Ages ago, Trinidad and Tobago were part of the South American mainland. Then the sea flooded the northeast part of the continent, forming the Gulf of Paria and making Trinidad and Tobago islands, just a handful of miles off the Venezuelan coast. Claimed for Spain by Columbus in 1498 and controlled by the British since the late 18th century, Trinidad and Tobago-with lush rain forests, shady mountains, coral reefs and remote beaches-became a single political entity in 1888. Ultimately, it gained independence from Great Britain in 1962 as a parliamentary democracy and, in 1976, became a republic within the Commonwealth. The country's 1.3 million English-speaking people, however, still trace their roots to Africa, India, China and the Middle East. Today, Trinidad and Tobago is likely the Caribbean's strongest economy, propped up in no small measure by its now-booming energy sector, which includes oil, gas and petrochemicals, centered on and around the island of Trinidad. The sector accounts for 70% of the country's exports. Trinidad is the largest supplier of liquefied natural gas (LNG) to the U.S. and the world's largest exporter of ammonia and methanol. Still, Trinidad remains largely under-explored. Proven reserves are 800 million barrels of oil and nearly 21 trillion cubic feet (Tcf) of gas. Estimated probable reserves are another 500 million barrels of oil and 8 Tcf of gas. But all that may belie the republic's true hydrocarbon potential. "The ultimate gas potential of the basin here may be on the order of another 60- to 70 Tcf," says Eric A. Williams, Trinidad and Tobago minister of energy and energy industries. Today, the eastern offshore portion of Trinidad is receiving a lot of seismic and drilling attention from BP, BHP Billiton, Total, British Gas, EOG Resources and Talisman Energy. But smaller independents have set their sights on finding black gold in and around Trinidad, including New Horizon Exploration, Vermilion Energy Trust and Canadian Superior Energy. What's encouraging these producers isn't just the region's untapped resource potential. "The country has a stable political and investment climate, a record of honoring agreements and very fair production-sharing contract terms," says one operator. Adds another, "The government is very pro-energy and user-friendly. It actually wants us here." Indeed, this month, Williams will make clear at a Morgan Stanley investment conference in Port of Spain, the capital, that he wants to attract more foreign investment in Trinidad's energy sector, and to leverage that sector's growth to improve the country's economy and make it a fully developed nation by 2020. Established energy companies in the region are already on the way to assuring the growth of that sector-as well as more local content in their operations. Growing and involved BP Trinidad and Tobago LLC, which accounts for more than 40% of the country's oil production and nearly 70% of its gas output, entered the region in 1998 when it took over the assets of Amoco. At the time, daily production was about 44,000 barrels of oil and 430 million cubic feet of gas, all of it from offshore southeast Trinidad, starting some 15 miles off Galeota Point. "Since then, with the start-up of the Atlantic LNG [plants] in 1999, market demand for natural gas has picked up," says Randy P. McLeod, president, production, production performance unit, BP Trinidad and Tobago. "As that continues, we plan to further develop the gas reserves not only in our established legacy gas fields, but also in newer gas fields further offshore." Already, BP has increased gas deliverability to 2.3 billion cubic feet (Bcf) per day from 400- to 500 million cubic feet daily. And by year-end, daily gas production will edge up to 2.5- to 2.6 Bcf, then jump to 3 Bcf by the start of 2006. "Even with gas-decline curves taken into account, we managed to achieve a 20% growth in output last year; for this year, it'll probably be another 37% gain-nothing short of extraordinary." McLeod attributes much of this success-and the ability to overcome annual decline rates as steep as 25% to 30% in 30-year-old oil fields -to improvements in seismic, drilling and completion technologies. "With better seismic-evaluation tools, we're now able to look at other prospects that underlie our existing producing properties. Also, with newer drilling and completion techniques, we're able to exploit reservoirs better." One technology contributing to BP's success is directional drilling. "Each of our wells goes through a 3-D review for trajectory, examining the best way into a reservoir, the best way in for recovery." BP also uses fiber optics to monitor every foot in the lateral section of a horizontal-well completion to make sure the completion is optimizing the production of the wellbore. "Looked at on an absolute basis, well costs have actually risen, with the average cost to drill and complete a well offshore