West Africa discoveries up despite price bustThe Africa oil boom has not been affected by the price bust after all. In the first 10 months of 1998, operating companies made a total of 27 oil and gas field discoveries, mostly on rank wildcat prospects located in very deep water.
All but one of the discoveries was offshore. Fifteen of the finds were tested, with flow rates ranging from 754 b/d of oil for Chevron's 120-10, in the Lower Congo basin on the shelf, to 20,000 b/d of oil for Chevron's D-14-9 in the Congo fan sub-basin in the deepwater.
To date, deepwater discoveries have yielded 13 fields. Nine of them are in deepwater Angola, three are in Nigeria, and one is in Congo. The discoveries confirm that the deepwater area is the playground of the majors. Exxon and Chevron led the charge with four discoveries each in deepwater Angola. Elf is next with three - two in Angola and one in Congo.
The small coastal state of Gabon acquits itself well with four discoveries (including Etame, which flowed 3,500 b/d of oil), third behind Angola and Nigeria. Cote d'Ivoire faired poorly. The country's sole discovery is only 60 net ft of oil in an undisclosed number of sands, encountered in Ibex South-1 by UMIC last April.
The preponderance of deepwater finds means that low oil prices have not distracted the operators from investing in high risk provinces in Africa and reflects the operator's confidence that an upturn is expected in a couple of years.
Most of the finds were from wells drilled after February, which was when the low oil prices had stubbornly come to stay. The earliest discovery was Marathon's Orovinyare East-1, in Gabon's coastal basin, made in January 1998.
Vanco sees major reserves off GabonVanco Energy is upbeat about the prospects of large finds in deepwater Gabon. Officials are talking of huge "world class" structures, possibly larger than Girassol and Dalia (the notable Elf fields in deepwater Angola).
The chief protagonist is Vanco's CEO, Gene Van Dyke, who touts a billion-plus barrel structure in a Congo fan formation, reportedly covering 110,000 acres and named Janice, after one of his daughters.
Janice and other prospects were thrown up by preliminary evaluation of the 2D survey acquired in 1997. Vanco is assembling a consortium of operating companies, to be known as Vanco-Gabon Group, to carry out extensive technical evaluation of the area. The first work is a carpet 3D shoot slated for first quarter 1999, covering 4,000 sq km initially and probably costing $20 million. Vanco is even thinking ahead about a floating production, storage, and offloading vessel to produce the still imaginary field.
The plan is that, with eight months of acquisition and interpretation of 3D seismic data, drilling could get underway by the year 2000, with each well costing $20 million. This is a very conservative estimate, especially as some of the prospects are located in water depths exceeding 3,000 ft.
Deepwater Nigeria is a "hem and haw" affairProspects in deepwater Nigeria still play hide and seek with operators, in spite of more than 25 wells in three active years of exploration. Just weeks after the euphoria accompanying the three discoveries by Conoco (Chota) and Elf (Ebwa and Ukot), which significantly improved the profile of the area, the news came in that Mobil's two wells Tubara-1 and Otobo North-1, drilled back to back on OPL 22, were both dry. Equally unsuccessful was Statoil's Atabilla, drilled in 3,300 ft of water in OPL 217.
Statoil has drilled six wells in deepwater Nigeria. None of the wells, which range in water depths between 350 meters and 1,000 meters, have encountered a commercial hydrocarbon pool. In the process, the company has accumulated a wealth of geological information. Three of Statoil's six wells drilled have been completely dry.
These misses do not, however, seem to hamper the willingness of operators to either acquire more acreage or gain access into the country's deepwater fairway. Industry eagerly awaits the government's decision on the ultradeepwater acreages, which are in 1,500-2,500 meters water depths.
Geologists at the Department of Petroleum Resources, the industry's regulatory agency, privately express the opinion that there's plenty of oil in the fairway, but most companies have not yet evolved the right concept to locate the resource. However, amid the gloom engendered by the failures of Mobil and Statoil wells, cheers have erupted from the indigenous company Famfa, whose first deepwater well, Agbami-1, was reported to have encountered an "encouraging footage of oil." Agbami-1 was drilled in behalf of Famfa by its technical partner Texaco.
The deepwater region offshore Niger Delta has had 26 wells drilled to date, on a total of 22 structures. Seven of these structures have been successful, and 11 out of the 26 wells have been commercial successes.
Companies want more money from NigeriaAll six companies operating in Nigeria who have joint venture arrangement with state owned NNPC are asking the government for a 50% increase in the 1999 budget from the $2.5 billion approved in 1998. The JV companies include Shell, Mobil, Chevron, Agip, Elf, and Texaco. For most of the last three years, the Nigerian government has either failed to meet the cash call payments for projects or simply allocated less than adequate cash for financing upstream operations.
But, low oil prices coupled with the significant depression in the Nigerian economy may not allow the government to give an enthusiastic response to the request.
Government officials always expect the companies to ask for more than they would expect to get anyway. Even as Nigeria has cut back its output in line with other OPEC countries, trying to bolster the sickly world crude market, years of under-investment mean capacity is far from the 2.5 million b/d semi-official target for the turn of the century.
Although the six-month-old government of General Abdulsalam Abubakar, who took over after the death of the dictator Sanni Abacha, has tried to pay recent cash calls, Nigeria has outstanding debts of several hundred million dollars from past years. Oil companies argue that Nigeria is a pretty low-cost producer and its best hope for the future lies in expanding capacity and reserves. They say that this needs to be done regardless of low oil prices.
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