GEONEWS

NO.5 JANUARY 1996

Technical Session

Dr. Emaliano Mutti, distinguished lecturer for the AAPG will be addressing members on Friday 26th Janurary 1996, on the topic "Geometry and Facies Characteristics of Turbidite Sandstone Bodies." All members and interested persons are asked to attend.

Amendment to Articles of Association.

At the annual Dinner/Dance, amendment to Article 14 of the Articles of Association of the GSTT was passed by vote of 34 to 0 in favour.

Annual Dinner Dance

Our annual dinner/Dance was held on the 10th November 1995.
The award for the best technical session was presented to Jeffery Chen for the session entitled "Emerged corals and reef terraces: Measurement and dating of Late Quaternary uplift, Tana Island, Vanuatu," You can contact the secretary for a copy of this paper. Stanley Wharton received the best field trip award for his trip "
Deforestation, hillslope development and landslide hazard potential - North Coast Road".

The following is the text of the speech of incoming president, Mr. Anthony Paul, given at the annual GSTT Dinner/Dance 1995.
"In this season of election promises and acceptance speeches, I shall be brief.
I will not tell you that we are World Class, that we are a society of National Unity, or even that we can make a difference. You already know these things.
The main task before me is to address you on the plans of your executive for the coming year.
Before doing that, I wish to take this opportunity, on behalf of the incoming executive, and on my own behalf, to give our warmest thanks and congratulations to Derek and his executive committee for the fine job they did during the course of last year. You have heard the report of the president on their activities, and I am sure that you will agree with me that it was indeed an eventful and successful session.
Let us all thank them and congratulate them for making the Society proud in the eyes of its members and of the international community, who joined us for the very successful 3rd Geological Conference of the GSTT and 14th Caribbean Geological Conference in July.
Incidentally, I have just returned from the 9th Latin American Geological Conference in Caracas, Venezuela, and people are still sending congratulations to the Society for the smooth running of our conference.

