Shell to develop Manatee natural gas field in Trinidad
TRINIDAD & Tobago signed an agreement with Shell on Wednesday for the development of a large natural gas field at a cost of more than US$1 billion.
The Manatee production-sharing contract with Shell Trinidad and Tobago Limited and Shell Trinidad and Tobago Resources SRL covers the shallow-water field, which has a surface area of 48.35 square kilometres and straddles the maritime boundary of Trinidad and Venezuela.
Prime Minister Dr Keith Rowley said at the signing ceremony that based on the development concept, the operating and capital expenditures were estimated at US$1.8 billion on what would be one of the largest natural gas developments in Trinidad.
“The upstream activity that will be generated by the project will create opportunities for the domestic energy service industry and other service providers,” Rowley said, noting that the Manatee field formed a part of the Loran-Manatee cross-border field, with Loran being located in the marine area of Venezuela.
The Loran-Manatee reservoir has an estimated resource of 10.04 trillion cubic feet of which 2.712tcf is within the Manatee field.
New agreement
Trinidad and Venezuela entered into a new agreement for Loran-Manatee in August that replaced the arrangement made two years ago in October 2019. The new ‘Unitisation Agreement for the Exploitation and Development of the Loran-Manatee Field’ delinks Manatee from Loran.
Trinidad pursued the alternative arrangement in the face of sanctions against Venezuela by the United States, which has hobbled cross-border transactions and commercial arrangements for the South American country, and paused activity around the gas development.
“While the imposition of United States sanctions may have temporarily derailed our cross-border initiative, this situation is not expected to last indefinitely,” Rowley said, adding that the decision to proceed independently with the development of the cross-border fields created the opportunity for both the Trinidad government, as resource owner, and Shell, as contractor, to monetise what would be one of the country’s largest natural gas fields to date.
“We are hopeful for re-engagement with the Venezuelan government when the environment permits, and would welcome Shell’s renewed interest as a partner,” he said.
The Manatee contract runs for 25 years, and is expected to begin producing gas by 2025. The initial output is estimated at up to 350 million cubic feet per day, and ramp up to around 700mmscf per day later.
However, Trinidad will begin earning fees and other financial benefits immediately from a range of charges that begin 10 days from the contract date and are due annually. Shell will pay an administrative charge of
bonus of US$15 million. Its contract also requires compliance with Trinidad’s local content policy regarding usage of local goods and services and employment of nationals.
“However, Shell needs no reminder, as the company has demonstrated its commitment to local content and local value added through its community-engagement initiatives and its close partnership with industry, government, and other local stakeholders,” said Rowley. “I expect that this custom will continue,” he said.
Trinidad’s energy output fell under the COVID-19 pandemic, but the PM says the sector is slowly recovering.
“Overall gas supply and international market conditions saw a number of petrochemical plants being taken offline …,” he said.
However, he adds that there have been new discoveries and production activity, with natural gas projections now showing that production would steadily increase to 2024, then undergo a brief decline before rebounding around 2026.
“During the period 2026-2027, Shell’s Manatee and BHP deepwater projects are projected to come on stream. These projects together have the potential to supply in excess of 1.0bcf per day of natural gas in the period beyond 2026, for the life of the projects,” Rowley said.