Michael Stone

‘ENERGY REBOUND’: BHP’s new

T&T country manager, Michael Stone.

AS BHP marked first oil from its Ruby Project, the Australian ­headquartered company is signal­ling that Calypso, it’s recently named deepwater block north-east of Tobago, is “orders of magnitude” larger than Ruby.

“We’ve discovered a tremendous amount of gas there. We’re going to be appraising that, and hopefully finding success to turn that into a commercial development,” BHP’s 37-year-old country manager, Michael Stone, told the Sunday Express last week.

But that development will take years.

Just as Ruby did.

First oil came earlier than expected from Ruby, an oil/gas field found in T&T’s shallow water off the east coast of Trinidad.

After all, Ruby had been in development for over a decade and, according to Stone, the company had projected oil to come on stream in the latter part of the year.

Ruby is expected to produce 16,000 barrels of oil a day.

This would add to the country’s existing production of about 57,000 barrels of oil a day.

With first gas anticipated in a few months, BHP considers the feat a milestone as it came together in the middle of a global pandemic.

“The project includes a new wellhead protector platform, so a new offshore installation, and then six new wells. They are all oil-producing wells, one gas-producing well and one gas-injection well. One of the oil-producing wells has come online. And over the course of the next few months, as we complete the drilling programme, you’ll see additional oil wells and the gas injector come online,” said Stone.

“What that means, of course, is that we will be ramping up our oil production to the Ruby capacity of an additional 16,000 barrels a day. That adds to our existing oil production of 4,000 barrels a day, so it’s a very significant increase.”

He said the company expects to start natural gas production from the development in July.

“That’s a little different because we already produce from our existing assets, Block 2C Angostura, gas anywhere in the range of 300 to 360 million standard cubic feet a day, depending on downstream demand. Now with Ruby coming online, we expect to be able to sustainably produce at that higher level for a much longer period of time because we have added a significant gas resource with Ruby, something in the order of about 274 billion standard cubic feet of gas. So we can produce at that high level, you know 353 to 360 million standard cubic feet of gas a day or so, for many more years,” Stone said.

To date, Ruby has cost the project partners about US$500 million. The Ruby development is a joint venture between BHP (operator; 68.46 per cent interest) and the National Gas Company of Trinidad and Tobago (31.54 per cent interest).

The time it took to be bring Ruby to fruition was in stark contrast to the success the company faced with its first field, Angostura, which was the first major oil find in T&T for 30 years. It came in 1999, three years after BHP got its licence to drill with estimates of close to 160 million barrels of oil and up to 1.75 trillion cubic feet of natural gas.

Ruby, in contrast, contradiction and complexity, was 13 years in development.

Ruby is located in the Block 3(a) and has an estimated 13.2 million barrels of oil and 274 billion cubic feet of natural gas. Stone explained that Ruby’s oil would be sold on the international market and would be transported from the field using Angostura’s existing facilities.

“Having made the discovery of Ruby in that block, it makes a lot of sense—if it’s commercially viable, and it has proven to be—to take that discovered resource and utilize the infrastructure right next door at Angostura to produce it. Otherwise you’d be building brand new facilities and that is not efficient. So, we’ve been able to utilise the Angostura central facilities through a production handling agreement,” he said.

Developing Calypso

With a secure, strong shallow water business, BHP has partnered with Shell in the South and BPTT in the North to get into the deepwater business.

“Deepwater is really the frontier of new hydrocarbon development in T&T. We’ve been working in T&T for a hundred years on oil and gas. So, the onshore has been heavily explored. The next step is deep­water and being frontier, there’s no model to go by,” outgoing country manager Vincent Perriera had told Sunday Express last year.

Stone elaborated more on what future deepwater means for BHP—high risks, high success.

To this end, he observed that Broadside’s dry well was part of being in the oil business.

But BHP’s now has Calypso, its deepwater block to the north-east of Tobago, on its mind.

“In the northern area, here we’re talking about Eastern Tobago, we have conducted a four-phase exploration drilling campaign that has yielded some significant discoveries. “We have announced that it is 3 to 3.5 trillion cubic feet of gas.

“By order of scale, you know the Ruby project is going to bring on additional gas resources of about 274 billion cubic feet. So relative to 274 billion, we’re talking about 3.5 trillion cubic feet. That is just what we’ve announced today because we have appraisal drilling to be done, and we hope that with successful drilling that number will grow. “We’re talking about an orders of magnitude larger resource. That resource is so large, and it’s in deepwater, which as you can imagine is more expensive, the wells are deeper, the equipment needed is more complex and expensive to develop something of that size and scale. It’s going to take a lot of engineering work to figure out these deep wells, but also, it’s going to take a lot of commercial work as well.

“A resource of that scale, unlike Ruby, some significant portion of it needs to find its way into the international LNG market, which attracts international LNG prices in order to justify the scale of investment required to move it forward so. Having said all that, we’re very excited about it. It is a very significant resource and discovery. We’re hopeful that our appraisal programme that we’re about to undertake will be the next step in moving that significantly forward,” he said.

The appraisal will be done by June or July and the project could take several years to come together.

“But if successful, and a lot of things have to come together to be sure, we hope if we’re successful and move this forward, that toward the latter end of the 2020s we’re able to bring on this huge new resource ­online,” he said.

In Stone’s estimation, the energy market has stabilised.

“I think the general sentiment is that oil prices have rebounded quite strongly, with, of course with the vaccine and renewed economic activity. And I think the general view that BHP holds and many others hold is that the demand for oil is going to be there for a sustained period of time. We would expect, at the current level of roughly US$60 a barrel, you know that’s where the market seems to have settled out. Who’s to tell where it’s going to go from there? But I think we’re very hopeful that the extreme volatility we’ve seen in the last year was something of a great anomaly with a global pandemic, and hopefully that there’s going to be continued strength for at least the near the mid-term,” he said.

About Stone

Michael Stone was BHP’s operations manager in Trinidad and Tobago before he succeeded Vincent Pereira as country ­manager.

Pereira will retire in June.

Stone has been with BHP for 18 years, working across Trinidad and Tobago and the US, with senior roles in operations, commercial and finance. He has diverse experience within the energy sector in both onshore and offshore operations. As operations manager in Trinidad and Tobago, he is accountable for safe and efficient production delivery and leads the operations team. He is a former Trinidad and Tobago National Scholarship winner and holds an MBA (with distinction) from the Richard Ivey School of Business in Ontario, Canada.

Ruby facts

Ruby is located offshore Trinidad and Tobago in the shallow water in Block 3(a) within the Greater Angostura Field. The development consists of both oil and gas production from the Ruby and Delaware reservoirs via five production wells and one gas injector well tied back into existing operated processing facilities.

The Ruby project closely aligns with BHP’s Petroleum strategy of advancing high return growth opportunities tied back to established infrastructure. At completion, Ruby is expected to have capacity to produce up to 16,000 gross barrels of oil per day and 80 million gross standard cubic feet of natural gas per day.

Drilling and completion activities at Ruby are ongoing, with subsequent wells to be placed into production in the second and third quarter of 2021 and project completion expected in the third quarter of 2021.

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