Trinidad now around $15 million," says McLeod. "However, if one looks at the improved efficiency and the production we're getting out of these wells, it's definitely the right investment." Of BP's top 25 wells globally, 15 are in Trinidad. "Since 2001, we've drilled 37 consecutive wells here and brought them all in on target, in terms of production and timetable." The company has commitments stretching out for the next 20 years, in terms of reserves discovered and waiting to be developed. "We expect to be drilling eight to 12 wells each year-not including exploratory drilling due to resume in mid-2004-but the focus won't always be on natural gas." Indeed, BP last year drilled more oil wells than gas wells in the region. And as more infrastructure is needed to support its upstream operations, McLeod expects to see more of it with local content. "The fabrication for a recent production facility only had 9% local-resource content; the local content on the next platform we're building will be 20%." To market, to market EOG Resources Trinidad Ltd. entered the country in 1992 when it bid on a royalty-based production license covering an exploration block in the South East Consortium Concession (SECC), 15 miles off the southeast coast of Trinidad. "One of the promises we made at the time was that if we were successful in getting this lease, we would have production onstream within a year," says operations manager J. Pat Woods. "That's a tall order in an offshore environment." Nonetheless, within 11 months of being awarded the license, the company drilled an exploration well to the 15,000-foot, gas-saturated Kiskadee Sands; installed a production platform and pipeline tie-in to shore; and had initial production up and running at 20- to 30 million cubic feet of gas per day. Subsequently, the company drilled five more successful wells on the block, increasing gross daily gas output there to 150 million cubic feet. That production, tapping into an estimated 1 Tcf of gas reserves, is being sold to the National Gas Co. (NGC) which, together with Petrotrin-the state-owned oil company-has a 5% working interest in the exploration block. Expanding offshore Trinidad, EOG in 1996 acquired its first production-sharing contract (PSC) from the government covering the U(a) block to the northeast. Within two years, the company's Omega #2 well, testing 14,800-foot sands on that block, encountered 350 feet of gas pay in one reservoir-another potential 1-Tcf find. Subsequently, it landed a contract with the Caribbean Nitrogen Co. (CNC) ammonia plant onshore to supply 60 million gross cubic feet per day of feed gas for that plant for 15 years-with an option to continue supply for five more years. "Currently, we have two gas wells on our Osprey platform in the U(a) block-one capable of producing more than 100 million cubic feet per day; the other, 50 million cubic feet per day," says Woods. "Right now, only the latter is being used to fulfill the CNC contract. However, we've just signed another contract agreement for similar gas supply to a twin CNC ammonia plant, due to come online in 2004." Last year, EOG made another gas discovery on its SECC license that tested 25 million cubic feet per day. The Parula platform, to be installed over that discovery this fall, will initially have two completions capable of combined daily gas production of 150 million cubic feet. Output from this platform will supplement 25- to 30 million cubic feet per day of gas production from Banyon, a satellite platform with two wells that feed into the operator's initial Kiskadee discovery. The company's next area of development on the SECC license will be the Oilbird Field, which will give EOG the ability to market yet another 80 million cubic feet per day of gas. In addition, it has signed other production-sharing contracts covering nearby offshore blocks LRL and U(b)-plus a 25-year extension on its SECC production-license block. Says Woods, "While offshore exploration wells here typically cost $10 million to drill; drill-stem tests, another $2 million; and completion operations, $3- to $5 million more, our all-in finding and development costs are still only about 30 cents per thousand cubic feet." Following the trend Talisman (Trinidad) Petroleum Ltd., which first got involved in Trinidad and Tobago in 1995, is literally on trend for growth. The company has a 25% working interest with BHP Billiton and Total in Block 2-C, which contains the huge Angostura Field, 24 miles offshore eastern Trinidad. Drilling in this field has uncovered estimated recoverable reserves of 160 million barrels of oil and 1.75 Tcf of gas. Talisman also holds a 30% working interest with BHP, Total and BG in the adjacent 3-A Block. "While Block 2-C contains both oil and gas, we're initially developing it as an oil field and should have first oil flowing in early 2005, with our share of the production 20,000 to 25,000 barrels