchstone 80% working interest operator, Heritage Petroleum Company Limited 20% working interest) was sidetracked (ST1) and drilled to a total depth of 6,350 feet.
Cased hole wireline logs and drilling samples indicated approx. 1,037 feet of prospective hydrocarbon pay in the Cruse and Herrera formations at depths between 1,030 and 6,350 feet. The first stage of the initial production test of the Cascadura-1ST1 well was designed to evaluate the lowest 162 feet of prospective pay found in the Herrera Gr7c and Herrera Gr7a formations between 6,056 and 6,218 feet.
This interval was completed on January 17, 2020, and testing was suspended due to high pressures and natural gas volumes encountered on the clean-up flow.
The Company subsequently mobilized an international well testing company to assist in the evaluation of the high-pressure natural gas well. Natural gas production testing commenced on February 4, 2020 with flow tests spanning a total of 36 hours, comprised of an initial clean-up flow period, followed by an initial shut-in period and a four-step rate test, including a final 14-hour extended flow test.
Cascadura-1ST1 achieved a peak production rate in excess of 5,736 boe/d during the extended flow test period. This production rate included 30.2 MMcf/d of natural gas and 710 bbls/d of natural gas liquids.
The flowing pressure of the well during this stage of testing was 3,305 psi through a 40/64″ choke. During the final 14-hour extended flow test period, the well averaged a production rate in excess of 5,180 boe/d including 26.9 MMcf/d of natural gas and 694 bbls/d of natural gas liquids. The flowing pressure of the well during this test period was 3,319 psi through a 40/64″ choke, resulting in an estimated 20% draw down. A total of 28.6 million cubic feet of natural gas (4,770 barrels of oil equivalent) was produced during testing, with 680 barrels of natural gas liquids and 38 barrels of water.
During the final extended flow test, Cascadura-1ST1 yielded an average of 54° API natural gas liquids at a ratio of approximately 26 barrels of free natural gas liquids per million cubic feet of natural gas produced. Field analysis of the produced gas indicated liquids rich natural gas with no hydrogen sulfide content. Additional testing of fluid samples will be conducted to accurately assess the gas and associated liquids composition.
The well is now expected to be shut-in for an extended pressure build-up survey. This build-up period is anticipated to take two weeks, after which the Company plans to complete and test the second stage of the Herrera Gr7bc formation targeting approximately 450 feet of pay immediately above the first test interval.
James Shipka, Chief Operating Officer, commented:
‘The exceptional performance of the initial Cascadura test demonstrates the tremendous potential of the high-quality Herrera turbidites on the Ortoire block. The Coho and Cascadura discoveries have proven our turbidite model and indicate that the main sand fairway extends through a large portion of the Ortoire block. These discoveries provide further confidence as we move forward with two further exploration wells at our Chinook and Royston prospects which are targeting separate structures along the same geological trend.’
Source: Touchstone Exploration
Touchstone Exploration drilling ahead in Trinidad
Two rigs to drill two onshore wells simultaneously, chief executive said
By Caroline Evans in Port of Spain
Canadian junior Touchstone Exploration plans to accelerate the drilling of two more wells onshore Trinidad and Tobago following successful results from a pair of initial wells last year.
Natural gas companies have a crucial role in the energy transition
IEA’s World Energy Outlook special report on the role of the oil and gas industry in the energy transition comes to a clear conclusion. Although a successful transition to low carbon energy sources is possible without the involvement of the traditional energy players, a transition of this kind would be more difficult and more costly to achieve.
For oil and gas companies determined to play a part, the steps that need to be taken are challenging but clear-cut. Capital expenditure in low carbon projects, which currently makes up about 5% of the leading oil & gas companies’ annual budget allocation, needs to be substantially increased.
Emissions from existing operations must also be accounted for and dealt with. This is a “first-order priority for all”, the IEA argues. Fossil fuels will still be a key element of the energy mix for decades, and while they are, it is imperative that the climate impact of methane emissions and flaring are minimised.
Another takeaway is the IEA’s reminder that electricity, though an increasingly significant part of the energy system, is still only part of the solution to the problem of global emissions. Investments in hydrogen, biomethane and other low carbon fuels will be needed to decarbonise the many applications for which electrification is not a suitable fix.