Plans & Projects
Which brings me to some of the Plans, projects and ideas being put forward by your executive, for the further development of the Society and you the members. Many of these you well recognise are a continuation of the good work done by previous administrations. We are not afraid to admit these things.
Our main objective in this our 20th year is to address seriously those issues that will have long-term benefit to the geological fraternity, the geological sciences and the nation as a whole.
If this is starting to sound like a political speech, let me inform you that, recognising the inordinate proportion of politicians who weaned their skills while being practicing geology, some of our members are considering forming a political arm of the Society. The competition for political leader, as you would expect, is stiff, so I am getting in my practice now. So that when the time comes for accommodation, I will be the one doing the shifting over and not squeezing in.
But seriously. I shall first mention those areas that will impact the geologists, geophysicists and other earth scientists operating in Trinidad & Tobago.
We intend that our projects will assist all these persons, whether they are involved in petroleum, engineering, water resource management, mining, education, government, planning or any other application of the earth sciences.
Our larger goal is making geological information that will be useful to all of us readily accessible. This lack of access to information has been a perennial problem and constraint to our work. The projects that we have in mind to help alleviate this situation include the following:
1 Establishing type collections of the rocks and fossils of Trinidad & Tobago, that will be owned and housed by the GSTT and available to all practicing geologists.
2. Identifying type locations for all geological formations and working with the responsible authorities, be it the lands and Survey Department, Town and Country Planning Division, Forestry Division, the Ministry of Energy and Energy Industries, Petrotrin, or Caroni Limited, to mark and preserve significant rock outcrops for future study in much the same way as a national park functions.
3. We will pursue with our partners at the Ministry of Energy and Petrotrin the idea of publishing old reports from their archives. Many of these works can be regarded as national treasures and are invaluable sources of information on the historical development of Trinidad and Tobago's oil and minerals sector. Some have provided the standard for geological research nationally and internationally.
In researching this project, we are sure to come across many enlightening pieces of hard core data that have never been released to public scrutiny. Information that has not been used for decades and which can have a profound impact on the development of the geosciences on a national scale. This approach can certainly help researchers in unraveling the many mysteries underlying the Territory of T&T. There are of course countless pieces of trivia that are sure to drive any history buff to ecstasy.
We are also planning a special reprint issue of CLASSIC PAPERS on the Geology of T&T, many of which are now out of print.
4. We have started discussions with the Venezuelan Geological Society on a joint working session on the geology of the Eastern Venezuela Basin. Their Members are anxious to sit down with you, their Trinidad counterparts, and exchange information and ideas about our common Geological Desktop (To use today's jargon.) 5. In the area of training and Education, our focus this year will tend to be beyond the membership of the society. We aim to target the wider population, especially the schools and the University of the West Indies. Specifically, we intend to publish a careers guide for high school students, inclined towards the earth sciences. 6. We are working with high school students and teachers to provide lectures and training materials pertinent to those areas of the 'A" Level Geography curriculum. In this regard we will be calling on our membership to offer their services in their areas of expertise. 7. The University of W.I. Geology Dept. has provided the GSTT with the bulk of its membership. For this we are extremely grateful, as I am sure are the employers present here tonight. We feel that we have an obligation to give something back to the University. To work with them in developing students, teachers and programs all better prepared to meet the needs of the Trinidad and Tobago environment.
To this end our aim is to work out a program with the Geology Dept. of UWI whereby we can offer training from industry and from among our illustrious corps of semi-retired members. These specialists can help prepare and teach courses in which UWI may be short of expertise. We also hope to provide the facility for UWI to access training materials and equipment, research projects with industry, distance training through the UWldite video-conferencing system, and even on-the-job training for University students.
8. We are looking at ways of getting the research work already done by UWI students published for wider dissemination. These include much detailed mapping of Tobago and the Northern Range of Trinidad.
Besides these projects which we plan for this year, there are several ideas that we will develop further.
9. In the non-petroleum and general geology sectors, we intend to work along with such organisations as the Geographic Information Systems Society of T & T, the oil companies, and the many government and public utility agencies involved, to help develop a national digital data-base. This will bring together all the parties who use any kind of map data, be it roads, rivers, pipelines, topography, or electoral boundaries and develop one common computerised base that everyone can use, without the repeated effort of collecting the same information many times over.
10. Additionally, we hope to bring to bear the experience of the Society and its members on crucial areas of national policymaking by offering our skills and services where we might be able to be of help. A few examples come to mind immediately: - Environmental issues and the E.M.A.'s mandate vis-a-vis the role of hydrologists - Water; for example Mr. Humphrey's idea of water wells and water treatment plants to service local areas, as an alternative or in support of the huge national grid of large water mains; - major construction projects : What are the engineering implications of putting up massive plants at La Brea, with its pitch problems? What are the demands for construction materials relative to our quarrying potential? - the recurring problem of beach sand mining in Tobago.
We in the GSTT will strive to achieve a sustainable industry of indigenous consulting and geological services, for the benefit of our entire membership and the country. This will serve to capture the
Experience of those seeking to be their own employers, while creating opportunities for younger, fresher graduates. The latter is a commodity we must never run out of if we are to remain competitive.
These are some of our plans and ideas. We believe there is a future for geologists in T&T and we want to be prepared for it.
Finally, let me, on behalf of the executive of the GSTT for 1995-1996, thank you the members for the faith you have put in us. Let me assure you that we will do our utmost to serve the society to the best of our ability, and that we look forward to the challenge ahead.
Thank you and please do enjoy the rest of the evening."

NATURAL GAS - ITS ROLE IN THE ECONOMIC DEVELOPMENT OF Trinidad and Tobago

Presented by Frank Look Kin, Vice President
Business Development, The Natural GasCompany of T&T LTD at the 1995 Annual Dinner Dance.

INTRODUCTION

Thank you Mr. Chairman, distinguished guests, ladies and gentlemen. It is an honor to be invited to address this distinguished gathering of Earth Scientists and Professionals of the Geological Society of Trinidad and Tobago. Tonight I propose to talk about the natural gas industry of Trinidad and Tobago. The gas based sector -of the energy industries in Trinidad has been on a sustained growth path since the mid to late '70s and this is expected to continue at almost the same pace for the next five (5) years and more. I welcome this opportunity in the 21st year of The National Gas Company of Trinidad and Tobago to provide you with some insight into the strategic growth and development of the gas business here in Trinidad and Tobago and the tremendous opportunities that arise therefrom.

HISTORICAL ANTECEDENTS

The gas industry is as old as the oil industry since they are inextricably linked by mother nature. The production of natural gas was associated with crude oil, and gas was used in oil company operations as fuel and for gas-lifting in oil production. Its commercial use outside of the oil fields and refineries did not begin until the start-up of the first anhydrous ammonia plant by Federation Chemicals Limited, a subsidiary of W R Grace in 1959. That was the first gas based petrochemical plant in Trinidad and Tobago and it was based on the development of Penal gas condensate field in South Trinidad. The use of natural gas expanded with its use as the primary fuel in the generation of electricity for public supply in 1964.

