The Trini Potential

Pat Bishop 2010

Trinidad and Tobago Energy Conference 2018

Transforming the T&T Natural Gas Industry:

Maximizing the Value Chain
Mark Loquan, President | The National Gas Company of Trinidad and Tobago Ltd
2018-Jan-22
DISCLAIMER:

The National Gas Company of Trinidad and Tobago Limited (NGC) has agreed to make this
presentation to the attendees of this event. NGC makes no representation as to the accuracy of
the information contained herein and advises that no reliance should be placed on that
information. The information in this presentation is based primarily on publicly available
sources, which NGC is not responsible for preparing or verifying.

The information provided shall not be binding on NGC, its shareholders, board of directors,
employees and/or agents, and has no legal effect and in no circumstances shall the contents be
relied upon for any reason whatsoever. No responsibility is accepted by or on behalf of NGC, its
shareholders, board of directors, employees and/or agents for any decisions made by the
recipients of such information pursuant to receipt of the information nor shall NGC be
responsible for any direct or indirect consequences as a result of any reliance on the information
being provided by NGC herein.

Without prejudice Subject to disclaimer

 Where do we
Grow from here?
Pre-1974 1974 -1985 1986-1999 2000-2010 2011-202? 2017 & Beyond
“Early Years1” “Embryonic “Retreat & “Global Status1”“Supply/ “Transition &
Stage1” Revival1” Demand Transform”
Imbalance”

0.9
Changing market fundamentals and
0.8
production declines demand urgent,
0.7 collaborative effort to transform the
0.6 industry.
0.5
0.4
Long-term survival require focused ?
MMBOE/D

attention on value maximization and

0.3
competitiveness
0.2
Average Daily Oil & Gas Production
0.1 1908-20162
0
1968
1972
1908
1912
1916
1920
1924
1928
1932
1936
1940
1944
1948
1952
1956
1960
1964

1976
1980
1984
1988
1992
1996
2000
2004
2008
2012
2016
Oil Production (bopd) Gas Production (boepd) Without prejudice
Sources: 1)McGuire in From Oil to Gas and Beyond; 2) EIA Subject to disclaimer
 Without prejudice
Subject to disclaimer
 Supply T&T Gas Supply/Demand

Based on current level

of Upstream activity
T&T cannot support a
2007-2022 Trinidad Gas Supply (mmscfd) 4.2 bcf/d market over
the next 5 years
Domestic Supply LNG Supply Power

4,500

4,000 Total Domestic & LNG

Contracts
3,500

3,000

2,500

2,000
Total Domestic Including
1,500 Power

1,000

500

-
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Source: NGC Commercial Database
Without prejudice
Subject to disclaimer
 Supply Offshore Exploration &
Development activity increase
Distribution of Proven Fields by Size
Exploration & Appraisal Production
3-10 years 1-5 years 10-25 years

Shell BP – TROC, Juniper

seismic

2017
acquisition
Blocks 6b,e,
5a, 5c & 5d
EOG – Osprey infill drilling
Source: EIA
MEEI Bid
Round
Drilling Activity and Commerical Success Rates Launch BP – Angelin
BHP & EOG new OBN DeNovo Block 1a Iguana
Seismic acquisition &
2018 - 2020
development drilling
processing
Blocks 2c/3a & SECC Shell – Starfish & Dolphin
infill
BHP Le
Clerc
appraisal
drilling

Source: NGC Commercial Database

Exploration investment
critical to finding new hydrocarbons Without prejudice
Subject to disclaimer
 Supply T&T Gas Supply/Demand

NGC as the DOMESTIC AGGREGATOR: TROC/Juniper added

More than just a Transporter!
• Greater network stability and
capacity (not
supply reliability through co- incremental volumes);
ordination of upstream and improving network
downstream work plans stability and reliability
of supply to
Inlet Pressure on Domestic Network 2016 - 2017 downstream
Apr ‘17:
TROC

Aug ‘17:
Juniper

Jan-2016 Jul-2016 Jan-2017 Jul-2017 Jan-2018

Inlet Pressure – Upstream (BUD) Greater Co-ordination of

Inlet Pressure – Downstream (PPVS)
Control Range (650 psi)
Source: NGC Operations Database
Downtime through data sharing
with TTUOG and PLEA; less
unplanned downtime
Without prejudice
Subject to disclaimer
 Demand Molecular Optimization need in
downstream
Molecular Efficiency (mmscfd/MT) Shifting Market Dynamics: A new
equilibrium will be found
Ammonia Methanol • Persistent curtailment and reduced
80 production have undermined our global
80
position.