By drawing attention to the positive role that the oil & gas industry can play in the energy transition, the report anticipates some of the central themes that will drive the discussion at Flame 2020, Europe’s largest gas and LNG conference
For the past several years, Flame has provided a vital platform for the natural gas industry to confront the key challenges involved with the transition – in particular, how to decarbonise gas infrastructure and meet rising global demand for energy in the process.
The 2020 agenda brings a renewed focus to the technologies needed to reduce emissions from the gas system, including power-to-gas, blue hydrogen, biomethane and CCUS.
Day two of the conference is entirely focused on decarbonisation, with discussions ranging from the implications of the European Green Deal to the impact of the energy transition on gas storage. Similar issues will also be explored at the Energy Transition World Forum and Biogas Development Forum, both co-located with Flame.
It is more important than ever that the gas industry has a venue to collaborate on these issues in 2020. The largest and most influential European event of its kind, Flame will continue to be the conference gas professionals turn to in order to understand the role of their industry in the transition to a carbon neutral future.
[ We hope you can join us in Amsterdam from 11 – 13 May to share your perspective. You can find out more about Flame here: http://bit.ly/38QeA4V ]
The opinions, beliefs, and viewpoints expressed in this article do not necessarily reflect the opinions of LNG World News.
UTT president resigns
PROF Sarim Al-Zubaidy resigned as president of the University of Trinidad and Tobago (UTT), after days of rumours circulating.
Asked to comment on a memo in his name which was e-mailed to media houses, Al-Zubaidy said, “If it is there, it is there.”
Asked if he was resigning prematurely ahead of the date in August when his contract reportedly expires, Al-Zubaidy said everything he wanted to say was contained in the memo.
When Newsday asked why he was resigning and what his future plans are, he repeated his previous answer.
His tenure will have run for two and a half years, from August 7, 2017 to February 25, 2020.
That period was marked by the retrenchment of several hundred academic and non-academic staff in light of restructuring brought on by calls to cut costs.
Staff were retrenched in several rounds, amid claims this might lower teaching quality and deny some staff a procedural fairness in dismissal.
A citizen of Iraq, Al-Zubaidy has a PhD in mechanical engineering from the University of Hertfordshire and has worked in Oman, Kazakstan, UAE, New Zealand, Malaysia, Australia, Jamaica and the UK.
Education Minister Anthony Garcia said that before he could comment on the resignation, he understood UTT acting chairman Prof Clement Imbert first wants to speak to UTT chairman Prof Ken Julien, who is out of the country.
Al-Zubaidy’s memo, titled Tender of Resignation, was dated January 14 and addressed to all members of staff.
In it he said, “I wish to inform the university community that I have officially tendered my resignation as President of UTT effective March 31.
“However I will be proceeding on vacation leave and my final day in office will be February 25.”
He commented on his tenure,
“I see a young university that has the potential to further evolve into a well-respected, well-established tertiary institution that can play a pivotal role in the development of the human resources of the country and the region. Indeed we have been able to surmount the many challenges, but they have only served to steer us on the right path towards providing quality tertiary education and research for the advancement of TT.”
Al-Zubaidy said he has had the pleasure to work with some of the most brilliant academic minds and to witness the university’s innate talent and vitality.
“I am confident these qualities will serve the university in good stead as it continues forward in the pursuit of excellence.”
He extended a gracious farewell to university staff and best wishes in their future endeavours, and to the Student Guild whose tireless work he said had created a student-centred environment. “Finally I wish to extend a thank you to the chairman and members of the board of governors of UTT for allowing me the opportunity to dutifully serve this national institution with pride. I wish you all the very best as you transition into the new phase of UTT.”
PET
Discussions continue between government team and Patriotic Energies and Technologies Company Ltd and other stakeholders
Backed by OWTU Pension funds PET is the preferred bidder for Pointe-a-Pierre refinery. They were accompanied to the talks with the evaluation committee and a Cabinet sub-committee comprising of Stuart Young as Minister in the Office of the Prime Minister, Robert Le Hunte, Minister of Public Utilities and Franklin Khan, Minister of Energy and Energy Industries (MEEI), by their international advisers.
The Ministry of Energy described the meeting as “very productive,” saying the main objective “being the restart of the refinery.”
