Episode Transcript
[00:00:01] Speaker A: The best insight, instant feedback, accountability the all new Talk Radio Freedom 106.5 well.
[00:00:09] Speaker B: As I said to you, we do have an interview for you at this time discussing energy, energy related matters. The future of energy in Trinidad and Tobago is impacting on us. Let's welcome to our program regional energy expert. I hope I get this correct. Serio Millard, Did I get, did I get your name correct? Hi, good morning.
[00:00:29] Speaker A: One small thing, Sario Cesario.
[00:00:32] Speaker B: Okay, great. Thanks so much for the clarification. It's nice to have you with us here this morning. As we begin our interview, let me allow you the opportunity to familiarize listeners with, with yourself and some of the things that you're involved in. Tell us about you and some of, some of what you're involved in.
[00:00:51] Speaker A: Right. Yeah. So I've had a background at least for the last 14 years in the energy sector ranging from petroleum engineering into sustainable energy management.
We have looked at several cost benefit analysis with different types of projects and also help with the monitoring and evaluation of many renewable energy projects across the Caribbean. Quite recently in Jamaica and Barbados as well. So.
[00:01:23] Speaker B: Let'S focus our discussion home and some of what's taking place here at home. We've been having some raging discussions about our energy sector and the future that our energy sector will play in the country's economy and our development or lack thereof. Let me get from you your opinion of where energy sector is and some of what we should be concerned about and some of the things as well that we should be on a positive note looking forward to, if there are any.
[00:02:00] Speaker A: Well, I mean, first off, the energy sector is one of the most important sectors for growth in a government, especially for Trinidad and Tobago where energy sector plays the major role for gaining revenues for the country.
When we look at that, we must consider that that sector itself, along with other sectors which can help either support it or at least help diversify away from it so that you can encourage greater gross product, gross development of the product in your country.
Right. So Trinidad and Tobago is not unlike any other country across the world where it is exposed to the vicissitudes, which just means the impact of the market forces across the world. Trinidad is special in the Caribbean quite recently, just like Guyana, where we are blessed with fossil fuels, that being oil and gas that we know in this country.
So when we look at that, we've had about 100 years in the oil and gas sector. But what's happening here now is a result of being 100 years into the sector.
We had a lot of new fields 100 years ago, but now those fields are considered mature or brown fields in the sector. And so we're going to have a declining production while we're trying to bring on new reserves or resources that have already been found. Right.
So that is where Trinidad Tobago is in. In this space now we start to remember that the price of the fuel is going to change. And that's a result of economics around the world. It's a result of policies that have taken place. And quite recently, looking at COP 29, which is the Congress of parties where many governments would meet and discuss the future of energy and energy transition, those policies there help to set and dictate the future for investment in renewable energy transition away from fossil fuels and other. Now when we look at that, that's called international. We're looking at international geopolitics because they're international policy.
We had the US government elections recently as well. And we have to note that a change in the in presidency or in the type of leadership, whether it's a Democrat or Republican, that's going to impact the world itself because their policies are what's going to shape consumption patterns across in the Western hemisphere. For the most part, when we look at the eastern side of things and we are talking about Europe, Europe, Azerbaijan, Asia, all those things like that, you know, they help to set the initial set of policy and I guess the rest of the world tends to follow it when you look at it from that perspective.
So it's important to follow all of those changes are happening across the world.
I'll just open up with that.
[00:05:40] Speaker B: It's always an interesting discussion when we talk about the energy sector simply because of the vital role that the energy sector continues to play in who we are and our ability to pay our bills and all of these other things.
But there has been a drastic reduction in our production levels, meaning that while we do have some of these things, still we're not at the level that can sustain us.
And it's cause for concern because it's not an infinite resource first and foremost. And the energy sector takes long time periods when you find something and from when you can make money off of it.
