EXCLUSIVE: National Energy President Paltoo Talks Energy Transition

MEXICO CITY—National Energy Corp. of Trinidad and Tobago President Vernon Paltoo spoke with Hart Energy’s international managing editor Pietro D. Pitts on March 23 on the sidelines of the two-day AAPG-Energy Opportunities event to talk about steps the twin-island country is taking to remain competitive and relevant while it builds the framework to transition into a lower carbon future.

Pietro D. Pitts: What is Trinidad doing to transition further to cleaner energies?

Vernon Paltoo: Trinidad has traditionally been a gas economy since the late ‘80s into the ‘90s. Subsequently, [Trinidad] became a significant producer of gas-based products internationally—methanol, ammonia and LNG—and continues to be a leading player on a global scale in those areas. We’re fully cognizant that as a country we need to remain competitive and relevant and have taken deliberate steps to build the necessary foundation and framework to transition almost seamlessly into a lower carbon future. I would dare say by using gas as a feedstock, we’ve already embarked on a low-carbon path, as opposed to oil, seeing that gas is the cleanest hydrocarbon there is.

Understanding that basis, we have looked at several key areas, not just as a company, but to extend it to the country in terms of driving a lower carbon future. This would involve energy efficiency as a low-hanging fruit, seeing where we could improve the current utilization and current wastage of gas and, for example, electricity and power production, etc. That is one of the projects we’re looking at in terms of improving efficiency, and that involves a concept called Super ESCO [energy service company], looking at energy efficiency and all the entities that use gas, both on a commercial and industrial level and how to improve the efficiency of gas and power utilization.

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We are building a very comprehensive renewable energy program, and the first utility scale solar PV project is expected to begin construction in the next quarter. Lara, a 112-megawatt solar PV [photovoltaic] project, is a consortium of multinationals together with the state agency, ourselves. It will be the first utility-scale renewable energy project in Trinidad [and] the largest in the Caribbean. It's significant in terms of what we do and meeting our commitments to the Paris Agreement and our obligations where that is considered.

We are also advancing development of a low carbon future by deliberately producing a low carbon feedstock, and ultimately, we’re looking to green hydrogen as that goal. We see carbon capture and storage (CCS) as a key step toward getting there. So, energy efficiency, renewable energy and CCS are our pillars that get us to green hydrogen. In November, working together with the Inter-American Development Bank [IADB], KBR did a study to prepare a roadmap to take us to the green hydrogen economy. Offshore wind resources have been identified that will allow us to produce as much as 57 gigawatts of power that could translate into 4 million tons (MMton) of hydrogen to supply our entire local industry, petrochemical industry, which uses gas, or replace the gas with green hydrogen. Beyond the 2 MMton we would use to satisfy local power and petrochemical [demand], we can actually export that and that’s a long-term vision and plan.

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We have hydrogen now, but it’s gray hydrogen. Ultimately, we expect to remain competitive as carbon taxes become more prevalent, as that is where the industry is headed in terms of preserving our environment, and at the same time, balancing economics. This is a plan to ensure our industry remains competitive going forward and allows us almost immediately to begin that process of remaining competitive. We’ve always been leaders when it came to the production of methanol, ammonia and LNG and… that’s the plan in terms of how we are approaching the low carbon hydrogen market. It would start from optimizing our existing resources in terms of efficiency, but gradually reducing the carbon footprint of the industry. More or less what you’re doing is future-proofing the energy industry for Trinidad and allowing us to be in a position to provide low carbon hydrogen to the region in the coming years and decades to come.

PDP: Are there already visions for another project Lara in the future?

VP: Yes, those things are in the planning phases at this point and we’re looking to see how we can introduce wind energy as well. At present, studies have been done establishing parameters and preparing demonstration plans on wind energy.

PDP: And solar, as well, I would assume since you are in the Caribbean?

VP: Absolutely! We have a good resource and good access. Our issue is land space because [we’re] a small country, and that’s why wind becomes more attractive, especially offshore wind. And that is where [KBR’s] study would’ve identified the most appropriate resource for long-term large quantities of renewable energy power generation that will allow us to become competitive on a hydrogen scale. The reason the study identified us as being able to compete on a global basis [versus] other countries that may have lower-cost renewable energy is because we have a ready market for green hydrogen [within] our industry, which is not available in other countries that are producing large quantities of green hydrogen in pilot phases or planning to. [Also] we don’t have to transport the green hydrogen to any great distances, it’s right there.

PDP: Trinidad’s gas production is around 2.8 billion cubic feet per day (Bcf/d) versus a peak of over 4 Bcf/d not long ago. Lower gas supply has already caused problems for some gas-dependent plants across the country. Is this an issue as the country eyes green hydrogen production in the future?

VP: I don't think that's an issue simply because these are two parallel streams that are advancing and more or less have a synergetic-relation with each other. As we go more into green hydrogen, the gas will always be important for us and the gas industry [and] I dare say will remain very relevant in terms of our economy for many decades to come. We understand that and continue to maintain the relevance and importance of that industry. But at the same time, just as we did in the past, we want to think ahead and be prepared for when the changes and the transition come, to have that competitive advantage and remain competitive as a country.

PDP: Trinidad has a lot of gas production and some oil production. Is it fair to say Trinidad has energy security or does more need to be done to make sure that you can produce everything you need locally?

VP: What we’re looking at is more [about] energy security from a regional perspective because from a country [point of view], we are fairly comfortable in terms of energy security. When we come together as a region, it's a stronger value proposition. When we talk about collaboration in the region, a lot of our intentions, plans and strategies are aligned toward working with other countries towards energy, and that involves oil, gas and low carbon energy. So, from the perspective of energy security, when we look at it from a regional perspective, we’re in a much stronger position to deal with any matters that come along.