The discovery of significant gas reserves by Amoco Trinidad Oil Company in its offshore East Coast licensed areas in 1968 with the drilling of OPR - 2, provided one of the prime catalysts for the rapid expansion of the gas industry in the decade of the 1970's. This discovery was followed by an expansion of the natural gas resource base with the additions of gas discoveries in the South East Galeota, East Mayaro, East Manzanilla fields by Amoco, the Pelican, Kiskadee, Ibis and Oil bird fields by the South East Coast Consortium, the Dolphin field by Texaco/Tenneco and the KK-4, Chaconia and Poinsettia field in the North Coast Marine area by the DATO Consortium and by Petrotrin.

In August 1975, this country's government established the National Gas Company of Trinidad and Tobago Limited (NGC) to purchase, sell and distribute natural gas in Trinidad and Tobago. With the initial asset base of the T & TEC's 16" gas pipeline from Penal to Port of Spain, NGC entered into the gas transmission business. Three (3) years later, the government funded the construction of a twenty-four inch (24") offshore and land pipeline system to transport gas from the offshore gas field to consumers on the west coast of the island. The capacity of this line was 400 mmcf from Amoco Teak gas field to Point Lisas. In 1983/1984, a 30" submarine line was laid from the Amoco Cassia field to Abyssinia, Guayaguayare and a 30" cross country pipeline was laid to Point Lisas but this time via Rio Claro and more northerly route through the center of the island. This 2nd line has a design capacity of 600mmcfd.

NATURAL GAS RESERVES AND PRODUCTION

It is significant to note that it was the high oil prices in the mid-1 970s which stimulated an intensification of the oil exploration effort in Trinidad and Tobago by various licensees and this resulted in the discovery of significant gas reserves off the east and north coasts of Trinidad. These discoveries were not a result of specific exploration for gas and this led to a search for gas based industries to utilize and monetize this valuable natural resource.

On the basis of the evaluation by independent petroleum consultants supplemented by-updates from the Ministry of Energy and Energy Resource, the nonassociated natural gas reserves in Trinidad and Tobago as at January 01, 1995 were estimated at some 18.8 trillion cubic feet. A breakdown of this figure gives 10.1 trillion cubic feet as proved reserves; 6.0 trillion cubic feet as discounted probable reserves and 2.7 trillion cubic feet of discounted possible reserves.

The bulk of these gas reserves (some 75%) is located in the east coast marine area. The remainder is primarily in the north coast marine area which is still undeveloped. The current proven reserves to production ratio of is in order of forty five (45) years and this could well extend beyond 80 years with the inclusion of the discounted probable and possible reserves. However, this picture changes when we include possible gas demand that are being pursued.

Amoco Trinidad Oil Company has been the main supplier of natural gas to the NGC since 1975 with production derived from its Teak, Cassia, Flamboyant and Immortelle fields. In fact, Amoco was the only supplier until 1982, when NGC invested in two (2) offshore gas compression platforms as a conservation project. This project entailed the collection and compression of associated low pressure gas that was being flared from Amoco's Teak and Poui oil fields. These facilities are presently producing some 110 million cubic feet of gas per day while today Amoco supplies the NGC some 344 mmcfd.

In 1988, a second supply source the Pelican field - was developed by Trintomar in the South East Coast Consortium (SECC) licensed area. This field's production peaked at 130 million cubic feet per day in early 1991 and experienced a precipitous decline afterwards. The third supplier - Enron Gas and Oil Limited with a sub-license for the SECC licensed area excluding the Pelican field - began gas production from the Kiskadee field in November 1993. Today Enron supplies NGC with 22% of its requirements at 130 mmcfd.

The NGC has contracted additional gas supplies from the Dolphin field on the east coast from British Gas Texaco. This production is expected in the first quarter of 1996. At the end of the third quarter in 1995 some 588 million cubic feet of gas were supplied. Distribution among suppliers was as follows:

344 mmcfd from Amoco Trinidad Oil Company representing 59% of total supply;

130 mmcfd from Enron Gas & Oil Trinidad Limited representing 22% of total supply;

110 mmcfd from NGC representing 19% of total supply;

8 mmcfd from Trintomar representing 1.9% of total supply; and

2 mmcfd from Coastline International Ltd., a small land based producer in the Tabaquite field.

The multiplicity of suppliers and supply sources significantly enhance the security and reliability of the gas supply and supports the further development of the gas market in Trinidad and Tobago.

MARKET DEVELOPMENT 1975 TO 1994 The expansion of natural gas market and gas use in Trinidad and Tobago has accelerated tremendously since the mid 1970s. This was a direct result of the deliberate strategy of resource-based industrialization, the main goal of which was the monetisation of the substantial reserves of natural gas which had become available.

