With international oil prices bubbling in 1999–2000, what comes next?
High energy prices are good news for Trinidad and Tobago, but trouble for most other Caribbean countries, bringing higher oil import bills, higher electricity costs, and higher gas prices at the pump. Trouble too for the airlines, as they fight to improve services and keep fares affordable. Next month’s energy markets are pretty much unknowable, let alone the next decade’s.
Some-long term trends seem clear, however.
In spite of growing energy efficiency, growing GDP will boost demand. But by how much?
And supply? At the start of 1999, an Economist cover story predicted a world awash with cheap oil. Wrong, for now.
But just how much undiscovered oil and gas is out there waiting to be found? Quite a lot, probably.
Take Trinidad and Tobago. Energy-using industries — steel, chemicals, and a Liquefied Natural Gas plant — now eat up close to 0.6 trillion cubic feet a year. But with new discoveries (the October 2000 reserves figure was an all-time record, 33 trillion cubic feet), energy companies exploring offshore are confident that there is more to come. Onshore investments have provided the stimulus encouraging them to risk expensive exploration projects.
And the big picture?
Informed guesswork is one of the tasks of the US Geological Survey. Their World Petroleum Assessment, released in June 2000 at the World Petroleum Congress, estimated the total reserves likely to be discovered over the next 30 years at 732 billion barrels of oil and 5,196 trillion cubic feet of gas, inside and outside the US. For comparison, total cumulative world production up to the mid 1990s was 710 billion barrels of oil and 1,752 trillion cubic feet of gas.
But if the new oil and gas fields are still undiscovered, isn’t all this just wild guesswork? Not really. At the local level, it’s impossible to finally confirm the presence of oil or gas in a particular field without drilling it. But, even without drilling, surface-based seismic surveys and other techniques can give us a good idea of what lies below. And pooling this knowledge over a wide area allowed the USGS to estimate global energy supplies. It wasn’t easy; the task kept a team of 40 geoscientists busy for five years.
Some geological structures have virtually no chance of containing useful oil and gas; others, perhaps a five per cent, 20 per cent or 50 per cent chance. So — find 50 promising geological structures, each with a 20 per cent chance of containing oil or gas, and you probably have ten which will strike lucky.
Which ten, of course, remains anybody’s guess.
Pooling a large number of potential oil and gas fields gives a fair assessment of what is likely to be out there, based on today’s geological thinking. But moving from a world-scale assessment to continents, regions and localities, the chance factor increases. Bearing this in mind, how does the Caricom region look?
The prospects are promising. Worldwide, one of the most exciting untapped regions may be the Guyana-Suriname basin, with perhaps more than 15 billion barrels of oil, most of it trapped in a 150-metre thick layer of mudstones deposited by underwater turbidity currents in the Cretaceous period, when the forerunner of today’s Caribbean first opened up as a new ocean basin.
Trinidad and Tobago, currently the region’s powerhouse, may have enough undiscovered oil and gas offshore to double today’s known reserves. Good news for this energy-based economy.
But the surprise is that there is even more energy in neighbouring countries which are not, at present, big energy producers. Guyana may have more oil than Trinidad and Tobago, and significant quantities of gas. This would transform the prospects of an energy-importing economy which needs to diversify. But most of Guyana’s Exclusive Economic Zone is claimed either by Venezuela or by Suriname. A Surinamese patrol boat prevented drilling by a Canadian company last year, and development will not proceed until these disputes are settled.
Suriname, whose onshore Tambaredjo field is currently a minor producer, may have the largest oil and gas resources in the Caricom region. At the “mean probability” level, Suriname has more undiscovered gas than Trinidad and Tobago, and 17 times as much oil. Shallow waters offshore will make the construction of new pipelines and other infrastructure relatively straightforward. With fewer than 500,000 people to share the wealth, there’s every chance of transformation for what is currently one of the region’s shakiest economies.
Barbados currently has a small onshore oil and gas field, which supplies a fraction of the island’s energy needs. But Conoco recently completed offshore seismic surveys, which look promising. There’s a significant chance of finding nothing at all — but also a possibility of some very large oil and gas finds.
Gas, however, would not be easy to use. Based on current information, the best prospects are in deep-water structures some distance offshore; building pipelines and other infrastructure to land gas, as well as processing industries to use it, would be a challenge. Even if oil and gas are confirmed, development would probably need to proceed slowly.
Grenada’s Exclusive Economic Zone includes the northern fringe of the Carupano basin. There are confirmed gas fields in nearby Trinidad and Tobago and Venezuelan waters, so it’s hardly a surprise that Grenada, too, may have some gas. As with Barbados, the challenge will be in landing and using it.
Further north and outside Caricom, Cuba may have new onshore and offshore oil and gas fields. But, based on current information, these are likely to be useful mainly for cutting the island’s energy imports. The chances of a new energy export powerhouse right next to the booming Florida market are, unfortunately, not high. And Venezuela, of course, remains the Caribbean leader.