The next steps, are the “establishment of dedicated teams on both sides to achieve this mandate as well as a detailed inspection of the assets in the transaction. As we seek to finalise the transaction there would be continued dialogue between all parties with a view to achieving restart of the refinery within the earliest possible timeframe which would redound to the benefit of the citizens of T&T.”
Titan prepares to close
The crisis at the Point Lisas Industrial Estate is escalating with the planned shutdown of the Titan Methanol plant if it is unable to reach an agreement with the NGC for the supply of natural gas.
Plans are in place for the plant’s closure and mothballing because after a year of negotiations with the NGC and having spent more than a quarter billion dollars last year in an upgrade, Methanex cannot reach an agreement with the State aggregator.
If the plant closes 100 high-paid permanent employees will be axed with another 40 contract workers also getting their pink slips.
It will also mean a loss of tens of millions of US dollars for the treasury should the plant close.
There are last-minute efforts by the regime, the NGC and the company to avert the situation but that looks grim.
It would be the second plant in two months to close after Yara shut down its plant ousting workers because it could not pay the price the NGC is demanding for its gas.
In the last four years, thousands of workers in the energy sector have lost their jobs.
Energy Minister Franklin Khan insisted negotiations are still ongoing and it is not a done deal, responding to the following questions –
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- Is the Government concerned about the possibility that another plant will be shut down on the estate?
- Is it that the upstream contracts have to be renegotiated because the downstream simply cannot pay for gas at those new prices?
- Is it that the closure of these plants will make no difference since other industries can sustain these higher prices?
- Do you expect more closures?
Khan said, “It is inappropriate to comment on Titan’s action when we are still in active negotiations with Methanex. This will be speculation at the moment. Titan has made a public statement that there is an interim agreement in place to allow the parties to continue negotiations. This is obviously with a view to arriving at an agreement and to parties continue to work diligently towards that result.”
At the heart of the problem is the price that the NGC wants to charge the downstream companies for gas. Petrochemical companies have been saying that the higher prices will mean they operate at a loss, with global prices for both methanol and ammonia weak.
It is also a position predicted in a study by economist Dr Terrence Farrell who found that the sustainability of the downstream petrochemical sector is under threat because of uncompetitive natural gas prices. Natural gas shortages and high prices led to a reduction in methanol and ammonia production and loss of jobs in the sector. Unless there is a change in policy, the sector will get to a point of no return and there will be a collapse of the Point Lisas Industrial Estate.
NGC Chairman Conrad Enill insisted that the negotiations are ongoing but companies needed to ask themselves how some can survive at the higher prices- a clear shot at Methanex and Yara as opposed to Nutrien which reached an agreement on new prices with the NGC.
Enill said, “We have contracts that we have signed with individuals outside of Yara, and they are able to do what some others are not doing, so the question is what are companies doing and how are companies positioning in the same environment that some can survive and some cannot. Those are questions that they need to answer. The issue with the Titan plant is the model and they have to explain that to you.”
NGC is a business that buys and sells gas and can only sell at a profit. The country is in a position where the energy sector and circumstances in the energy business have changed.
When it was pointed out that the change had now made the NGC gas prices uncompetitive globally, Enill responded, “NGC, like everybody else, is working to see how it can mitigate those issues and how it can, in fact, continue to ensure that those who can do it will do it, and that is the basic issue.”
Enill was asked if there is a need to renegotiate the deal with the upstream companies that was facilitated by the prime minister and which both Energy Minister Khan and National Security Minister Stewart Young praised as the famous Houston trip, but he denied negotiating the agreement, saying he merely facilitated the return to the bargaining table of the upstream companies and the NGC.
NGC will always be looking to see how it can ensure that the industry continues to be maintained but there are things that the NGC can do and there are things that others have to do. “The issue of plants shutting down has nothing to do with the NGC. It has to do with the global outlook for prices which you have looked at. The outlook for prices for ammonia and methanol—what are they over the next two to three years? That is the issue.”
NGC was earning billions of dollars in the past, now down to hundreds of millions.
CEO of the Energy Chamber Dr Dax Driver said the chamber was concerned that Point Lisas is under threat.