Plant Efficiency
Plant Efficienty

60 60
40 40 • US emergence as a net exporter in 2016
20 20 continue to shift market fundamental
0 0
0 20 40 60 0 20 40 60 • Decisions on plant turnarounds stymied
Age Age by uncertainty around long-term supply;
Size - Avg. Gas Consumption (mmscfd) prompts evaluation on best use of gas
Source: NGC Commercial Database
Commodity Price Trends FOB Ammonia US$/MT
FOB Methanol US$/MT
HH Natural Gas US$/MMBTU
LNG JKM Index USK/MMBTU

600.00 20.00
500.00

USD/MMBTU
15.00
400.00

USD/MT
300.00 10.00
200.00
5.00
100.00
0.00 0.00

Source: Ferticon (Ammonia), IHS (Methanol), Platts (Nat Gas, LNG)

Without prejudice
Source: CBTT, Review of the Economy 2017 Subject to disclaimer
 Demand Power
Focus on
Energy Efficiency Restructuring Power Sector
Impact of Low T&TEC Price and best value for • Progress made in reducing cost
on NGC molecules is now and consumption
critical • Work continues to re-structure
commercial Arrangement
Opportunity Cost • Transition to Renewals underway
2012-2017
~US$1.3B (TT$8.8B)
Solar Costs falling faster than predicted

Source: NGC Commercial Database

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Opportunity Cost Price Inoviced to T&TEC Price Paid by T&TEC

Collaboration with T&TEC has

Power Generation reduced consumption by
Improvement 14%, and increased output
Gas Consumption (msfd)

30,000 1500
Power Output (MW/Hr)

25,000
20,000 1000
15,000
10,000 500
5,000 Source: NGC Commercial Database
0 0 http://rameznaam.com/2015/08/10/how-cheap-can-solar-get-very-cheap-
indeed/

Without prejudice
TTEC TOTAL/mscfd Average MW/Hour Subject to disclaimer
Linear ( TTEC TOTAL/mscfd )
 Without prejudice
Subject to disclaimer
 Pillar Secure Existing Business –
2 Sanction Marginal Fields
Unsanctioned Small
& Marginal Fields Source: NGC Commercial Database
PRIORITY
DEVELOPMENT
The next best option to
close the supply gap!

Marginal Fields:
• MEEI to review
Excluding holdings, incentives &
Iguana &
Zandolie
other support
approaches

• Opportunity for
strategic partnerships
within Upstream

Small Agile Players

Small & Marginals fields:
• Generally considered uneconomic for Large Infrastructure
development Owners
• Reserve size: 40 – 500 BCF
• Shallow to Moderate water depths (90’ – 1000’) Without prejudice
• >80% lie in portfolios of existing operators Subject to disclaimer
 Pillar Secure Existing Business
2 – Regional Supply
Is US Shale a Potential Alternative Supply?
• Comprehensive FSRU commissioned by NGC
concluded that this is unfeasible given the
price of gas.
Source: Woodmac, NGC Commercial Database

Secure alternative supply

from regional sources
• Negotiations continue
with Venezuela for Cross
and Across Border Gas

• Watch List: New

discoveries in Guyana and
Grenada offer potential
supply source.

