DESPITE the challenges in the global energy sector amid the Covid-19 pandemic, Australian energy company, BHP has assured that its multimillion dollar Ruby project in Trinidad and Tobago is on schedule.
As operator of the approximately US$500 million Ruby project, BHP holds a 68.46 per cent interest, while two T&T companies – Heritage Petroleum and NGC – hold the remaining 20.13 per cent and 11.41 per cent interest, respectively.
The project consists of five production wells tied back utilising the latent capacity of the existing processing facilities, proven technology of the existing operated asset, and newly acquired ocean bottom node seismic imaging.
In an interview with the Express Business, BHPTT President Vincent Pereira said global trade has been constrained due to the closure of borders and many other factors. In this regard, supply chains have been impacted.
“But I would tell you, the Ruby project, which we are doing right now, I don’t think any of us ever thought we would be trying to do it in the middle of a pandemic, but we are. Now BHP could have thrown our hands up and said well this is just bad luck or we could have done what we’ve done which is find different ways to ensure we keep the supply chain working and keep the project on track.”
Pereira said for a project the size of Ruby, the energy company has components being built and manufactured in different parts of the world and would have to bring them all together to ensure the project remains on track.
“It is BHP’s expectations, that the Ruby jacket will be installed in the second half of this calendar year and start drilling towards the latter half of 2020, so that the project would be in full production and on stream, in the second half of 2021.
“Now some of that required extraordinary effort to ensure it happened and continues to happen.”
The local head of the transnational commodity company said it has been very active in the deep water and apart from Ruby development, which is in shallow waters, it has run a very successful deep water campaign in the frontier deepwater of T&T which was announced last November.
“The discovery of a very significant gas resource in what we’re calling the north deepwater area, where we said we discovered 3.5 trillion cubic feet (gross) of gas with the hope of finding more. And that’s a resource the company is now looking at to see what indeed is the size of it and how do we commercialise that gas because it is such a large volume, so that is a very significant project if we can figure those things out.
“So, for a find of that volume, we look at it like, things like its close in the jurisdiction of existing markets.”
He explained that this country has the LNG market and existing downstream markets, so there is a market for gas in T&T.
“Clearly a volume that size and scale will find its way into the international market and LNG is high on the consideration of how we will commercialise the gas in the deepwater. BHP is working with our partner BPTT on that and we will try to figure it out as 6,000 feet of water is relatively deep, but it’s very exciting.”
In terms of the spend for the different projects, Pereira noted that the company has invested in excess of a couple billion US dollars and will look at investing significantly again in the future.
“Ruby itself is a half a billion dollar investment and that’s going ahead. And the deep water we are still trying to figure that out in terms of what investment is needed. But if we can make that project work, it would also be a very large investment in the upstream in T&T. And we are excited about it and working pretty hard to figure that out.”
Covid-19 has caused major job layoffs in the global oil industry with BP recently announcing plans to cut 10,000 jobs worldwide. Pereira said while he would not comment on what BP is doing, the Australian company is focusing on trying to reduce expenditure.
“We have not undertaken any mass layoffs or anything at this point and we have been trying to manage this as best as we can, first and foremost, through the lens of spend, transformation and increasing efficiencies. So if we can do it that way, we don’t have to think at this point – things like staff layoffs. Prices are rebounding, so it gives us hope that things will improve, but the spend we undertake now is the most important spend we can do and any spend that is discretionary we will push that out as far as we can to preserve value and preserve cash.”
Downstream industries have been calling for collaboration among Government, upstreamers (like BP, Shell and BHP) and the natural gas aggregator (NGC) to lower the price of natural gas sold to the methanol, ammonia, urea and other downstream industries.
Pereira, a 30-year veteran of the energy industry, said with oil and gas prices crashing around the world, it’s the same thing that has happened to petroleum commodities, and prices have collapsed because of demand.
“So those things are causing tremendous disruption in the marketplace and we’ve all heard the call from the downstream industry. And what has been happening is the Government has put together a team to look at the gas value chain to try and understand how we get a gas value chain in T&T that allows companies to invest throughout the chain. As a result of that, it will almost cause collaborations to occur across the value chains.”
Pereira said in the oil and gas industry world, competitive today is not necessarily competitive tomorrow.
“If you look at what’s been going on in the past few months, it would suggest many things which were competitive before need to be revisited. I would say that this is something the country needs to keep an eye on because the competition for capital is aggressive.
“BHP is doing all we can to ensure that we can keep our fiscal environment in T&T attractive to attract the capital needed to keep the industry going.
Also working together with the Government and private sector, to find solutions to get the balance right will allow the ability to invest even when prices are low and reap the benefits even when prices recover,” the BHP head said.