(Trinidad Guardian) – In what appears to be a major embarrassment for the Keith Rowley administration and the National Gas Company (NGC), Atlantic LNG’s Train 1 plant will be mothballed in the coming weeks and could stay out of service for at least two years, according to highly-placed sources at both the NGC and the government.
The closure comes even though the state-owned gas company pumped hundreds of millions of dollars in a desperate, ill-fated attempt to keep the plant running and despite the major shareholders, Royal Dutch Shell and bpTT insisting that they did not have natural gas to support the plant and the multinationals’ decision that they will not put a cent further in keeping it alive.
The NGC, which essentially buys gas from the upstream producers and then sells it to companies in the petrochemical sector, has very little supply of its own and still, it decided to risk an estimated quarter-billion dollars in doing a turn-around of the plant and on keeping Train 1 in a state of readiness to operate with no guarantee that it could find the gas to support its eventual return to operation.
Highly placed sources in the Rowley Administration insisted that the government was misled by the NGC and at least one member of its leadership team who said that he had “line of sight” of gas that would be coming. According to the government official, that line of sight turned out to be poor sight as the gas has not come and the multinationals have insisted that they do not have gas for four LNG trains, forcing the government to finally stop spending money on a plant that since December has not produced a cubic metre of LNG.
Guardian Media Spoke to the Chairman of the NGC Conrad Enill and asked if it is true that the plant is to the mothballed and after a long pause he insisted that was a question for the government and not the NGC.
“Curtis that is not a question for the NGC. That is in the hands of the Cabinet and that is where you have to direct your question, to the government,” Enill told Guardian Media. The following questions were sent to Energy Minister Stuart Young on Wednesday but three days later he has not answered. There were also five calls placed to his cell phone which were never answered nor returned.
Young was asked by Guardian Media: 1) When was the decision taken to decommission Train 1? 2) How much money was spent by the NGC on its turnaround? 3) Is that money now lost? 4) Was the decision to pursue operating Train 1 driven by economics? 5) Were the central issues lack of natural gas, safety and environmental? 6) Is there a way forward for Train 1?
Since becoming Energy Minister Young has said little on Train 1 only noting the negotiations are ongoing.
The other partners, bpTT and Shell both said the question was one for the government and that they remain in talks with the administration and the shareholders.
But Guardian Media has confirmed from multiple sources those talks on Train 1 were going nowhere since the gas is simply not there and not all the shareholders have been party to the talks with the Chinese investors not even participating.
The issue of Train 1 first came to fore in 2019 after bpTT which supplied to the plant the approximately 500 million standard cubic feet of natural gas per day said it could not guarantee a supply beyond November 2019 because of its poor infill drilling results.
Finance Minister Colm Imbert tried to downplay the impact of the failure, telling the Parliament in May 2019, “All this drama over one unproductive well is totally unnecessary!”
Only yesterday the Central Bank’s latest Monetary Policy report pointed to the trouble in the LNG sector and confirmed that Train 1 has been down since last year.
It read, “Data for the first four months of 2021 pointed to a deterioration in energy output compared to the same period of 2020. Natural gas output between January to April 2021 declined by 20.6 per cent.
The decline in natural gas production filtered through to the midstream sector, with NGL and LNG production falling by 22.3 per cent and 37.5 per cent, respectively. The large drop in LNG output came about as the limited availability of natural gas resulted in Atlantic Train 1 being taken down at the end of December 2020. The downtime at Train 1 also coincided with scheduled maintenance at Train 3 in March
Former Energy Minister Kevin Ramnarine told Guardian Media that any decision to shutdown Train 1 means questions need to be asked as to ‘why the NGC as a minority (10%) shareholder of Train 1 opted to fund the Q1 2021 Train 1 turnaround when BP (34%) and Shell (46%) chose not to. According to reports that have not been denied by the NGC, this has cost the company approximately TT$300 million’.
He said, “I believe this decision was driven by political considerations as the Government wanted to stem the tide of bad news in the energy sector in 2020. The NGC has poured money behind keeping Train 1 “operations ready” but clearly that strategy has not worked as there is no gas for operations. Train 1 requires 492 million cubic feet per day of natural gas but can be run with half of that volume or 246 million cubic feet per day. BP being the sole supplier of Train 1 would have known that supplying even that minimum volume was a challenge.”
Ramnarine noted that the production from BPTT in 2021 is its lowest since 2002 (19 years).
“The former Minister of Energy, the late Mr Khan opined that BP was not the only supplier of natural gas – alluding that there were other sources of natural gas for Train 1. However, we are yet to see that other source step forward. I recall that the Point Lisas CEOs in December 2020 rejected the idea that some of that natural gas could come from NGC’s supply to Point Lisas. Added to all this, Train 1 has been down since November 2020. That is the longest a Train has ever been down in T&T. It raises all sorts of questions about rotating equipment and restarting the Train. I understand that the Atlantic Partners are awaiting feedback from the Government as to its position going forward.” Ramnarine insisted.
He said the shutdown of Train 1 will be a sad day for T&T and as a country, we must ask – why do we not have natural gas supply to keep Train 1 going albeit at a 50% rate? Why did we allow natural gas production to dip this low? Additionally, in the current scenario of climate change, companies like BP and Shell are looking to cull high carbon footprint assets and the Atlantic Trains are just that.
Crucial to understanding the Government’s dilemma is the role of bpTT, which for the last 21 years provided 100 per cent of the gas for Train 1. The company has made it clear that it does not now have the gas and has not provisioned for it.
A confidential bpTT document which the Guardian obtained earlier this year showed that not only has bpTT not allocated a molecule of natural gas for Train 1, it is expecting a catastrophic fall in its production.
The document showed the company expecting an average of 1.371 billion standard cubic feet of natural gas per day. Compare this to March this year when the company was producing over 2 billion standard cubic feet per day and averaged up to September this year 1.8 billion standard cubic feet per day.
The forecast has so far proven accurate.