Without prejudice
Subject to disclaimer
 Pillar Growth – International
3 Collaboration; New
Markets

Emerging Energy Economies

and the Panama Canal will
International Gas Plays open new markets and traffic
to the region, creating
opportunities to export
energy services and expand
operations
Regional Expansion 201 Mozambique
Ghana 180
tcf Guyana
Venezuela tcf
57
tcf
Tanzania

Source: Map only: Espinasa & Humpert, 2016, Energy Dosier:

Trinidad and Tobago ;

Without prejudice
Source: NGC Office of Strategy Management Subject to disclaimer

Country and Industries must reposition to compete globally.
A new way of working is needed!
Government/THA
•Trade Missions
•State to State Agreements
•Diplomatic Corps: Ground
Intelligence and Liaison
Services, Market Entry Support
•Business Development
capacity building
Tertiary & Institutions
•Industry Training; Student
Exchanges
•Conferences
•Research & Development
Pillar National Contribution:
4 Export Local Talent
Collaboration at the national
level is needed to create the
next wave of growth:
• Government Support &
Backing
NGC Group
•Technical Service Agreements
• Collective Industry Know-
•Infrastructural Dev’t How
•Shipping
•Gas-Based Production & • Access to Local and
Operations
International Capital &
Development Funding
• Creativity and Innovative
Business Community
• Chambers & Associations:
spirit
Membership Readiness;
Business Dev’t Support
•Construction & Energy
Services: Sub-contraction;
Exchanges
•Financial Services
Without prejudice
Subject to disclaimer
 Pillar National Contribution: LIC
4 Growth

Revitalize Light Industry

• Alternative Fuel
Displacement
Sectors targeted for LIC • Not just a CSR project:
Growth have a far greater Sustainable, profitable
employment creation sectoral growth
potential than the Energy • Strategic Partnership
Sector with TTCIC & TTMA
• Focus on Tobago with
THA

Source: CBTT, Review of the Economy 2017

Without prejudice
Subject to disclaimer
 Pillar Develop the Organisation
1 – Operational Excellence

Manageable Non-Volume Expenditure

Efficiency 2010 vs 2016 (based on 2010 EPC) Commitment To Operational
Excellent

NGC continues to rank in the Top

Quartile of Benchmarked
systems for Operational
Efficiency

Worldwide Gas Transmission Current initiatives include:

Benchmark study (Solomon Network Optimization
Associates, now in progress) • Process Safety & AIM
Source: Solomon Associates
• Debottlenecking

Process Optimization
• Upgrade ICT Platform
Asset Integrity System Safety-Critical Actions: • Supply Chain Management
Weighted Average Dec 2017 Annual Close out Rate • Learning Systems
National
2.02 94% 100% Group Synergies
Average
72% 75% 74% 75% • Co-ordinating Planning
Dec-17 2.07 • Policy Standards
• Cost Sharing
Oct-15 1.79 • Talent Management
2012 2013 2014 2015 2016 2017
Source: NGC Office of Strategy Management Source: NGC Office of Strategy Management Without prejudice
Subject to disclaimer
 Pillar National Contribution:
4 Corporate Social
Investment

Beyond CSR:
“License to Deeper Value by facilitating
Operate” Strategic Partnerships between and
among our communities
Philanthropy
(Contributions/
Sponsorships)

Community
Engagement

Community Economic
Development

Sustainable National
Development Without prejudice
Subject to disclaimer

Recognising our National
Hero
• Hasely Crawford (2017)
Pillar National Contribution:
4 National Heroes
Recognising our National Hero
• Pat Bishop (2018)

Musician

Artist

National Treasure
Lecturer
Cultural
Ambassador

Without prejudice
Subject to disclaimer
 Closing Remarks

• Work differently and with urgency Our survival over

the next five years
• Maximize the value chain and into the future
• Build and leverage institutional depends on us:
capacity
• Collaboration
• Harness our people potential
• Creativity
• Be competitive • Innovation
• Entrepreneurship

Without prejudice
Subject to disclaimer
 To be here for the long term means
navigation through tough times in the short to medium term.

We have the potential to do so!

The Trini Potential

Pat Bishop 2010

Without prejudice
Subject to disclaimer