“The Energy Chamber continues to be concerned about the future of Point Lisas and there are issues which need to be resolved in order to ensure the continued competitiveness and sustainability of the industry.”
The natural gas master plan has advised that ammonia and methanol earn more money for the country per molecule of gas than LNG.
NGC is in negotiation with Methanol Holdings, Tringen and Methanex for over a year now and no agreement has been reached with either of those companies with the petrochemical companies saying the terms are too difficult to live with.
The Titan plant is 20 years old and is considered a young plant by international standards.
2000 ex-workers await compensation from Petrotrin
One year since SOC Petrotrin closed its doors in November 2018, approximately 2000 workers are still awaiting proper compensation packages from the company.
Oilfield Workers Trade Union (OWTU) – the representing union for the workers, and Petrotrin representatives went to the Industrial Court, San Fernando to have these unresolved matters addressed.
The union is bent on ensuring the workers are treated fairly and has also filed similar matters before the High Court on their behalf.
First vice president of the union, Ricky Benny, and representatives from six of the bargaining units which represented workers in the former oil company, prayed before entering the Irving Street court for a preliminary case-management hearing with Petrotrin before the registrar.
Consultant, Harrison Thompson, took lead role in presenting the union’s side of the matter to the court. There was no information regarding the company’s team.
Benny said a grave injustice was done to approximately 2000 workers – casual, temporary and permanent – and the union will take an aggressive approach to ensure workers get their just due.
Units represented workers across the entire Petrotrin assets from Penal, Forest Reserve, Santa Flora, Pointe-a-Pierre, Trinmar including those previously working in the hospital services.
“We are dealing with all matters regarding the closure of Petrotrin, from pensions to medical and incorrect calculations of termination benefits. There are members who did not receive any items.”
After the case management phase, the next step will be to file evidence and arguments and set a date for hearing. Benny said the union is hoping to secure a victory for all workers to get the compensation they are entitled to. Since the closure, life has been very difficult for most of the workers who are still unable to find jobs. Benny blamed this on the “stereotyping of oil workers as highly paid and lazy. These stereotypes affected workers to the point where they still can’t get jobs. The market is very tight.”
Workers are hopeful the union’s Patriotic Energies and Technologies Co, which Trinidad Petroleum Holdings Limited has offered to operate the refinery, will be able to absorb some of their unemployed members. Asked for an update on the progress of that arrangement, Benny said OWTU’s president general Ancel Roget will address that issue.
Opportunities in Guyana with its discoveries is also an option for some members to pursue.
Modern Trinidad & Tobago was built on Oil…
….but over 60,000 jobs were lost since 2015.
One of the largest mass retrenchments was that of 5,500 Petrotrin permanent and temporary employees when the refinery was shut down on November 30, 2018.
In his national address to the nation“It’s Your Business” on January 7, 2019, the Prime Minister said 20,000 people had lost their jobs in since 2015. Since then, more people have become unemployed with 178 workers at Unilever Caribbean Ltd (UCL) shed in December 2019.
Data from the Central Statistical Office (CSO) contained in the Central Bank of T&T’s Monetary Policy Report of May 2019, confirm the unemployment rate increased to 4.8 per cent in 2017—the highest rate since 2012—from 4.0 per cent in 2016.
During 2017, the number of people employed fell by just under 10,000 while the labour force contracted by 4,600 people. This resulted in a small decline in the participation rate from 59.7 per cent in 2016 to 59.2 per cent in 2017
In the absence of official unemployment data for 2018, retrenchment notices filed with the Ministry of Labour and Small Enterprise Development indicate that retrenchments were higher by over 53.2 per cent (excluding the layoffs due to the closure of the Petrotrin oil refinery) in 2018.
In January-May 2019 retrenchments continued to rise—631 people compared with 412 people in the similar period in 2018. Further, the average number of vacancies advertised in the print media fell by 11.7 per cent (year-on-year) over the first five months of 2019.
Economist Roger Hosein said “The latest official labour market statistics from the CSO indicate that the unemployment rate declined to 3.8 per cent during the first half of 2018 compared with 4.9 per cent during the same period of 2017. On a year-on-year basis, total employment fell by 900 persons, while the labour force contracted by 8,500 persons. This resulted in a decline in the labour force participation rate to 58.7 per cent over the first half of 2018 compared with 59.7 per cent during the corresponding period of 2017. The continued decline in the labour force participation rate is a source of concern since this has implications for future economic prospects.”
