Green light for Manatee: Shell approves development of key gas field in Trinidad and Tobago

The long-anticipated Manatee project has reached final investment decision (FID). On July 9, 2024, Shell Trinidad and Tobago Ltd. (Shell), a subsidiary of Shell plc, announced its FID on the Manatee project, an undeveloped gas field located in the East Coast Marine Area (ECMA) of Trinidad and Tobago.

The Manatee asset, part of the large cross-border Loran-Manatee gas field, could provide much-needed gas for Trinidad and Tobago in the short to medium term. The field is located offshore on the border of Trinidad and Tobago and Venezuela. The field was discovered in 2005 by ChevronTexaco Corp (Chevron). This discovery confirmed the extension of neighboring Loran field appraised by Chevron in the previous year on Venezuelan contract blocks. Chevron exited the project in 2017 by selling all of its Manatee Trinidad and Tobago shares to Shell.

In 2004, a cross-border unitization agreement between Trinidad and Tobago and Venezuela facilitated the exchange of technical data, leading to the successful drilling of the Manatee-1 well. After many years of trying to develop a unitized cross-border project, the Trinidad and Tobago government decided to proceed with the Manatee gas development independent from Venezuela. In 2019, Trinidad and Tobago and Venezuela agreed to independently develop their respective portions of the field. To this end, in November 2021, the government of Trinidad and Tobago announced an agreement with Shell Trinidad and Tobago Limited on the terms and conditions of a new 25-year production sharing contract (PSC) in respect of the Manatee field.

In 2023, Shell contracted McDermott International Inc. for the front-end engineering design (FEED) of the Manatee gas development. This includes services for a wellhead platform, export pipeline system, shore approach, midstream pipeline, and onshore control room.

Shell has applied for an environmental clearance certificate from the Environmental Management Authority (EMA) of Trinidad and Tobago, as part of its compliance and sustainability measures. The company has also outlined provisions for future expansions, including near-field subsea tiebacks, which may unlock additional resources from the Loran field in Venezuela.

The Manatee project represents a strategic move for Shell to expand its gas business. Situated in the prolific gas-producing region of the ECMA, the Manatee gas field will enhance Shell's development efforts alongside its existing operations in Dolphin, NCMA, Barracuda, among other projects. The decision underscores Shell's commitment to maximizing the potential of its assets and contributing to the global demand for natural gas.

Project highlights

The Manatee gas field is located approximately 100 km off the east coast of Trinidad in an average water depth of 110 m (360 ft). The operator has indicated that the recovered hydrocarbon resources from Manatee would be delivered by drilling eight new horizontal wells, which will be completed with open-hole gravel pack using a jackup drilling rig. Production will be collected in a new offshore platform, remotely monitored and controlled from shore via a new fiber-optic cable. Gas and condensate production will be sent to shore through a new 112 km, 32 in, two-phase pipeline which includes a 3 km segment onshore.

According to Shell's press release [1] from July 9, 2024, the Manatee project is expected to commence production in 2027. Once operational, Manatee is projected to reach peak production of approximately 604 MMcf/d.

Asset valuation

The Manatee project, with its strategic importance and robust development plan, stands as a testament to Shell's commitment to sustainable and efficient energy production. As Shell continues to invest in the ECMA, the Manatee gas field is poised to play a crucial role in meeting both global and domestic energy demands due to estimated resources in the order of 1.8 Tcf of gas, according to EDIN, a product of S&P Global Commodity Insights.

To evaluate project economics at different price scenarios, Vantage, a product of Commodity Insights, has modelled the Manatee Trinidad and Tobago asset development through our cost estimation tool QUESTOR™, a product of Commodity Insights. Based on the operator's guidance on anticipated development plan, Manatee Trinidad and Tobago sanctioned project capital investments are estimated to total approximately US$ 1.3 billion with operating cost close to US$ 1.1 billion.

The Manatee Trinidad and Tobago gas asset results in an After-Tax Net Present Value (ATNPV) discounted at 10% of US$638 million at our base natural gas price. While the current analysis is based on S&P Global Henry Hub estimates, there is still an upside to the asset valuation if LNG feedstock is considered for a portion of the production. Manatee Trinidad and Tobago stands out among other offshore new projects due to the Breakeven Price for gas which is at 2.0 US$/Mcf at the entrance of the Beachfield facility, below the average from other new projects with similar resources in the country.

The FID on the Manatee project marks a significant milestone for Shell and the energy sector in Trinidad and Tobago. The project not only strengthens Shell's position in Trinidad and Tobago gas business but also contributes to the country's economic growth and energy security.

Solutions

To ask questions, see a demo and learn more about QUE$TOR™ please contact ci.support@spglobal.com

For more information regarding well, field & basin summaries, please refer to EDIN

For more information regarding asset evaluation, portfolio view, and production forecasts, please refer to Vantage

[1] Shell's announcement can be found in the company's official web page News and media releases | Shell Global