per day," says Des Norris, exploration and resident manager for Talisman. This year, the company expects to spend US$66 million to help fund the development of 2-C, which includes the drilling of two development wells into the block's prospective 5,000- to 6,500-foot-deep Oligocene-age sands and one exploration well in the Block 2-C Retention Area. Three other exploration wells will be drilled in Block 3-A. Norris is sanguine about the future of the latter prospect. "It's along a producing trend that has many of the same characteristics we encountered in 2-C." These enticements aside, Talisman is spending $20- to $25 million onshore Trinidad on an ambitious 2-D and 3-D seismic survey of the Eastern Block, in which it acquired a 65% working interest last year, partnering with Petrotrin. "The permitting process, which began in mid-2002, was huge," says Norris. "There are more than 6,000 land owners or land occupiers in the area, a town right in the middle of the block and challenging terrain, including swamps and steep, forested slopes." Given this, Talisman has been conducting a low-environmental-impact seismic survey in the area. All equipment is carried in by people along existing roads or paths -although the company does use water buffalo to access some of the more remote areas. Thus far, 67% of the seismic survey has been shot, with the expectation of exploration drilling in late 2004. Why such an effort? "We're in a block where Petrotrin is already producing oil and where there are quite a number of naturally occurring oil seeps," says Norris. "Also, we're along a geological trend that runs through the Eastern Block out towards Angostura. So from a conceptual point of view, we're definitely in an oil fairway. What we're seeking, at depths between 6,000 and 12,000 feet, is some evidence of Cretaceous-age turbidite sands-a hydrocarbon-bearing reservoir target." Adds the explorationist, "There hasn't been a discovery like Angostura for more than 30 years in Trinidad. And once you crack the secret of a play's fairway, you very often continue to find more oil and gas along that trend." In the case of Canadian Superior Energy Inc., a small Calgary-based independent, pursuing exploration opportunities offshore eastern Trinidad is a logical one. "We've developed drilling expertise offshore Nova Scotia-joint venturing with El Paso Energy on two major wells that are targeting natural gas prospects in the 1- to 2.5-Tcf range-and we've recently been looking for another world-class play," says Canadian Superior president Greg S. Noval. "Trinidad caught our eye because it is the major country identified with future LNG supply to North America, particularly to the U.S. Moreover, it is one of the most underexplored geological regions in the world, not only for gas but oil-as the huge Angostura discovery suggests." Recently, the company signed a joint-venture agreement with Petrotrin, approved by the Minister of Energy and Energy Industries, for exploration licenses on the Mayaro Bay and Guayaguayare blocks offshore southeastern Trinidad. The licenses collectively cover 55,000 acres some 20 miles southwest of Angostura. "We're between two older, major oil fields-Galeota and Navette," says Noval. "Here, we're looking at two major structures at depths between 6,000 and 10,000 feet. While we're targeting in each case potential oil reserves of 250 million barrels or more, it's possible we could instead encounter gas reserves totaling more than a Tcf. Since there's plenty of infrastructure in place-a big onshore oil refinery in nearby San Fernando and major gas pipelines that go right across our licensed blocks-either outcome would be welcome." This fall, subject to regulatory and environmental approval, Canadian Superior plans to have WesternGeco conduct a $4- to $5-million, 3-D seismic survey across the entirety of its two licenses. Based on that survey's data, the company plans during the next 12 months to drill, with the help of a new Tarzan-class Rowan rig, a $3.5-million well on the Mayaro Bay Block and a $4.5-million one on Guayaguayare. Besides these relatively affordable costs for a small independent exploring internationally, Noval likes the receptivity of the government toward industry. "We must have looked at a half-dozen different oil-country regimes around the world, and saw this one as the most user-friendly, with the fairest [production-sharing] terms. "The people here recognize that at the end of the day, a fair deal creates more resource development. And the capex of many of the major oil players in the region like BP, which is reportedly allocating a sizeable chunk of its total worldwide seismic budget to Trinidad, speaks volumes about this basin." Adds Noval, "Down here, the trend's your friend, and we've tried to stay between the cracks among the bigger operators probing the huge oil and gas trend that extends eastward from offshore Venezuela."