Serving the island’s oil, gas, and petrochemical sector
The Energy Chamber of Trinidad and Tobago, founded in 1956, is an independent, apolitical organization that represents the country’s oil, gas, petrochemical, and heavy industrial sectors. The Chamber has about 400 members, including the island’s major exploration, operator, and production companies. It is governed by a seventeen-member Board elected by its membership, while its day-to-day operations are the responsibility of Dr. Thackwray Driver, the Chamber’s current President and Chief Executive Officer.
The following is the text of a recent conversation between Dr. Driver and Business View Caribbean, touching upon a variety of subjects, including the Chamber’s mandate, the current condition of the country’s oil and gas industries, and Dr. Driver’s outlook concerning the future of the sector.
BVC: What are some of the most important items on the Chamber’s agenda?
“There are a few areas of huge importance to us in this industry. One of them is safety and another is environmental protection. There’s a huge amount of work which we do to try to ensure that we operate safely, that we don’t injure people as we’re doing our work. So, we’ve done a lot of work on improving the safety management systems of contractors and service companies and improving the skills and knowledge of workers within the industry, and certifying them. That’s an area in which the Chamber has been in the forefront of. The Chamber has also been in the forefront of trying to foster industry collaboration between the companies in order to find more efficient ways of solving problems in this very moment of a low-price environment.”
It would be disingenuous to suggest that the oil and gas sector in Trinidad is having its best year. In fact, Prime Minister Rowley has announced a number of economic “belt-tightening measures” because oil and gas revenues have been falling precipitously. Can you address that?
“Trinidad and Tobago is very dependent on the hydrocarbon sector. So the fall in oil and gas and petrochemical prices over the past 18 months has very serious implications for our economy. It significantly reduces our export earnings; the amount of foreign currency which flows into the economy has been very seriously reduced which also reduces government revenue. So that has a big effect on the rest of the economy. It puts pressure on our balance of payments, because we import most of the things we consume. We do have a manufacturing sector which exports to the region, but it’s dwarfed in its size by the energy sector. So, the low-price environment is very challenging for us, as it is for all oil and gas economies.”
According to current predictions, there isn’t going to be an immediate change in the situation for some years. How is the Chamber going to respond to the flattening of prices into the foreseeable future?
“I think that the industry goes through these cycles; it’s happened before, so the big emphasis is on efficiency. You have to make sure operations are as efficient as possible to reduce your costs, and so you can continue to produce even in these low-price environments. The big threat is on future investments and whether we’ll see the investments we need in order to maintain our production levels. Production of gas in Trinidad has been falling over the last two years and that puts a strain on our LNG facilities and on our petrochemical companies because they’re not getting all the gas they need to produce at capacity. So that affects them. The only solution to that is investment in new gas production, but obviously, in this environment, it’s even more challenging than it was before.”
Isn’t part of the answer in Trinidad and Tobago, specifically, to increase the diversity of its economic sectors?
“Of course, that is the long-term objective for the country – to diversity our economy away from reliance on the carbon sector. But the reality of that diversification will take many years; it’s not going to happen over the next two or three. We can work on it now, but it’s not something that’s going to give us an immediate solution to the problem that we’re in. I think what we need to be doing as an industry and as a country is to reduce the level of subsidies which are going from the state to individuals and to business and we need to be much more efficient in how we’re using the revenue that we have. We’ve become quite wasteful because we have money coming in, so the economy becomes quite wasteful in its use of resources. We’re very energy inefficient; we waste a lot of electricity, we waste a lot of transport fuels and if we can change that structure and be less wasteful, the economy could survive on a lower level of government expenditure.”
That’s not something that the Chamber can do on its own, right?
“Of course. Our role is to advocate that with the government and to put forward a position and to try to convince a change in the policy environment to make that happen.”
Every year, the Chamber sponsors a region-wide Energy Conference. What are you expectations for this year’s convocation?
“What we saw in 2015 was that despite the low commodity-price environment, the levels of investment in Trinidad in the oil and gas sector maintained at a fairly high level. There’s quite a lot of activity going on in terms of upstream drilling, and in terms of new facilities construction. And that is actually continuing through this year. So, in 2016, there’s still quite a lot of activity going on offshore in the upstream gas sector, which should be good news for the economy. The big story is the deep-water exploration program which BHP has and it looks very promising in terms of a major oil find. (BHP Billiton Petroleum is an Anglo-Australian multinational mining, metals and petroleum company headquartered in Melbourne, Australia.) Obviously that doesn’t solve any of the short-term problems, but it gives you a longer-term positive for the oil and gas industry, five or six years away.”