The 3.8 per cent unemployment rate in 2018 was very low, since 2003 it had has been below ten per cent on average. Since 2012 the unemployment rate on average per annum had not crossed five per cent, a remarkable statistic; on paper, it was one of the best in the world.
What was alarming about the T&T economy case was the fall over time in its labour force participation rate which stood at 63.9 per cent in 2006 and collapsed to 58 per cent by 2018. The State made the tremendous error in the last 15 years of being too heavily involved in the labour market and basically starved the private sector for workers. While the private sector was expanding, it was expanding mainly in the services sector. The State wanted to expand in the non-energy export sector, so the economy developed serious structural imbalances that needed to be addressed.
One of the most worrying aspects of the labour market data trends in recent times was the sharp decline in the employment of petroleum and gas sector workers—this collapsed from 21,300 in 2014 to 12,600 in June 2018.
The petroleum sector was a highly competitive high human capital sector and the loss of 40 per cent of the employed labour force was a frightening eventuality as these skills if they were lost or migrated to nearby Guyana, Suriname or elsewhere will take time to be rebuilt.
Policy makers would want to ensure that by the time the Ruby field comes on-stream with BHP Billiton in 2023, that the sector was not further starved for workers with the relevant skill-sets.
Such a massacre of occupations underlies the epidemic of domestic violence against women and children, drug-trafficking, armed gangs and vice, aggravated by the influx of Venezuelan refugees
Companies that laid-off workers from 2015-2019
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- ArcelorMittal shed 600 workers on December 2015 and 800 contract workers earlier that year
- 200 TMS International Corporation workers were dismissed in 2015
- Central Trinidad Steel Limited (Centrin) terminated 200 workers on February 2016.
- Over 800 Construtora OAS workers were eliminated on March 2016
- Caribbean Development Company which produces Carib beer axed 15 workers on May 2016
- 66 workers of roofing producer, GGI Trinidad Limited were discharged on August 2016
- Over 100 workers of the Tourism Development Company were retrenched on August 2017
- 16 workers at the Trinidad Cement Limited (TCL) were ousted on September 2018
- Petroleum marketing and wholesaling company Unipet evicted seven supervisors in October 2018
- 5,500 Petrotrin permanent and temporary/casual employees were fired when the refinery closed on November 30, 2018
- TSTT retrenched over 500 workers on November 15, 2018
- 99 non-academic staff at the University of TT (UTT) received separation letters on August 2019
- 178 Unilever Caribbean Ltd (UCL) workers were axed in December 2019.
Trinidad nixes gas deal with Venezuela over U.S. sanctions
Feb. 3, 2020
Trinidad PM: Dragon project stalled on US sanctions
Trinidad and Tobago says it canceled an agreement with Venezuela for the joint development of the Loran-Manatee natural gas field straddling their maritime border because of U.S. sanctions on Venezuela’s PDVSA state energy company.
Trinidad and Tobago Prime Minister Rowley, says the two countries will now independently develop the 10T cf shallow-water field.
Chevron (NYSE:CVX) holds a 60% interest in the Loran field, with the remainder held by PDVSA, while Royal Dutch Shell (RDS.A, RDS.B) owns a 100% interest in the Manatee field.
Separately, the four liquefaction trains that comprise Trinidad and Tobago’s Atlantic complex will operate as a single unit under a restructuring agreed by the government and shareholders led by Shell and BP that will boost the government’s income from LNG exports.
The deal signed in 2018 would have allowed Trinidad &Tobago to process natural gas from shallow-water Dragon field off Venezuela.
BHP preps Trinidad drilling
Well marks end of BHP commitment on licence, company said. BHP plans to drill an exploration well on its southern licences off Trinidad and Tobago later this year pending “investment processes”, a company official told Upstream.
The Australian operator has secured the Transocean drillship Deepwater Invictus
McDermott lands Ruby subsea contract off Trinidad
BHP has contracted McDermott International Inc. to provide subsea umbilicals, risers and flowlines, transportation and installation, pre-commissioning of one jacket and topsides for the Ruby oil and gas project offshore Trinidad and Tobago.
