T&T’s natural gas production plummeted in June to its lowest level since 2016 averaging a mere 3.110 billion standard cubic feet per day (Bscf/D).
The information is contained in the latest report on the energy sector which was released by the Ministry of Energy and Energy Industries on August 11th, one day after the general elections.
According to the figures from the Ministry, natural gas production declined from 3.5 Bscf/D to 3.1 Bscf/D or a fall of 400 million standard cubic feet per day (mmscf/d).
To put it into perspective the 400 mmscf/d is equivalent to all the gas used to power the entire country. It is enough gas to power Atlantic LNG’s Train 1 prior to its debottlenecking. It is also enough gas to run four methanol plants and an ammonia plant.
This represents a significant fall from production in 2018 which averaged in June 2018 3.81 Bscf/D and a year ago which was 3.45 Bscf/D.
Recently the Business Guardian reported that the upstream companies (BPTT,Shell,EOG, BHP) had been asked by the National Gas Company (NGC) to reduce their daily contracted quantities because there were a number of petrochemical plants that had shut down because the collapse of global prices for methanol and ammonia along while the relatively high prices for gas being demanded by the NGC had made them uncompetitive.
The NGC is the aggregator so it buys natural gas from the upstream companies and then sells it onto the downstream operators at a profit.
According to numbers from the Ministry of Energy BPTT was the major contributor to the decline in the natural gas production.
The Ministry report showed that BPTT’s production in June was 1.738 Bscf/D as opposed to 1.994 in January. That is a fall of more than 250 mmscf/d. EOG’s production also fell by more than a quarter or just under 100 mmscf/d.
In terms of usage LNG and methanol production were the worst affected.
Methanol utilisation of natural gas fell from 577 mmscf/d to 375mmscf/d or a fall of more than 200mmscf/d. This is a 35 percent fall in utilisation and probably reflective of the closure of plants.
The news is also not good for LNG usage which also fell dramatically from a high of 2.06 Bscf/D in April to 1.71 Bsc.f/D in June.
These numbers are all going to hurt government revenues since it means lower production of LNG and petrochemicals and in the petrochemical context, no taxes on profits from plants that are under significant pressure. It will hurt revenue from gas production since the royalty is on volume and the lower the volume the less money government gets.
There is however some better news as Heritage Petroleum led a 5000 barrels of oil per day (bo/d) increase in crude production in June when compared to May this year. In June, crude production averaged 56,316 bo/d compared to 51,218 bo/d in May.
The figure however represents the continued decline in production from the high in the 1970s of over 250,000 bo/d down to the relatively minuscule production today.