Trinidad goes for LNG

David Renwick on a massive industrial project in the Caribbean

Trinidad and Tobago has ensnared the biggest customer for its natural gas so far, now that British Gas (BG) – the world’s largest integrated gas company – Amoco and the major US gas importer, Cabot Inc., have agreed to study the feasibility of a liquefied natural gas (LNG) project there.

The scheme would require 300 million cubic feet of gas per day, which would be liquefied in Trinidad and transported thousands of miles to international markets in North America and the UK. Gas is the world’s preferred fuel, being clean and cost-efficient, and the LNG trade is growing by 17 percent a year.

Only six countries now have LNG plants, with three others at various stages of planning. Trinidad and Tobago will thus be joining a rather exclusive club. If it beats Venezuela to the completion of an LNG plant, it will become the first western hemisphere member of the LNG fraternity.

Trinidad and Tobago has been seeking to monetise (as the jargon has it) its natural gas reserves ever since they were estimated in the 1970s at 8.4 trillion cubic feet (proven), plus 4.6 trillion (discounted probable) and 7.1 trillion (possible), making a grand total of 20.2 trillion cubic feet.

With world demand swinging towards gas, primarily for environmental reasons, 20.2 trillion cubic feet is a useful resource to have in your backyard (or at the bottom of your seabed, which is where Trinidad and Tobago’s gas is). But like any other natural resource, if it is not exploited, it adds nothing to national income or standard of living.

After a little uncertainty in the 1970s over how exploitation should proceed, Trinidad and Tobago has been gradually finding profitable uses for its natural gas, principally in electricity generation and petrochemicals. The single largest customer to date is the local power company, which uses about 130 million cubic feet a day. The ammonia producer, Fertilisers of Trinidad and Tobago (Fertrin), uses about 98 million. The larger of the two plants owned by the Trinidad Nitrogen Co. (Tringen) needs about 54 million a day, and the Trinidad and Tobago Methanol Co. requires 48 million. The Ispat Caribbean steel company takes about 30 million more.

Including gas used offshore for lifting oil out of wells where pressure has fallen, Trinidad and Tobago’s total natural gas production is now approaching 700 million cubic feet a day. Even at that level of production, proven reserves can last for at least 30 years more. If the “discounted probable” reserves are included, the supply scenario extends to 55 years. If the belief of some analysts that total reserves will be closer to 100 trillion cubic feet is correct, then there will be enough gas to last well into the 22nd century.

Despite needing more than twice as much gas as the largest existing customer, the proposed LNG plant could be comfortably accommodated on the basis of proven reserves alone.

The search for more gas customers will continue apace, even while the LNG deal is being finalised. The state-owned National Gas Company (NGC) has been mandated to attract commercial users of natural gas to Trinidad and Tobago. One possibility on which it is currently working is a third methanol plant (the second, the privately-owned Caribbean Methanol Co., is almost completed and will be using about 50 million cubic feet of gas a day when it goes into production in July).

The NGC recently absorbed the government’s think-tank, the National Energy Corporation, and has been re-energised under the chairmanship of the UWI engineering professor, Dr Ken Julien. He is the man credited with bringing the Point Lisas industrial estate on Trinidad’s west coast, where all the gas-using industries are now sited, to fruition.

Other gas-based ventures being pursued by Dr Julien and his team of technocrats are MTBE, the replacement for lead in gasolene, which will activate gas use through the methanol that is its main component; aluminium smelting, which requires gas to generate large amounts of electricity; a urea ammonium nitrate (UAN) plant; and even compressed natural gas (CNG), an alternative to gasolene for local motorists.

One recent coup that will have positive effects on Trinidad and Tobago’s economy over and above additional demand for gas is the Nucor Corporation’s iron carbide plant, which the NGC managed to attract to Trinidad and Tobago despite the offer of lower-cost gas from Venezuela.

The plant, to be ready by the end of next year, will be the first attempt to commercialise iron carbide production anywhere in the world.

Iron carbide is thought to have a very promising future as a cheaper input into steel production than scrap, thus cutting the costs which have been the bugbear of the US steel industry.

The Trinidad plant will use a relatively small amount of gas at first, about 15 million cubic feet a day. But if it is successful, more units will be added and gas demand will rise substantially. And the process is likely to attract new steel producers to Trinidad, giving the country the potential for becoming a world steel centre as well as a significant gas-producing centre.

All this threatens to overwhelm the Point Lisas estate, which is close to capacity for accommodating huge, heat-generating industrial plants. The government is therefore looking elsewhere and the LNG plant is likely to be sited at Brighton-La Brea, on the south-west coast between San Fernando and Point Fortin.

This area is known internationally as the location of the famous Pitch Lake; it has a good natural harbour and the natural gas pipeline will shortly reach the town. It will require extensive infrastructural work however, and the NGC plans to persuade its LNG partners to finance most of that.

Funding provided by the 11th EDF Regional Private Sector Development Programme Direct Support Grants Programme.
The views expressed on this website are those of the the authors and do not reflect those of the Direct Support Grants Programme.