The continued massive fall in bpTT’s natural gas production is the main reason for the gas shortage the country continues to grapple with.
A Cabinet Note, which the Business Guardian has obtained a copy of from the Office of the Prime Minister, has revealed that bpTT’s production in May averaged just over 1 billion standard cubic feet per day (bscf/d) which is just over a half of the size of its average production last year and shows the almost free-fall in its output since the end of 2020.
The Cabinet note read, “There was an estimated 2% decrease in natural gas production from 2,559 MMscf/d in April 2021 to an estimated 2,497 MMscf/d in May 2021. EOG and BHP had production increases of 83 and 40 MMscf/d respectively.
However these were counteracted by a 185 MMscf/d decrease in production from BpTT. The major driver of the decrease was the BPTT Juniper platform being offline for 15 days.”
bpTT’s low natural gas production was one of the major reasons that Atlantic LNG’s trains 2,3 and 4 saw plummeting output in May.
The Cabinet Note reported that in May gas sales to Atlantic LNG decreased by 219 MMscf/d.
The Note revealed that there was a 19% decrease in LNG production from an average of 30,775,486 MMBTU in April 2021 to 24,891,291 in May 2021.
“The Atlantic decrease was driven by lack of supply due to reduced BpTT production with the Juniper platform being offline for planned works and Shell onshore Beachfield facility being offline from May 22. Trains II and IV were online at reduced rates for the entire month. Train III came online from the 7th May 2021 at reduced rates. Train I remained down.” The Cabinet was told.
The problems with bpTT and to some extent lower output from Shell has meant significant lost revenue opportunity for the country even as LNG prices are strong and petrochemical prices have rebounded.
It is also the reason that Train 1 will be mothballed in the coming weeks and why the decision of the Mark Loquan management and NGC Board to invest a quarter billion dollars into an ill fated attempt to save Train 1, that now seems all but lost, has raised so much concern.
Petrochemical production ramps up
But the news is not all bad as both petrochemical and crude production ramped up on both higher global prices and the coming onstream of new volumes.
Ammonia production increased by 8% or 34,121 Metric Tonnes (MT) while Methanol production increased by 63% or 202,458 MT. Urea production increased by 985 MT and UAN increased by 8,754MT.
The increase in petrochemical production meant that more gas was sold to the NGC according to the Cabinet note.
“Sales to NGC increased by 213 MMscf/d while the NGC increase was due to the higher supply to the methanol sector after signing of new gas sales contracts, as well as, a slight increase in demand from the ammonia sector.” the Cabinet Note read.
Crude Oil production shows promise
With BHP brining on its Ruby development it has had the immediate positive impact on the country’s crude oil production which in May averaged over 60,000 barrels of oil per day (bpd).
In May 2021, crude oil and condensate production averaged 61,055 barrels per day (bpd).This was a 2,537 bpd increase on the previous month’s revised production of 58,518 bpd and was due to increased output mainly from BHP and Perenco.
In May 2021, production from Perenco increased from 7,932 bpd to 8,311 or 5%. This increase can be attributed to Perenco having more operational issues in April as opposed to May.
BHP’s production increased from 4,011 bpd in April 2021 to 6,934 bpd in May 2021. On May 4th, BHP commenced production from the Ruby field with the P2 well being brought online. This well produced an average of 4,000 bpd initially. As such, there was a marked increased in the monthly production of crude oil by BHP. However, there were some flow challenges associated with the production from Ruby since the flowline was designed for a much higher flow rate than it was being used for, with only one well online. This resulted in P2 being taken offline and subsequently restarted with a restricted rate of approximately 3,000 bpd.
As such, a smaller than expected increase in production was realised over the month. It is expected that as additional production wells come online from the Ruby development and the flowline becomes packed, the production rate per well would increase.
State-owned- Heritage’s production saw a negligible increase in production from 34,744 bpd to 34,753 bpd.
Oil prices strengthen
The price of all the major crude markers increased with West Texas Intermediate (WTI) strengthening by 6% to US$65.09/bbl and Brent also increased 5% to US$68.37/bbl in May.
For the month of May 2021, Heritage Petroleum Company Ltd exported a combined 1,530,098 barrels (bbls) of Molo crude oil to the USA at a weighted average price of US$66.76/bbl.
The Cabinet was told, “After declining in April, crude oil prices in May moved toward post-pandemic daily highs at nearly US$70.00/bbl. Continuing draws on global oil inventories contributed to upward crude
oil price pressures. Despite rising COVID-19 case counts in some countries, particularly India, global oil demand remained higher than supply in May, contributing to continued global withdrawals from inventories of crude oil and petroleum products.
“It is expected that upward pressure on the Brent price will ease and the Brent price to decrease to average US$65.00/bbl in the second quarter. This decrease comes as OPEC+ crude oil production rises to meet the gradually increasing crude oil demand. Economic activity has increased significantly after reaching multiyear lows in the second quarter of 2020.
The increase in economic activity and easing of COVID-19-related restrictions have contributed to rising energy use.”
The Cabinet Note ended by warning of softening crude prices saying that the US EIA expects that continuing growth in production from OPEC+ and accelerating growth in US tight oil production, along with other supply growth, will outpace decelerating growth in global oil consumption and contribute to declining oil prices.
Based on these factors, it is expected that Brent will average US$60/bbl in 2022.