The DLV 2000 will transport and install the flowlines and platform at the Ruby field offshore Trinidad and Tobago.
The Ruby field is in block 3(a) about 28 mi (45 km) offshore northeastern Trinidad.
Engineering and project management will be performed in Houston with engineering support from the company’s Mexico City office.
The project will begin immediately and is expected to be completed in August 2020.
(Courtesy McDermott)
Columbus Energy announces first injection of CO2 in the Trinity Inniss field
27 Jan 2020
Columbus Energy, the oil and gas producer and explorer focused on onshore Trinidad and Suriname, has announced the first injection of CO2 in the Trinity Inniss field, onshore Trinidad.
Leo Koot, Executive Chairman of Columbus, commented:
‘The Company has successfully injected the first tranche of CO2 in the Trinity Inniss field. The CO2 project is an important enhanced oil recovery project for both the Company and Trinidad. I look forward to updating the market as to the results of the CO2 pilot project in due course.’
Background – Trinity Inniss CO2 Project
the term of the Trinity Inniss Incremental Production Service Contract (‘IPSC’) has been extended to allow for the implementation of the CO2 Pilot Project.
The Company has now injected the first tank CO2 into well AT5X in the Trinity Inniss field and will over time contribute to the determination of any impact on enhancement of production in offset wells to AT5X. The Company and Predator, its joint venture partner, will proceed to continuous injection of CO2 as is required to fully evaluate the potential of CO2 injection to increase oil production from the offset wells.
The Company’s interest in the Trinity Inniss field benefits from an agreement with Predator Oil and Gas, whereby Predator will help plan and fund the CO2 EOR Pilot Project. As part of agreement with Predator, Predator has the right (until 30 September 2020) to purchase the Company’s interest in the Trinity Inniss field for US$4.2m.
Source: Columbus Energy
Columbus Energy to test Saffron well – South West Peninsula
24 Jan 2020
Columbus Energy announced the following operational update regarding the Saffron well, onshore Trinidad:
· Completion of the interpretation of the Saffron cased hole logging, with the result supporting the completion and testing of the Saffron well in February 2020; and
· Submission of a Saffron Well Test application to the Ministry of Energy and Energy Industries.
Leo Koot, Executive Chairman of Columbus, commented:
‘The Company has now completed the interpretation of the cased hole logging for the Lower Cruse portion Saffron well. The interpretation for the Upper Cruse and Middle Cruse are expected shortly. The logging does not materially alter the Company’s previous announcement that the Company has drilled multiple sand packages with high sandstone content and multiple oil shows to Total Depth (‘TD’). The interpretation of the logging gives the Company comfort that it should proceed with the completion and testing of the well. Indeed, the only way to be certain and to evaluate the geological and economic potential of the prospective oil sands is to conduct a flow test – which can be done in relatively short order. We have submitted the well test proposal to the Ministry and, subject to Ministry approval, we would expect to commence the testing in February 2020. I am conscious that we would have liked more concrete results from the logging but the geology of the South West Peninsula and its effect on the tools available to us to log the Saffron well do not provide that level of certainty. The best way to evaluate Saffron is to complete and test the well, which we are in the course of doing.’
Saffron Well Completion and Testing
The Company has now completed the interpretation of the cased hole logging for the Lower Cruse portion of the Saffron well.
The interpretation for the Upper Cruse and Middle Cruse (the tertiary and secondary targets) are expected shortly.
The Company is currently focussing on its primary target, the Lower Cruse as, per Ministry requirements, any testing and production must first be from the deepest possible stratigraphic level.
Cased hole logs for the Lower Cruse confirm the presence of sand in line with the cuttings descriptions and the cased hole sigma log response suggests the presence of hydrocarbons within those sands. The logs are not definitive as to the water/oil ratio within those sands and the Company believes that flow testing, rather than any further logging, is the best way of evaluating the geological and economic potential of the Lower Cruse.
The Company is targeting three (3) horizons for testing. The horizons lie between: (i) 4236 feet and 4244 feet; (ii) 3937 feet and 3947 feet; and (iii) 3760 feet and 3768 feet, respectively. The Company believes that each of these horizons are the tops of larger sand packages. The objective of these tests is to prove an oil filled reservoir. If this objective is met, the Company intends to perforate the larger sand packages to maximise water free production.
