Is The Caribbean Ready For An Oil Boom?

As Trinidad and Tobago continue to explore for major oil and gas fields in the Caribbean region, the Bahamas Petroleum Co. has made a non-commercial oil discovery.

While Trinidad and Tobago have focused on natural gas for the last two decades, the country’s oil industry has been developing steadily. In 2020, the country’s third-largest oil producer Trinity Exploration & Production increased production by 7 percent to 3,226 bpd. This figure is expected to reach around 4,000 bpd by 2023.

Trinity Exploration & Production’s executive chairman, Bruce Dingwall, explained of Trinidad’s oil industry, “[There is a] huge reserve base and not many players and I think you’ll see some structural change in Trinidad over the next few years”.

In 2016, Trinidad and Tobago had 728 million barrels of proven crude oil reserves. With output levels of between 55-60,000 bpd throughout 2020, Trinidad managed to maintain its pre-pandemic levels of production during the industry’s difficult year.

As well as being the region’s biggest oil producer, Trinidad and Tobago is home to the largest natural gas processing facilities in the Western Hemisphere. In 2014, Trinidad was the sixth-largest global exporter of natural gas, following 15 years of heavy investment in the sector.

The Caribbean region has great oil potential going into 2021 as recent discoveries in Suriname and Guyana demonstrate the untapped potential of the region. Majors are starting to show greater interest in the Caribbean as production costs could be as low as $30 to $40 a barrel.

This February, the Bahamas Petroleum Co. completed drilling of its Perseverance #1 well in the Southern Seas of the Bahamas, however, it did not find hydrocarbons at the commercial levels it had hoped. The exploration project was the first in the zone in several decades and leaves the door open for greater exploration.

The Bahamas Petroleum Co. is also ramping up production in neighboring countries, with projects in Trinidad and Suriname expected to reach production levels of 2,500 bpd in 2021.

However, upon the Perseverance #1 disappointment, Bahamas Petroleum Co. share prices fell 73 percent this week to 0.56p. It is expected that its other regional projects will prop the company up, yet hopes for an oil boom in the Bahamas looks unlikely to be fulfilled any time soon.

In addition to continued investment in fossil fuels, the Caribbean region is also looking into the potential for renewable energy development over the next decade, with Dominica and Barbados announcing a 100 percent renewable energy target by 2030, and Guyana by 2040.

According to the Inter-American Development Bank, the Caribbean Community could save as much as US$5.7 billion in generation costs from 2020 to 2040 through better renewable electricity generation investment.

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Due to the Caribbean countries’ close proximity to the sea, their hydro potential is significant. In addition, wind and solar power could provide the region with a significant source of energy.

Guyana and Suriname are already embracing the change, investing in solar PV mini-grids and battery storage facilities to power local communities. The countries’ governments intend to introduce taxes to carbon emissions to encourage the switch to renewable energy over the coming years.

This February, The Government of the Republic of Trinidad and Tobago also announced plans to invest in offshore wind at the Energy Chamber’s 5th Annual Energy Efficiency and Renewables Conference. An onshore wind assessment will provide a clearer picture of the country’s wind energy potential.

Senator Franklin Khan, Minister of Energy and Energy Industries said of the plan, “Over the next decade, offshore wind, which includes bottom-fixed in the shallow water and floating in the deeper water, is projected to become one of the most competitive sources of electricity, commensurate with fossil fuels, solar PV and onshore wind.”.

So while the Caribbean’s oil and gas production is going from strength to strength across several countries, the region is also likely to be a forerunner in the introduction of new technologies to harness the power of water, wind, and sun.

By Felicity Bradstock for Oilprice.com

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