So there is a cycle that needs to be taken into consideration when we're evaluating the role of the energy sector. The latest that. Well, it's not the latest, but one of the things we've been hearing for related. Well, for some time is that we are whole strain until 2027 when we were expecting to get, I don't want to say a windfall but some better fortunes when it comes to energy production simply because some of the things that are in train, we're expecting by then to monetize them and for them to come into full production and whatever else needs to take place. Are you as confident as, as the people saying that to us that well, that's exactly what's going to happen?
[00:07:13] Speaker A: Well, I would lean on my experience for this. When we look at how Trainer has been performing over the last at least.
[00:07:23] Speaker B: 20 years, I just need you to speak up a bit because you're sounding very faint.
[00:07:28] Speaker A: Okay. Yes, no problem at all. Just making sure you can hear me.
[00:07:32] Speaker B: Yes.
[00:07:32] Speaker A: All right, great. So I'm gonna look.
Let's look at 2008. Around that time we had a lot of oil production. It was probably just about a hundred thousand barrels per day. And after that we had like a 10% per annum decline for some time.
And when we look at that it is very difficult to bring on new resources between that, you know, between that time and replace those all resources. So when we look at those, those reports like in the past we used to hear about the writer's cut report so much and the writer's cut report always showed something like nine years replacement reserves, eight to nine years. And it has never really changed much over the last 15 years. Right. And mainly because we had, we had a lot of those fields that were already discovered and found but they were not, they didn't have financial investment decision that has taken place by private sector companies that are bought into those licenses. They will.
So when we look at it, it's only the timing of bring it on those, those fields is what causes that that reserve to kick up or otherwise. Also the finding of new fields.
We had a delay in between bringing on new, at least leasing new fields like the TTMA region. I think that the deep water build ground there was a bit more of a delay between that as well. So the difficulty of finding new reserves is definitely apparent because those fields are relatively new. There's no particular hydrocarbon indicators from the near shore region that you could use out there in the Deepwater region. And when, when that's there you basically have a whole brand new field. So that area is going to be, is going to be new when it comes to that. Now let's look at the results that we have in place. The Lauren Manatee field, the Jack and Gas field. These fields that we hear, we hear about and it almost seems like we hear about them every time that election comes around.
It's unfortunate that we hear more about it then, but the development of it has been slow because these are mostly cross border deals that have to take place. And that means that you have to manage geopolitical tensions between countries.
Most notably look at Venezuela who initially and quite publicly have said that they, the, you know, their beliefs on, on who should own that that resource. But it's about where that resource falls at the end of the day, right? So there's some, there's a split between data. Lauren and M feel like they want to hold off till they say wait until 2027.
It is likely that yes, it could come on stream 2027, probably closer to 2028, you know, closer to around there just for any delays, whether it be weather disruptions, labor disruptions, otherwise like that.
Because you have to develop the subsurface, you have to know what the subsurface infrastructure you're going to put in place, that drilling infrastructure overhead. And and then finally you also need to make sure that you have the, the resource to either pump it back or to pull it back to onshore. So these things are going to take some time in terms of what final move that they're going to make towards bringing that to the facility there at point 14, which is the Atlantic Energy facility.
So that is one of the main concerns there. The second part is ownership of the, of the asset coming back to us here now. So you have the gas that is coming to the country. It's about 2.7 trillion cubic feet of gas at about 600 million cubic feet per day.
Just you know, in reference to that, how much that makes a difference first we have about 2.5, 2.6 billion cubic feet per day. And so 600 million is about 0.6. So it's gonna, it's gonna give a bit of a bump. Right?
We already have a gas curtailment issue in the country. So it's not really about bringing on brand new reserves, but really about replacement of reserves in that, in that aspect. So that the facilities at Point Lisa and others could perform at a, at a higher level, you know, closer to their capacity.
So that's kind of what that intention is there.
The Atlantic Energy facility, while it brings in some revenue to the country, it's probably not going to give you all of the revenue that you can get because the only way that you can get more revenue is for it to go into the petrochemicals and from the petrochemicals go to derivatives and then you sell those for higher value products to make more income for the country.
But we don't have those facilities in place yet. And so we have to look at that.