Funded largely by the government with fiscal surpluses earned in the oil boom, this strategy resulted in the establishment of several major gas-based petrochemical plants on the Point Lisas Industrial Estate: four ammonia plants; one urea plant; two methanol facilities; a direct reduced iron (DRI) and steel plant; an iron carbide plant; a natural gas recovery plant; and an electric power plant.

All plants were either wholly or majority owned by the government which invested one point eight billion US dollars (US$1.8 billion) in these industries over the period 1975 to 1990.

In its role as owner of a gas transmission system and transporter of natural gas, the NGC has had a good record of reliable service to customers. The present main gas transmission network consists of two major sub-sea and subterranean pipelines of 24" and 30" in diameter. The pipeline system has a combined throughput capacity of 750 million cubic feet per day and transports gas at an inlet pressure of 900 psi from the east coast fields to the natural gas liquid recovery plant in Point Lisas and then on to our various customers.

The gas is of an excellent quality with a high methane content greater that 96%, less than 5 ppm sulphur and about 0.5% carbon dioxide' It is an excellent feedstock for reforming into hydrogen and carbon monoxide, prime building blocks for manufacture of ammonia and methanol and an excellent fuel for heating in industrial, commercial and domestic applications.

Natural gas sales by the NGC increased from the level of 150 mmcfd in 1978 to over 570 mmcfd in 1994. This remarkable growth represents an average of 9% compound annual growth rate in gas use. The petrochemical sector was the principal driver of this growth performance with gas sales to this sector increasing by 11 % per year due to the phased investment in new petrochemical plants. Sales to the heavy industrial sector increased by 5.1%, power generation by 6.9% and the light industrial and commercial sector by 6.3%.

The natural gas industry has now emerged as a leading economic sector in Trinidad and Tobago. Petrochemicals alone accounted for 17% of total export earnings in 1993, compared with a share of 5.2% ten years earlier, and contributed over 10% of real GDP (gross domestic product). The rate of real growth in this sector (which is about 8.8% per year) has mitigated the rate of decline in the overall economy between 1983 and 1994. The share of natural gas in total industrial energy demand in Trinidad and Tobago is in excess of 80%.

Five (5) significant features of the evolution of the natural gas market should be noted:
1) Most of the reserves were discovered during the period of the oil boom when price provided an adequate incentive for the exploration investment;
2) Market development involved significant levels of capital investment by the government on both plant and infrastructure;
3) The development of the industry was-essentially demand-driven, that is, investment decisions in gasbased plants provided the basis for NGC to seek new suppliers. Stated in a different way, supply responded to demand.
4) The supply of gas was dominated by one producer with well head prices determined on a production cost basis and set with fixed escalators; and
5) In 1992, the government identified the natural gas industry as the engine of growth in the economy and mandated the National Gas Company to be the prime mover in gas-based development.

INDUSTRY OUTLOOK

The next five (5) years are likely to witness continued growth in all sectors of the natural gas business. We expect to see an increase in gas consumption from the current 600 mmcfd to over 1,300 mmcfd by the turn of the century - inclusive of Liquefied Natural Gas (LNG).

In the petrochemical sector, an eight to ten percent growth rate is expected. A third methanol plant is already in a pre-start up mode - ahead of schedule.

Last month, approval was granted by Hermes to provide insurance for the project financing of a 4th Methanol Plant under the sponsorship of Ferrostaal, Caribbean Methanol Company and the Government of Trinidad and Tobago. This 4th Plant will be build in Point Lisas adjacent to the 3rd Plant and is expected to be completed by 1998.

In addition, there is interest in the construction of a 5th plant with a capacity of 850,000 tonnes per year by Saturn Methanol Company using an alternate technology Lurgi Process. If both plants materialize, the total plant capacity for Methanol production in Trinidad and Tobago will be almost 3 million tonnes per year. This will be approximately 9% of total world capacity of Methanol. Today, Trinidad and Tobago provides 10% of world Methanol trade and by 1998, it is projected to be up to 20% of the trade.

Recent developments in the former Soviet Union have heightened concerns about security of supply of ammonia from that source and will no doubt strengthen interest in establishing new ammonia capacity in stable locations like Trinidad and Tobago. Farmland/Misschem have signaled its intent to establish an 800,000 tonne Ammonia facility in Trinidad and Tobago. This will bring the production capacity to over 3 million tonnes by 1998. The development strategy for this sector will focus on downstream petrochemical expansion aimed at increasing value added from natural gas. In the future, it is anticipated that some 25,000 barrels of ethane will be extracted for use as feedstock for downstream industry expansion.