Vincent Pereira, the Energy Chamber’s Chairman, recently said, when speaking about the oil and gas sector: “This is not a sunset industry.” In the long run, though, isn’t the hydrocarbon sector in Trinidad and Tobago, if not the entire world, in some sense, a sunset industry? Scientists tell us that if we keep on taking what’s out of the ground and burning it, we’re headed in the wrong direction.
“I think it depends on what time you’re looking at in terms of the ‘long run.’ The world is still going to be very reliant on fossil fuels for many, many decades. All the projections show that. There’s a growing demand for energy around the world and, notwithstanding the threats of climate change and global warming, that desire for energy exists. And the fossil fuel industry is going to go on supplying a significant portion of that for many years to come. I think that the gas industry is in an interesting position as the least carbon-intensive of the three fossil fuels, so I think that creates a particular opportunity for Trinidad, being a gas-based economy. Also, I should point out that gas is also the feedstock which goes into a number of many vital petrochemicals for which there are no alternatives that really exist at the moment. Many plastics come from petrochemicals and fertilizers come from natural gas. So, with the world’s growing population needing more food and energy, there’s going to be a future for the hydrocarbon sector for many decades.
“I think that there’s a huge challenge of climate change which the world has to grapple with, but the industry can be a big part of the solution to the climate change problem – fuel technologies like carbon capture and sequestration, which we’re looking at in the country, and specifically through the ability of the industry to implement extremely impressive and large engineering projects. We’re the only industry which can do that. The many engineering projects which are needed to go on supplying energy to the world are going to come from the oil and gas industry.”
Will the Chamber begin to absorb, in its mandate, more of the alternative energy sector as time goes on?
“It’s already here. We have a very active renewable energy and energy efficiency committee within the Chamber and, in the upcoming conference, we have a whole day devoted to green energy and to renewable energy. There are significant opportunities in that area, not just in Trinidad and Tobago, but particularly in the rest of the Caribbean. The other Caribbean islands are very reliant upon imported fossil fuels for their electricity generation and there’s significant potential for them to, first of all, be more efficient in how they’re using electricity, and secondly to diversify their fuel mix. And gas is one of the fuels which can be a transition towards renewables like wind and solar and ocean current and the whole array of different renewable technologies which are available. So that’s something the Chamber is working very actively on.”
Some people see the power companies, who are dependent upon fossil fuels for their revenue, as the ‘enemy;’ that they are, in fact, retarding the progress that needs to be made because it’s normal for any industry to try and stay alive as long as possible. How does the Chamber respond to that kind of thinking?
“I think it’s a tremendous mistake to see the oil and gas companies as the enemy. I think we’d be the companies that have the potential to deliver quite extraordinary projects and to do the large-scale transformations which the world is going to need. So, I think you want them as your allies, not as your enemies. I think what you need to try to do is create the right policy environment which incentivizes those companies to put their technical skills to solving the technical issues that are going to be needed by the world to cope with climate change and to invest in renewable technology and low-carbon solutions.”
What’s the status in Trinidad and Tobago? Has the government there incentivized the industry to move in that direction?
“Very little to date, but there’s a commitment to introduce more renewable energy into the mix. The challenge is that our economy and our people have become very used to very cheap electricity and it’s very difficult to economically bring in renewable energy when people are used to cheap electricity from natural gas. So, I think the first step in the process of reducing our carbon intensity is to make our existing power generation much more efficient; to stop wasting quite so much gas and so much electricity. That’s where a big win can come. And then, over time, to look at what are the renewable technologies which we can financially and feasibly introduce in projects to bring them on-stream. I think those are the steps which we need to take and there’s a commitment from the government around that. Making it happen will take a while.”
Are you optimistic that we will make the transition and that things will come out positively for our children and grandchildren?
“I think that climate change is very real. It’s happening and the scientific evidence for it is very clear. It’s very unpredictable how climates operate and so there’s a lot more scientific research which has to continue. But I think that humans have an amazing ability to adapt and to find solutions and to find our way through problems. And I think that the doom and gloom – that the world is going to come to an end – history just doesn’t bear out that way of thinking. We will find solutions to these problems and find a way to solve the problems that the world has.”
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