TRINIDAD & TOBAGO: Recently I wrote a series of articles that utilised the work done by the reputed petroleum geologists, Jean Laherre and Colin Campbell, that sought to demonstrate that a number of large oil producers in the world, including Norway and the UK, had reached their peak in production and the world will have to rely on the Middle East nations to bridge the gap. But even in Saudi Arabia the large oil fields have already been producing for decades and are close to their peak.
OPEC itself has indicated its inability to increase production in the short term, a situation exacerbated by the troubles in Iraq. The North American position is as dicey with present production of 22tcf per day of natural gas likely to drop to 6tcf by the year 2015 (Jean Laherre). In T&T our oil fields are maturing and one expects the same decline even with the recent BHP blip in expected production.
However, economists like Michael Lynch, president of Global Strategic Energy, contend that the ultimate recoverable resources are not a static amount and grow over time as a result of the economic changes, developments in the area, technology and better scientific knowledge, a position not unlike that of our present Government.
I was on a morning TV programme with Mr Cape of ALNG and my position was that the Ryder Scott figures for the proven reserves were some 20tcf. Cape's working estimate for the basin was 100tcf. Today Cape, when asked about the possibility of ALNG's train VI, is reported as saying (Express October 22) that the company did not want to expand unless it was going to become more competitive. According to him, assuming the reserves were there expansion would be a definite issue. The issue, he continued, is really about reserves, so it is too early to say. He claims that the mathematics says you can do it but you need the reserves for it to make sense. In other words at this time there is some doubt as to the adequacy of the available reserves of natural gas. He concluded that the kicker might be the utilisation of Venezuelan gas.
Cape's position is in line with what Dr Jim Lee Young expressed at the last petroleum conference when he disagreed with the optimistic approach of GOTT to finding more and more gas. He expressed concern over the lack of increasing reserve position given the drilling programme. Robert Riley of bpTT also told us that about the 30 per cent shortfall in oil production of bpTT this year and having to bring forward their investment programme to try to remedy the situation. Yet we hear of these plans for increasing use of natural gas in our development programme. According to my expert geologists the day of prolonged high-energy prices is here. Will we have the production capacity to continually expand the GOTT take, including increased taxation?
The severity of our present hurricane season and the battering Japan and its neighbours are taking from typhoons are being put down to climate change associated with increasing carbon emissions into the atmosphere. The largest contributor in this is the burning of fossil fuels, petroleum, to produce energy. T&T is a major culprit per capita given our energy-based industry.
Listen to Gwynne Dyer in the Express (October 21):
"In a world of cheap and plentiful fossil fuels and no worries about carbon dioxide emissions the low capital cost and the short build time of oil-, gas-, and coal-fired plant put the nuclear power industry at a huge disadvantage and concerns about nuclear safety provided the coup de grace.
But when oil gets expensive and future reserves get scarce, the shoe starts shifting to the other foot-and then rising concern about carbon emissions does the rest''.
Another commentator advises us in T&T:
"We are fast approaching a time when a country like T&T might do well to preserve a good fraction of her reserves for domestic use for the children of the present generation of her citizens.''
The depletion of the world's resources, the pending if not ensuing peaking in production coupled with increasing demand from, for example, China, will ensure high prices of energy. Thus, one must question the economic wisdom of exploiting our remaining resources as quickly as possible and saving the surplus earnings in the RSF, instead of leaving the resource in the ground for the use of future generations when petroleum will be scarce and more valuable.
My last two Budget presentations in the Senate complained of the almost unipolar focus on the increased exploitation of the oil and natural gas resources in T&T. Our respected local commentators are beginning to talk openly as "the issue is really about reserves, so it is too early to say..'' all pointing to the fact that T&T may be nearing or has reached its production peak in oil and gas.
Yet we still have an official policy that the energy sector is the driver of our economic development towards 2020. Further, that economic development will drive the discovery of the needed new reserves. We all know what happens to the ostrich with its head in the sand.