[00:13:33] Speaker B: I know that there are many, many factors that are going to impact on what we actually achieve in 20, in 2027, 2028, whenever it actually comes on stream. And we'll get to those after these messages. For those of you who may have joined our conversation midway, we're speaking with regional energy consultant Tassario Millard. We'll be right back.
[00:13:56] Speaker A: The best insight, Instant feedback accountability, the all new talk radio freedom 106.5 we.
[00:14:06] Speaker B: Get continue our conversation this morning with our special guest, that is the regional energy consultant Saria Millard. Before we went to the break, I, I was suggesting that we take our conversation to exactly what's going to happen in 2027, 2028. Now we had a conversation with former Energy Minister Kevin Ramnerain and one of the things that he suggested is that while there will be some improvements, the improvements may not necessarily be all that we need.
And that's something that we're not discussing because the country is being told hold strain, things are going to be difficult until 2027, 2028. But we're not being told how better things are going to get if they're going to get better. Now with the production levels dropping consistently since 2008, even if we get this increase in production, how far up will it take us and will it be sufficient to meet some of the challenges that we are facing at this point in time and that are definitely going to be magnified in two or three years?
[00:15:14] Speaker A: Right? Well, good question there.
Kevin Ramner is not wrong at all. Actually, it's saying what he's saying there.
We do have a little bit of an issue here, mainly because we're not sure, we're not sure what those net returns are going to look like for Trinidad and Tobago. Talking about financially speaking, because when you develop a field so far off like Lauren and Manatee, the cost of bringing it onshore is going to be significant.
And so the net back that we're going to get is not necessarily going to be in the financial setting so much because we're going to have more of a more macroeconomic development perspective where you would have jobs available for people and that might trickle down into the economy in other ways. And so and the next part was the taxes. So we probably get more taxes from the Atlantic lng. We have a slightly bigger stake from NGC in, in Atlantic Energy. I think it's about 5.7% ownership by NGC in that.
So, you know, it's, it's that we're not going to get back the returns the way that we would normally have gotten it back, which would have been from the extraction of those reserves and them selling it down the line. And so you would get some money from each one of those points. But when it's being delivered, whether it be by pipeline or any other means, most likely going to be by pipeline, the cost of the capital outlay for that pipeline and then the, the, the transport of it is going to be significant especially on NCC's part or otherwise. So you know, those are things that we're, you know, that has to be managed carefully.
So that means bringing on additional fields is probably also going to be necessary.
They just signed it to Dragon Gas deal not long ago I think about the year.
And so the development of that deal is going to take you know, at least five years again other than that. So you know, we're not going to see the kind of returns that we are expecting over that course of, over that course of time, you know and it's not as high as before.
[00:17:55] Speaker B: Let me see if I could use a term here to explain it to people so that they could grasp the concept. While we will be having access to more energy resources is going to be more expensive to bring that to where we monetize it so that the profit margins are going to be whittled away in a very, very dramatic manner. Basically it's going to be more expensive for us to get the same gas if it were closer to land because of the infrastructure and because of all those things. And those need to be factored into the profit margin if we're considering profits.
The more, you know, I have a lot of discussions with people from the energy sector about, about this sector and some of these things and the more you talk about it, the more concerning this thing seems to become.
Yes, and, and, and it's, it's concerning because whether we like it or not, far too much of what we do is dependent on the energy sector. And, and, and all the things that happen within the energy sector play a direct role in the quality of life that we live. The standard we enjoyed at some point in time. We enjoying so much these days and from, from all these discussions things are not, are not going to be as good as some people are making it out to be in three or four years time. Now when, when, whenever you start these discussions and you say that people jump up and ball. Well you're not patriotic and you want this to feel and, and, but there's a sense of reality that needs to be injected into the discussion. Especially when you're talking about things like these where you have industry professionals like yourself who can sit and you can evaluate because of all the factors and because of history and because of just how things work, you can sit and you can tell in a very definitive manner, well, this is what to expect.
