Amer­i­can out­fit EOG re­sources has re­vealed that in 2021 the av­er­age price it re­ceived for its nat­ur­al gas in T&T was US$3.40 per mil­lion stan­dard cu­bic feet (mm­scf), con­sid­er­ably high­er than what it got in 2020 and the high­est price for some years. In 2020 the av­er­age price was US $2.57 per mm­scf.

It means that the down­stream petro­chem­i­cal com­pa­nies and the Na­tion­al Gas Com­pa­ny paid sig­nif­i­cant­ly more for nat­ur­al gas last year than in 2020 and even 2019, and is part­ly due to the stronger glob­al com­mod­i­ty prices. In 2019 EOG’s av­er­age price for nat­ur­al gas in T&T was US $2.72 per mm­scf.

EOG sells nat­ur­al gas ex­clu­sive­ly to the Na­tion­al Gas Com­pa­ny which then sells it on­to the down­stream af­ter adding its mark up. How­ev­er some of the con­tracts are tied for petro­chem­i­cal prices so that the high­er the price of methanol and am­mo­nia, the high­er the cost of nat­ur­al gas. There is al­so a floor price, un­der which the cost of ac­qui­si­tion of nat­ur­al gas can­not go.

In its an­nu­al re­port 2021, EOG said it sold 79 bil­lion stan­dard cu­bic feet of nat­ur­al gas in 2021 from its T&T op­er­a­tion. In 2021, EOG’s net pro­duc­tion av­er­aged ap­prox­i­mate­ly 217 mm­cfd of nat­ur­al gas and ap­prox­i­mate­ly 1.5 mb­bld of crude oil and con­den­sate.

While EOG is one of the small­er op­er­a­tors in T&T it is cru­cial to the do­mes­tic gas sup­ply as it has man­aged, in the main, to keep its pro­duc­tion rel­a­tive­ly sta­ble and does not sell gas in­to At­lantic LNG.

EOG, through its sub­sidiaries, in­clud­ing EOG Re­sources Trinidad Ltd, holds in­ter­ests in the ex­plo­ration and pro­duc­tion li­cens­es cov­er­ing the South East Coast Con­sor­tium (SECC) Block, Pel­i­can and Banyan Fields, Ser­can Area and each of their re­lat­ed fa­cil­i­ties and the Ska, Men­to, Reg­gae and deep Teak, Samaan and Poui Ar­eas, all of which are off­shore Trinidad; and a pro­duc­tion shar­ing con­tract with the Gov­ern­ment of Trinidad and To­ba­go for each of the Mod­i­fied U(a), Mod­i­fied U(b) and 4(a) Blocks.

Sev­er­al fields in the SECC, Mod­i­fied U(a), Mod­i­fied U(b) and 4(a) Blocks, Banyan Field and Ser­can Area have been de­vel­oped and are pro­duc­ing nat­ur­al gas, crude oil and con­den­sate.

Ex­plo­ration and Pro­duc­tion li­cens­es are dif­fer­ent from Pro­duc­tion Shar­ing con­tracts, with PSCs de­vel­oped much lat­er than E&P li­cens­es.

The com­pa­ny’s an­nu­al re­port al­so re­vealed for the first time some of the terms of its part­ner­ship with state-owned Her­itage Pe­tro­le­um.

It read, “In March 2021, EOG signed a far­mout agree­ment with Her­itage Pe­tro­le­um Com­pa­ny Lim­it­ed (Her­itage), which al­lows EOG to earn a 65 per cent work­ing in­ter­est in a por­tion of the con­tract area (EOG Area) gov­erned by the Trinidad North­ern Area Li­cense. The EOG Area is lo­cat­ed off­shore the south­west coast of Trinidad.”

The com­pa­ny was ex­pect­ed to drill an ex­plo­ration well late last year as part of its far­mout agree­ment with Her­itage. That well was post­poned and to ear­ly this year.

EOG an­nounced that in 2022 it in­tends to drill a to­tal of two ex­plo­ration wells and three de­vel­op­ment wells.

It said, “In 2022, EOG ex­pects to drill one net ex­plorato­ry well in the EOG Area in ad­di­tion to three de­vel­op­ment wells and one ex­plorato­ry well in the Mod­i­fied U(a) Block.”

EOG added that in 2021 it made progress on the de­sign and fab­ri­ca­tion of a plat­form and re­lat­ed fa­cil­i­ties for its pre­vi­ous­ly an­nounced dis­cov­ery in the Mod­i­fied U(a) Block.

On the chal­lenges fac­ing the oil and gas in­dus­try with re­spect to cli­mate change and sus­tain­abil­i­ty, the com­pa­ny said it be­lieves that its strat­e­gy to re­duce green house gas (GHG) emis­sions through­out its op­er­a­tions is both in the best in­ter­est of the en­vi­ron­ment and a pru­dent busi­ness prac­tice.

“EOG has de­vel­oped a sys­tem that is utilised in cal­cu­lat­ing GHG emis­sions from its op­er­at­ing fa­cil­i­ties. This emis­sions man­age­ment sys­tem cal­cu­lates emis­sions based on recog­nised reg­u­la­to­ry method­olo­gies, where ap­plic­a­ble, and on com­mon­ly ac­cept­ed en­gi­neer­ing prac­tices.

“EOG re­ports GHG emis­sions for fa­cil­i­ties cov­ered un­der the US EPA’s Manda­to­ry Re­port­ing of Green­house Gas­es Rule pub­lished in 2009, as amend­ed,” the com­pa­ny not­ed. It did not say whether it was em­ploy­ing sim­i­lar mea­sures in its non-US op­er­a­tions, in­clud­ing T&T.

EOG added that it is un­able to pre­dict the tim­ing, scope and ef­fect of any cur­rent­ly pro­posed or fu­ture in­ves­ti­ga­tions, laws, reg­u­la­tions, treaties or poli­cies re­gard­ing cli­mate change and GHG emis­sions. But not­ed that the di­rect and in­di­rect costs of such mea­sures could ma­te­ri­al­ly and ad­verse­ly af­fect EOG’s op­er­a­tions, fi­nan­cial con­di­tion and re­sults of op­er­a­tions.

“The po­ten­tial in­crease in the costs of our op­er­a­tions could in­clude costs to op­er­ate and main­tain our fa­cil­i­ties, in­stall new emis­sions con­trols on our fa­cil­i­ties, ac­quire al­lowances or cred­its to cov­er our GHG emis­sions, pay tax­es or fees re­lat­ed to our GHG emis­sions, or ad­min­is­ter and man­age a GHG emis­sions pro­gramme.

“In ad­di­tion, changes in reg­u­la­to­ry poli­cies that re­sult in a re­duc­tion in the de­mand for hy­dro­car­bon prod­ucts that are deemed to con­tribute to GHG emis­sions, or re­stric­tions on their use, could al­so ad­verse­ly af­fect mar­ket de­mand for, and in turn the prices we re­ceive for our pro­duc­tion of, crude oil, NGLs and nat­ur­al gas.

“Fur­ther, the in­creas­ing at­ten­tion to glob­al cli­mate change risks has cre­at­ed the po­ten­tial for a greater like­li­hood of gov­ern­men­tal in­ves­ti­ga­tions and pri­vate and pub­lic lit­i­ga­tion, which could in­crease our costs or oth­er­wise ad­verse­ly af­fect our busi­ness.” EOG not­ed.