Is the EMA costing T&T hundreds of millions of dollars?
There is concern that T&T is loosing out on hundreds of millions of US dollars because of slow decision making by state agencies, especially the Environmental Management Authority (EMA), and now comes word that Touchstone Energy’s Cascadura project will be delayed at a time of high gas and oil prices.
Sources at the Ministry of Energy told the Business Guardian that the delay in the project will mean a lack of access of to 90 million standard cubic feet per day of new natural gas production and three thousand barrels of light-sweet crude oil, plus Touchstone is losing money having already hired a rig to drill its wells in anticipation of approval from the EMA, but it appears that the regulatory body wants more questions answered.
However the environmental watchdog has insisted that it is not to be blamed for delays and has instead claimed that some of the oil and gas operators are at fault and that the government needs to take action if it wants to speed up Certificates of Environmental clearance.
In an interview with the Business Guardian Managing Director of the EMA Hayden Romano in a robust defence of the Authority said: “Companies that are complaining are the companies that are not taking the environment seriously.”
He said the EMA told the roadmap to recovery committee that the challenge it has in speeding up environmental clearance for projects is a lack of data and if the Government knows where it wants to create growth poles for sectors then it should undertake the Certificate of Environmental Clearance in advance of inviting investors.
“The EMA has recommended to the Road to Recovery Committee that data scarcity is a major challenge in Trinidad & Tobago and that measures have to be found to acquire data based on proposed developments/growth poles (Strategic Environmental Impact assessments) so that the CEC process can be fast tracked,” the Authority told the Business Guardian.
In a subsequent response to questions from the Business Guardian the EMA insisted that under the Environmental Management Act Chapter 35:05 (EM Act), it is charged with the responsibility of maintaining the delicate balance between environmental management and development.
It noted that according to the United Nations, sustainable development requires an integrated approach that takes into consideration environmental concerns along with economic development.
“Attempting to strike this balance has attracted fall-out when business interests and needs conflict and compete with sustainable development.” the EMA noted.
The problem is not new and according to a study by the Energy Chamber hundreds of millions of dollars in net present value can be created and shared with government and industry if the project approval process was hastened.
In response to questions from the Business Guardian the Chamber said its six-point plan to secure the future of the gas industry, released in May 2022, identified the need to speed-up regulatory approval processes as a key area for action.
“In 2020, the Energy Chamber released the findings of an in-depth study into the approval process for upstream gas projects. The study indicated that for a typical offshore upstream gas project there were a total of thirty-three separate major approvals needed across eight different agencies, including the Environmental Management Authority, the Commissioner of State Lands, the Solicitor General and the Maritime Services Division, in addition to various divisions within the Ministry of Energy. For onshore upstream projects there are additional approvals also needed from agencies such as the Forestry Division and local government.
The study indicated that it took on average 12 years between the launch of a bid round and first production from a gas field,” the Chamber told the BG.
It said there is a major opportunity for T&T if the approval process for both upstream and other energy sector projects could be streamlined. The same study the Chamber noted calculated that a one-year reduction in the time taken to first gas could create US$ 120 million in additional net present value for a typical T&T medium-sized offshore gas field. This is value it said which would be shared between the Government, in terms of taxes or profit share, and the operator company and could make a significant difference in project economics.
According to the Energy Chamber it is not just upstream oil and gas projects that are hampered by slow approval processes and slow decision making, renewable energy projects and other energy sector investments and upgrades have also been hampered by a lack of focus on timely approval processes.
“The Energy Chamber of Trinidad & Tobago will continue to advocate for faster decision making across all relevant agencies and we hope that this will become a key area of focus for the Government.”
Former Energy Minister Kevin Ramnarine insisted that legal action against the EMA appears to have made the body even more cautious.
“The length of time it takes to get regulatory approvals in the energy sector is choking projects and lengthening timelines. It’s a very real problem and it’s gotten worse in recent years since regulatory agencies like the EMA have become a lot more cautious because of the Judicial Review actions brought by environmental groups.
“However, in the context of an economy that needs more oil and natural gas production, it is mission critical that the Government take a quick and decisive look at the labyrinth of approvals required for energy projects. Sometimes, I get the feeling the regulatory agencies are detached from reality and don’t understand the industry.
“We had a situation when I was Minister where a regulatory agency held up first production from a natural gas project because they wanted the company to meet a standard that was the second most stringent in the world.
“How is that practical in a brownfield province? When you think of the billions that are being lost in value and days its a huge problem. I think, if we are to deal with the shortage of natural gas and the low production of oil we need to find ways to speed up approvals and/or to create a one stop shop approvals agency,” Ramnarine said.
“This was hinted too by Romano. He told the Business Guardian: “When we point out deficiencies in the EIA, its the EMA pointing out the deficiencies as the principal involved in the process, but it is the deficiencies coming from the various stakeholders as a result of the public comment period...This is a public engagement and I think some applicants still don’t understand that..We are not there to hold back a process.”
According to the EMA its average processing time fora Certificate of Environmental (CEC) Application requiring an Environmental Impact Assessment (EIA) is 180 working days while that of the Applicant is 220 working days.
“It must be noted that Environmental Impact Assessments (EIAs) are required in instances where projects are anticipated to have potential significant impacts and require a more rigorous assessment. It is incumbent on the applicant to provide the information that is requested. The average processing time for Oil and Gas applications not requiring EIAs is less than 100 working days,” the EMA noted.
Specific to the Touchstone application the EMA said it was submitted and an EIA determination was made by the EMA. The EIA was submitted and accepted for review in January 2022. The mandatory Public Comment period of 30 days for this EIA ended on March 18, 2022. The review of the EIA by the inter-agency review team revealed several deficiencies and Primera (Touchstone) was notified on 4 May 2022. Responses were received from Primera on May 16, 2022 which did not address all the deficiencies identified.
On June 23, 2022—Primera was advised that several deficiencies were not addressed. On July 1, 2022 the EMA reminded Primera that it was still awaiting the outstanding information to satisfy environmental requirements in accordance with the EM Act,” the EMA told the Business Guardian.
It added that the EMA received the responses to the request for clarification on the deficiencies in the EIA on day #80, the statutory deadline for making a determination, once all deficiencies were addressed.
As a result of this the EMA was unable to make a determination within the specified statutory period and notified the applicant in writing of the revised date by which the determination would be made and the reasons.
It said the EMA works within the statutory timelines as provided by the EM Act and the CEC Rules and the Authority is not responsible for any project delay.
“The EMA as a regulator is responsible for permitting projects based on the environmental impact through the Certificate of Environmental Clearance (CEC) process. The CEC process is administered in accordance with the EM Act and CEC Rules and requires the project proponent to provide information to the EMA and to the stakeholders and general public to ensure all negative environmental impact is mitigated,” the BG was told.
It added that in the past concerns were raised and through the conduct of sensitisation sessions, pre-application meetings and regular stakeholder engagement these concerns were addressed and it frequently meets with applicants to provide clarity to what is required for the EMA to make a determination.
With respect to other projects like the San Fernando Water Front the EMA said those issues were resolved even though it took a very long time.
It said: “The CEC for the San Fernando waterfront CEC 5515/2018 was granted on June 2, 2022 and the MovieTowne CEC 0910/2004 was granted on September 2, 2005.”