BHP Ruby field Trinidad and Tobago

More bad news for the Energy Sector and the country’s economy as there is now confirmation that BHP’s Ruby field will produce much less oil than originally thought and as a result there will be no significant increase in crude oil production this year.

In response to questions from the Sunday Business Guardian BHP has revealed that its production will be lower from Ruby than originally anticipated because there is less oil in the field that originally thought.

BHP said; “Ruby’s production forecast is lower than originally expected due to lower in-place volumes associated with more subsurface complexity.”

The company was expected to be be producing 16,000 barrels of oil per day (bo/d) from Ruby but so far has averaged closer to 4,000 bo/d, a quarter of the expected production.

A lot of government’s revenue was projected on higher oil production which was predicated on BHP’s Ruby field, but no such bump is forthcoming.

BHP told SBG that there is an attempt now at optimisation by injecting natural gas into the wells. This will have a negative effect on natural gas being available to go into the national grid.

“Production optimization efforts are ongoing, including gas injection.” BHP revealed.

The Ruby development is located in Block 3(a) immediately east of the Greater Angostura Field.

Through its subsidiary NGC E&P (Netherlands) B.V., NGC is a joint venture partner in the Ruby Project with operator BHP.

It was mainly on the back of the projected increase in production from the Ruby field that Finance Minister Colm Imbert boasted that the country will return to producing over 80,000 barrels of oil per day.

He told the Parliament, “Oil and condensate production decreased from 71,725 barrels per day in 2016

to 56,481 barrels per day in 2020; but since then, has been increasing and is projected to reach 64,000 barrels per day by the end of 2021, further increasing to 86,000 barrels per day in 2022 stabilising thereafter around that level in the medium-term.”

This appears not possible and from the latest production figures from the Ministry of Energy crude production continues to hover around 60,000 bo/d as of November last year.

Former Energy Minister Kevin Ramnarine pointed out that the news is not good, not only for BHP, but its partner the National Gas Company Limited and was coming at a bad time, when prices are high.

He told SBG, “This is disappointing news for BHP and its partners in Block 3a which includes the NGC. It also has consequences for the country’s economic recovery in 2022 and revenue collection. It also comes at a time when oil prices are at its highest since 2014. Anyone who believes that the country will benefit from a windfall of revenue from the Russia—Ukraine invasion should therefore temper these expectations. Our past “booms” which were were based on a confluence of price increases and production growth. At this time we only have a price increase.”

Ramnarine reminded that the Finance Minister had talked about the increase and wondered what it means now for the budget.

“In his October 2021 budget speech the Minister of Finance based his forecast of 5 per cent growth in 2022 on the increase in oil production in 2022. He saw oil production reaching 64,859 barrels/ day by end of 2021 (this has not happened) and increasing to 86,163 barrels per day in 2022. These predictions would have been based on an expected 16,000 barrels per day from the BHP Ruby project. It’s now seems that Ruby will not deliver the production that was expected.” He told SBG.

The NGC which is a shareholder in the Ruby field was jubilant when it started producing, with its President Mark Loquan even predicting a net increase of oil and gas production. BHP later refuted Loquan’s claim of increase in gas production.

First gas is expected to occur soon, at the time the NGC stated.

“On completion of all development activities later this year, the Ruby field is expected to produce up to 16,000 gross barrels of oil per day and 80 million gross standard cubic feet of natural gas per day,” NGC noted.

In July 2020, NGC and BHP signed a Gas Sales Contract allowing NGC to purchase 100 per cent of the gas produced from the Ruby field to add to its existing portfolio of natural gas supply.

NGC as a joint venture partner is also entitled to a share of the field’s oil production.

“This will be marketed as part of its Energy Marketing and Trading portfolio, providing valuable supplemental income to the Company,” NGC stated in 2021.

Loquan, said the achievement on the Ruby project, together with positive news from other producers, gives cause for optimism.

“NGC has been working closely and conscientiously with upstream operators, both as a value chain stakeholder and Joint Venture partner in several developments, to advance work programmes and bring more gas into the pipeline. It is extremely heartening to see that work bearing fruit,” Loquan said.

“The announcement of first oil from Ruby signals important progress on an important project. We look forward to more positive news from the field and expect associated gas production which would contribute to further stability in supply. This is promising news for our downstream sector, for our Company, and for the country,” he stated.

NGC said its investment stake in these upstream projects has allowed it to deepen its participation along the gas value chain, and further its strategic objective of growing the business and its impact within the energy sector.

But BHP shortly after told SBG that the Ruby field will not mean any net additional gas will be added to the company or T&T’s natural gas production but would instead be used to keep present production at peak levels for a longer time.

Country Manager of BHP T&T, Michael Stone, told SBG that at present, BHP produces from its Angostura field between 300 and 360 million standard cubic feet per day (mmscf/d) and Ruby will allow it to maintain production in the higher range.

He explained, “With just Angostura it ranges between 300mmscf/d and 360mmscf/d. What we would expect is with the 80mmscf/d coming on from Ruby, it allows us to produce at the upper end of that range sustainably, but it’s not going to increase beyond the upper end of that range.

“What it’s going to do, fortunately, is it’s going to elongate the profile and allow us to produce at the higher end of that range for the longer period of time, but it’s not going to take us beyond that upper end of the range to answer your question.”