These are the costs that you're going to have to incur. And this is what, and aside, and apart from the costs and the infrastructure and all of those things that you're talking about, we are talking about a very uncertain environment because Donald Trump going to be in office for three years and he talking about drill, drill, drill, drill, drill all over the place.
And you've highlighted that that is going to change the dynamics of the energy sector across the world. Because America, one of the largest consumers of energy in the Western hemisphere is if they're self sufficient, they need nobody again. And Donald Trump as a businessman, he's not a politician, he approaches things from a business perspective. He's going to run America like a business and the purpose of doing business is to make a profit. So he's going to try to cut out all the expenditure and one of the expense is buying energy.
And we supply America with a lot of energy. As I said, it's just, well, I don't know if I'm being overdramatic, if I'm overly concerned about what's going on or if these concerns are justified.
We almost all the time, just a couple minutes again in 2, 3 minutes, tell our listeners what they can realistically expect in, let's just say five years.
[00:21:15] Speaker A: Okay, that's first off, looking at cop 29, we're gonna see that. Well, we have this, we have the Trump presidency back here again. And their last presidency was kind of marked with them pulling out of a lot of climate finance deals and climate agreements like the Paris Agreement and things like that. So we might expect something like that happening again. Which means that, yeah, they're going to focus more on bringing up production on their end. It's not going to be enough for them to be self sufficient or be a standalone entity because they have a significant amount of consumption.
The American economy is a consumption based economy.
That being said, we will still be able to sell resources into America. And America is one of the major trading hubs for whether it be West Texas Intermediate or the Brent or even Nymex or otherwise like that. So they are some of the major trading hubs. It's not going to stop at any point in time and we could expect that fossil fuel energies is going to play a major part at least for the next 20 years. Right. So that's what we can expect going forward.
That, that being said, we are in a current position where the prices are heading in a, in contango, as they say, at least for the fuel prices. And so that means that the prices are heading more downwards. Right. And a bit more bearish and it's going to be a bit flatter. So the returns from that, it's not going to be as, as high in other ways like that. Especially if you want to bring on a refinery or other things like that.
We have to watch those margins and see how we're going to get some sort of development coming from there.
[00:23:08] Speaker B: In.
[00:23:08] Speaker A: Terms of, and that's on the oil side, on the gas side of things.
We talk about replacement reserves. It's not going to be the major bump and bring on forex availability for the country and all these things that we'd expect.
Right. It's, it's going to make it a little bit easier, but it's not going to make it all the way easier and allow us to be able to trade US dollars on the street or anything like that. It's, that's, I don't expect that that's going to happen. Right. And I don't think that anybody could go and talk that to you. I believe however, that our energy sector is poised for some level of growth in the renewable energy space because we have to bring on a lot more solar energy. The government has put forward their commitment towards 30% renewable energy production in the country by 2030.
So that is definitely going to be a major space to look at in terms of bringing on that and climate finance is going to be a major part in making that happen. There was a tripling of the amount being put forward for international climate finance from 100 billion to 300 billion per year. Experts want 1.3 trillion per year to go towards climate finance. But that as well is going to be a bit of a challenge to get there.
[00:24:38] Speaker B: Yeah.
[00:24:38] Speaker A: So like I said, hydrocarbon energy is going to be a mainstay for us. Renewables is going to play, is going to play a significant part and you know, then we can look at other things going forward.
[00:24:53] Speaker B: This is where we're going to have to leave it. But we definitely need further conversations to delve a bit deeper into some of the non energy sector and the role it needs to play in our economy and all this. And I want to thank you for being with us here this morning and giving us a very frank opinion about some of these things. I don't want to say it's a dose of reality that we need as a nation, but it definitely is a conversation we need to have more, more of. Thank you so much for being with us here this morning. Thanks for being here and that of course, our special guest, ladies and gentlemen, regional energy consultant Sario Millet.
[00:25:23] Speaker A: The best insight, instant feedback, accountability. The all new Talk Radio Freedom 106.5.
