Cur­tis Williams

Good news from BHP Bili­ton, as the com­pa­ny is re­port­ing that all of its ap­praisal wells in its Ca­lyp­so de­vel­op­ment, north of To­ba­go, have en­coun­tered hy­dro­car­bons.

In its op­er­a­tional re­view for 2021 the com­pa­ny said, “In Trinidad and To­ba­go, the Ca­lyp­so ap­praisal drilling pro­gramme con­clud­ed on De­cem­ber 20, 2021. All wells en­coun­tered hy­dro­car­bons.”

It al­so had fur­ther en­cour­ag­ing news say­ing two of the wells ac­tu­al­ly en­coun­tered zones not be­fore seen.

The re­port read, “Bon­gos-3 con­firmed vol­umes downdip of pri­or pen­e­tra­tions and Bon­gos-4 es­tab­lished vol­umes in a new seg­ment. The well re­sults are cur­rent­ly un­der eval­u­a­tion and will be in­cor­po­rat­ed in­to the de­vel­op­ment plan.”

Last year the com­pa­ny’s Coun­try Man­ag­er for T&T, Michael Stone told Guardian Me­dia that the ap­praisal ac­tiv­i­ty in Ca­lyp­so would help de­ter­mine the ac­tu­al size of the dis­cov­ery it made in its North­ern Li­cense.

Stone said, “We have an­nounced pub­licly a 3.5 tcf dis­cov­ered re­source, but be­gin­ning in the mid­dle of this cal­en­der year, hope­ful­ly June or Ju­ly, we are go­ing to have an ap­praisal pro­gramme, sub­ject to the rig be­com­ing avail­able to us, that is what the tim­ing is de­pen­dent on, it is that ap­praisal pro­gramme Cur­tis, that is go­ing to help us do that very de­lin­eation.”

He added, “So we would ex­pect on the back end of that de­lin­eation pro­gramme, to­wards the end of the cal­en­der year, we will be in a po­si­tion to be clear­er on the re­source size and of course there will al­ways be a range and we are hop­ing if suc­cess­ful to add to the 3.5 dis­cov­ered re­source that we have an­nounced pub­licly.”

Stone said the plan re­mained to have some of the nat­ur­al gas sold in­to At­lantic LNG and then ex­port­ed to glob­al mar­kets. He ex­plained that due to the com­plex­i­ty and cost of deep-wa­ter drilling and pro­duc­tion, it made sense to pro­duce part of it for LNG.

“A re­source of this size and scale and in ad­di­tion a deep wa­ter re­source, I mean a deep wa­ter re­source, of course car­ries a dif­fer­ent cost struc­ture just by na­ture of the deep­er wells and com­plex in­fra­struc­ture re­quired to bring it to shore, yes LNG is go­ing to be an im­por­tant com­po­nent of the Ca­lyp­so de­vel­op­ment. It is go­ing to be nec­es­sary for some com­po­nent of that gas to make it in­to the in­ter­na­tion­al mar­ket to at­tract and in­ter­na­tion­al in­dexed price, so yes LNG is an im­por­tant part of the Ca­lyp­so de­vel­op­ment.” Stone ex­plained.

He said the com­pa­ny was hop­ing that the blocks that were ad­ja­cent to the Ca­lyp­so field, but were in Bar­ba­dos wa­ters, woild al­so prove to be suc­cess­ful.

BHP al­so in its re­view not­ed that crude oil prices have re­cov­ered to above US$70 per bar­rel as 2022 opens.

“We be­lieve fur­ther gains from here are pos­si­ble giv­en our con­struc­tive view of de­mand tail­winds. How­ev­er, fu­ture de­vel­op­ments in price are al­so ex­pect­ed to re­ly in large part on the rate at which cur­rent­ly cur­tailed sup­ply re­turns, which is high­ly un­cer­tain. Look­ing be­yond this phase, our bot­tom-up analy­sis of de­mand, al­lied to sys­tem­at­ic field de­cline rates, points to a long run struc­tur­al sup­ply-de­mand gap. Con­sid­er­able in­vest­ment in con­ven­tion­al oil is go­ing to be re­quired to fill that gap and main­tain mar­ket bal­ance. If that in­vest­ment is not forth­com­ing in a time­ly way, the pos­si­bil­i­ty of oil prices in­creas­ing ag­gres­sive­ly can­not be ruled out,” the com­pa­ny not­ed.

In terms of LNG, BHP said the Japan-Ko­rea Mark­er price for LNG was ex­tra­or­di­nar­i­ly volatile across the 2021 fi­nan­cial year. The mar­ket bal­ance it said shift­ed from heav­i­ly over-sup­plied to ex­treme­ly tight go­ing in­to the North­ern hemi­sphere win­ter. Since that time, prices have re­mained el­e­vat­ed rel­a­tive to sea­son­al norms, with ro­bust de­mand com­bined with on­go­ing sup­ply out­ages.

“Longer term, we be­lieve the com­mod­i­ty of­fers a com­bi­na­tion of sys­tem­at­ic base de­cline and an at­trac­tive de­mand tra­jec­to­ry. With­in glob­al gas, LNG is ex­pect­ed to gain share due to in­dige­nous sup­ply de­ple­tion and/or com­pet­i­tive­ness vis-a-vis pipeline im­ports in some re­gions. Against this back­drop, as­sets ad­van­taged by their prox­im­i­ty to ex­ist­ing in­fra­struc­ture or cus­tomers, or both, in ad­di­tion to com­pet­i­tive emis­sions in­ten­si­ties, are ex­pect­ed to be at­trac­tive,” BHP end­ed.