The Company has submitted to the Ministry a well test program to perforate and test the well. The Company expects this testing to occur, subject to Ministry approval, in February 2020.
Background
The Saffron well was drilled in the Bonasse licence area in the South West Peninsula of Trinidad, which includes the Bonasse field. The Company is the 100% owner of the Bonasse licence area.
The Saffron well is the first well drilled by Columbus ERP as well as the first well within the Southwest Peninsula in over 11 years.
Source: Columbus Energy
Trinity Exploration & Production Q4 2019 Operational Update; Strong Financial Performance
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Trinity Exploration & Production plc (“Trinity” or “the Group” or “the Company”)
Q4 2019 Operational Update
Strong Financial Performance Underpinned by Production Growth
Trinity, the independent E&P company focused on Trinidad and Tobago, today provides an update on its operations for the three-month period ended 31 December 2019 (“Q4 2019” or “the period”). During the period, Trinity continued to focus on growing production, generating free cash flow and protecting the business from downside risk.
The continued growth in production achieved during the period was underpinned by optimising production from existing wells and by the drilling of six new wells in the second half of 2019. The full impact of this drilling campaign has generated a strong start to Q1 2020 with all six wells now on stream and contributing to an exit production rate of almost 3,400 bopd during December 2019.
The Company ended Q4 with a year on year increase in cash balances, no debt, a new undrawn working capital facility in place and further hedges implemented to partially mitigate the impact of SPT.
Q4 Operational Highlights
- 13% quarter on quarter increase in Group average production volumes to 3,196 bopd for Q4 2019 (Q3 2019: 2,816 bopd)
- 5% year on year increase in Group average production volumes to 3,007 bopd for the full year 2019 (2018: 2,871 bopd)
- Increase in annualised production resulting from the six new onshore development wells coming on stream during H2 2019, and the Company’s ongoing low-cost work programme of recompletions (“RCPs”), workovers, reactivations and swabbing
- The six well drilling campaign commenced during H2 2019, so the full impact on production only began to be realised during Q4 2019
- The exit production rate for 2019 was almost 3,400 bopd, in line with expectations, with production levels above 3,400 bopd for much of December
Drilling Highlights
The six well onshore drilling programme delivered:
- an increase of 20% in Estimated Ultimate Recoverable Reserves (EUR) above pre-drill prognosis (602 mbo vs 500 mbo)
- an increase of 47% in estimated Net Oil Sand (NOS) encountered over pre-drill prognosis (1653’ vs 1125’)
- an increase of 54% in Initial Production rates (IP’s) over pre-drill prognosis (cumulative 650 bopd vs 421 bopd)
The strong performance of the 2019 drilling campaign results from more robust sub-surface mapping, and a more rigorous approach to examining reservoir performance which enabled more precise risking and ranking of potential reservoir targets.
The drilling programme lasted 125 days and there were no Lost Time Injuries (LTI’s) over the period, a significant positive result for the drilling team and lead contractors
The drilling programme included our first High Angle Well (“HAW”) FR 1807, which has continued to perform satisfactorily:
- The well had an IP of over 80 bopd vs the 50 bopd typically expected from a conventional vertical well.
- It attained a maximum daily production rate of 118 bopd prior to the planned implementation of a gravel pack, a completion technique to arrest sand production.
- Following the gravel pack implantation, the well is currently producing 40-50 bopd (no water production).
- A well pump optimisation is currently being run with production expected to be resumed at 80 bopd ahead of further optimisation.
Ongoing Operations
7 RCPs (Q3 2019: 10) and 26 workovers (Q3 2019: 25) were completed during Q4 2019, with swabbing operations continued across all land assets.
Better than expected results from the initial two well trial of Weatherford’s Supervisory, Control and Data Acquisition (“SCADA”) production optimising platform, with a meaningful increase in production from the two pilot wells
SCADA roll out continued with the platform currently on 6 wells with a further roll out expected to be carried out during 2020
With further roll out over a longer period the full production benefits and operating cost savings will become more apparent
Financial Highlights
- Cash balance of US$13.8 million (unaudited) as at 31 December 2019 versus US$10.2 million (audited) as at 31 December 2018 and US$15.6 million (unaudited) as at 30 September 2019.