In the heavy industrial sector, Trinidad and Tobago is emerging as a major centre for iron and steel production in the region. At present, the iron and steel plant produces 900,000 tonnes of direct reduced iron (DRI), and up to 700,000 tonnes of billets and 600,000 tonnes of wire rods on an annual basis. In 1994, the world's first commercial iron carbide plant owned by Nucor Corporation began production of iron carbide. Iron carbide and DRI are alternate feed stocks for scrap which is used in the manufacture of steel. The plant will produce some 320,000 tonnes annually and further expansion is likely. In addition there have been active discussion with another producer of scrap steel substitutes for the establishment of another gas based production facility. Discussions have been progressing with potential Aluminum producers for the establishment of a smelter in Trinidad since the electricity supply is gas based, the establishment-of such a plant will increase the demand for gas. In addition, the ongoing upgrade of the crude oil refinery will use additional volumes of natural gas as fuel, thus increasing gas use in the heavy industrial sector by 14% by 1998.

The strong correlation between power generation and economic growth was evident in this market during the period 1978 to 1983 when electricity consumption experienced a yearly growth of 7%. Over the next decade, excluding demand from the establishment of a smelter, natural gas consumption in this sector is forecast to grow by I or 2% per year. This will be due, in part, to increased efficiency in the conversion of natural gas to electricity and slower economic growth.

Growth in the light industrial and commercial sector over the last five (5) years has been stymied by limitations of the distribution network. A growth rate of 6 to 8% is anticipated in this sector, driven primarily by the promotion of new applications such as natural gas vehicles, natural gas cooling and co-generation and expansion of local gas distribution systems to new industrial estates. The potential gas cooling market is roughly estimated at three (3) mmcfd cubic feet per day. The NGC will be installing the first gas based air conditioning facility at Mt. Hope Hospital in 1996 and this will be followed by the Hilton Hotel which plans to convert to gas based air conditioning in 1996.

The industry outlook on liquefied natural gas (LNG) has been positive. For about two (2) years now, the NGC along with Amoco Trinidad Oil Company, British Gas and Cabot LNG Corporation has been working on the development of a liquefied natural gas export project. The project, involves the construction of an LNG plant with a single liquefaction process train capable of producing approximately 400 mmcfd of LNG for export by 1999. Deliveries of natural gas to the plant would be by Amoco from their east coast gas fields. The LNG will be marketed to Cabot LNG in the US northeastern states and to Enagas in Spain, Europe.

CONCLUSION

In concluding, I would like to point out that, on the one hand, while Trinidad and Tobago's oil production has been declining over time, on the other hand, natural gas production has been increasing. The country's natural gas reserves provide for it a significant role in the future of the natural gas world. Because of its small population and this high per capita gas reserves, it is in a potentially strong position as an exporter of natural gas products.

Prospects for growth in the natural gas business in Trinidad and Tobago are bright. The gas reserve base is large and the advent of several suppliers has enhanced security of supply. Wellhead prices are expected to remain competitive over the medium term while the flexible position of the NGC with respect to downstream pricing will enable present and future customers to maintain a competitive position in international markets.

The major challenge to members of this professional body - GSTT is to expand the gas reserve base in Trinidad and Tobago. While the present proven gas reserve base is adequate to support the existing and announced projects - LNG, Farmland and the 4th Methanol, it is imperative that further exploration and appraisal work must be continued to locate and prove up additional gas reserves to increase the gas reserve base. This natural gas reserve base together with our other advantages - proven ability to provide a secure gas supply, our skilled technocrats and a hospitable investment climate is necessary to increase investor and lender confidence in Trinidad and Tobago as a place to establish and continue gas based industrial development.

Earthquake!

On the 21st November 1995 an earthquake of 4.5 on the Richter scale rocked northern Trinidad, The epicenter was located at 10 0 north latitude, 62.10 west latitude and 63 km deep.

Drilling Highlights

Amoco spudded an exploration well at I 00 04'35.5" N and 60 ( 12'25.6" W, no details are available, also East Mayaro 5 will be spudded at 100 06' 17" N and 600 18' 51 " W.

Conferences,

The local chapter of the Society of Petroleum Engineers (SPE) will be hosting the IV Latin American and Caribbean Pertoleum Engineering Conference (LACPEC IV), from April 23-26 1996. For further information please contact Mr. J. Khan, Conference Chairman, Petrotrin.

The GSTT will be compiling for publication, with help from the Ministry of Energy and Petrotrin, unreleased papers and reports on various geological topics. The first publication in this series will cover the Cretaceous of Trinidad. Members are encouraged to suggest topics or papers of interest for inclusion. Donations of materials will be accepted. Please contact A. Paul at Petrotrin for further details.

New Members,

Anil Nanan, Francesca Chattoo, Gerald D. Kiser.