- The year on year increase in cash has been achieved despite the cost of the six well drilling programme having been incurred from which the commensurate benefits are only starting to be realised
- Working capital facility put in place (currently undrawn) with CIBC First Caribbean for US$2.7 million, providing further financial flexibility
- The Company has continued to implement its hedging strategy which is designed to protect the Group’s free cash flows by partially mitigating the impact of Supplemental Petroleum Taxes (“SPT”) whilst retaining upside exposure to rising oil prices over the majority of production
- Three further hedges were put in place, at attractive terms, during the short period when oil prices spiked as a result of escalating tensions between the US and Iran around the year end.
- As a result, the Company now has hedges in place over 47,500 bbls/month for the first six months of 2020 (equating to approximately 46% of its 2019 exit production) and 28,333 bbls/month for the second six months of 2020 (equating to approximately 28% of its 2019 exit production).
- The put spread range (where the Company receives benefit) is an average of US$50.00 to 56.00 and the call options granted (where the Company cedes benefit) apply to 35,000bbls at an average call strike of US$65.50/bbl
The Company will announce its audited preliminary results for the year to 31 December 2019, in early April. This will provide full details on production, margins, operating break-even, costs and profitability – highlighting the growing value of the Company’s assets and continued strong financial performance.
Outlook
With a low operating break-even due to tight control over costs (H1 2019 EBITDA margin of 35%) combined with increased production from new infill wells, the Company intends to prioritise bottom-line free cash generation and maintaining a strong balance sheet during 2020.
The hedging programme we have implemented will help to mitigate the impact of SPT in 2020 which should allow Trinity to generate bottom line free cash flow under most credible oil price scenarios.
Operationally, the drilling programme will continue in 2020 with the sub-surface team being challenged to prioritise the identification of HAW drilling locations. The Company will also continue to roll out further SCADA platforms on selected existing wells and on all new wells.
Importantly, the SCADA technology enables real time analysis of well performance, and the ability to change and review flowrates remotely, plan more efficiently and ultimately reduce operating costs.
Given the benefits shown to date, the Company believes that by a wider-scale roll out of this technology it has the ability to increase production from existing wells, reduce natural declines in individual wells and create meaningful operating cost savings.
On our east coast Galeota licence, the Company continues to have a positive dialogue with both Heritage (our partner) and The Ministry of Energy and Energy Industries (our regulator) in moving both the Trintes Field area and the TGAL field development forward.
Bruce Dingwall, CBE, Executive Chairman of Trinity, commented:
“We continue with our strategy of delivering returns for our shareholders by growing production and margins as well as maximising free cash flow from our attractive portfolio of assets. As such, the positive results from our H2 2019 drilling programme – incorporating our first High Angle Well (HAW) – are particularly pleasing.
“Furthermore, we are pleased with the SCADA platform’s results to date. Real-time data management and the associated increases in efficiencies and production are clear to see and we are excited about the potential impact of rolling this technology out across our portfolio.
“I’d like to take this opportunity to directly thank our fellow shareholders for their support and patience during what has been a volatile quarter in the global markets. Please be reassured that all of our plans are focused on ensuring that we have the best platform in place to grow the value of our Company over the short, medium and longer term.”
Enquiries
For further information please visit www.trinityexploration.com or contact:
Trinity Exploration & Production plc
+44 (0)131 240 3860
Bruce Dingwall CBE, Executive Chairman
Jeremy Bridglalsingh, Chief Financial Officer
Tracy Mackenzie, Corporate Development Manager
SPARK Advisory Partners Limited (Nominated Adviser and Financial Adviser)
+44 (0)20 3368 3550
Mark Brady, Miriam Greenwood, Andrew Emmott, Cenkos Securities PLC (Broker),Joe Nally (Corporate Broking), Neil McDonald, Derrick Lee, Pete Lynch
+44 (0)20 7397 8900
+44 (0)131 220 6939
Whitman Howard Limited (Equity Adviser)
+44 (0)20 7659 1234
Nick Lovering
Hugh Rich
Walbrook PR Limited
+44 (0)20 7933 8780
Nick Rome