Production ramps up off West Africa

The deepwater market off West Africa remains steady as a result of the long-term nature of the drilling programs, favorable economics, and field prospectivity. The US is looking to secure oil and gas reserves from areas outside the Middle East, and one of the potential sources is Africa, where activity has been tremendous in the past 12 months. .

Th 94185

By Judy Maksoud
International Editor

More deepwater exploration planned

The deepwater market off West Africa remains steady as a result of the long-term nature of the drilling programs, favorable economics, and field prospectivity. The US is looking to secure oil and gas reserves from areas outside the Middle East, and one of the potential sources is Africa, where activity has been tremendous in the past 12 months. Although political instability is an inherent risk in most of Africa's oil-producing nations, the risk of missing out on a big find is greater than the potential risk of lost capital.

Some of the finds to date have been enormous, and there is still a lot of unexplored deepwater off the West African coast. Though there are companies pulling out of areas offshore Angola and Nigeria, there are more jumping in, including a number of independents.

Vanco Energy is planning significant deepwater exploration that will begin next year. Licensing obligations require two wells off Morocco, one off Senegal, one off Côte d'Ivoire, and one off Namibia. In addition to fulfilling contractual obligations, Vanco plans to drill at least two wells off Equatorial Guinea, and possibly another off Madagascar.

Th 94185
Click here to enlarge image

Britain's Enterprise Oil is in talks to build North Africa into a new core area for its oil and gas exploration and production business. Egypt has seen a string of successes, and new plays are opening up offshore Morocco.

Exploration dollars will continue to flow into Africa for the next few years.

Equatorial Guinea

A number of companies are developing assets off Equatorial Guinea, where continued exploration is uncovering substantial reserves. Marathon Oil Company shelled out $993 million for CMS Energy's interests in Equatorial Guinea as part of the company's move to create new core business areas and to become a significant regional player.

Early this year, Amerada Hess, operator of the Ceiba Field, announced another significant oil discovery in Equatorial Guinea's Rio Muni Basin. The Ebano discovery is in Block F in 2,052 ft water depth about 10 miles northeast of the Ceiba Field. Ebano encountered reservoirs similar in quality to those in Ceiba, Okume, and Oveng. This marks Amerada Hess' third successive find in the area. Exploration continues to be profitable. ExxonMobil and Ocean Energy's Zafiro Field will increase output to 185,000 b/d at the end of this year and could hit 250,000 b/d by the end of 2003. The field now outputs 75% of what is produced off Equatorial Guinea. The remainder is supplied by Amerada's Ceiba.

Equatorial Guinea's crude production is expected to plateau at 350,000 b/d in 2005 up from 150,000 b/d now as output from Zafiro and Ceiba ramps up.

Gabon

Last August, Sasol Petroleum International signed an agreement with the Gabonese government for exclusive rights to evaluate the Phenix Block offshore Gabon, which is adjacent to Sasol's recent success in the Etame Marine Permit.

The agreement gives Sasol access to available seismic data for 12 months. Sasol will evaluate the data and present a report to the government. A determination will then be made regarding exploration and development.

Vaalco Gabon Inc. executed a five-year extension to the production sharing contract (PSC) covering the Etame Block offshore Gabon. The 3,000 sq-km-block contains the Etame discovery, which Vaalco plans to bring into production in the second half of 2002. The block also contains earlier discoveries - North and South Tchibala - that the consortium is studying for development. The terms of the contract provide for a three-year extension for two wells and a further two-year extension for an additional well.

Angola

According to Infield Systems' projections, Angola will see the bulk of the region's subsea development in the next few years, accounting for 53% of the region's planned and possible subsea wells. This figure is more than twice the development planned for Nigeria.

The Girassol Field will account for some of this development. The field, located in deepwater Block 17, saw first production in early December. It is the world's largest deepwater development now onstream. Eleven wells, eight of which are producers, were connected at production startup. When field development is complete, the 39 subsea wells will include 23 producers, 14 water injectors, and two gas injectors. Beginning production totaled about 40,000 bbl, with output set to rise to 120,000 b/d.

BP, which has been in the country since 1990, intends to invest $7 billion in Angola operations over the next 10 years. BP has invested $1 billion in exploring the ultra-deepwater, including Block 18, where fields including Platina, Plutonio, Galio, Paladio, Cromio, and Cobalto will begin production in 2006.

In addition to enormous production, Angola will see more exploration in 2002. Early this year, Ocean Energy Inc. acquired an interest in Block 10, which covers 1.2 million acres. The block is adjacent to Block 24, where Ocean Energy is conducting exploration. The agreement increases Ocean's overall holdings in Angola to 3.6 million gross offshore acres.

Nigeria

Nigeria continues to be the largest oil and gas producer on the African continent, and production is likely to increase as deepwater field development progresses. Oil production is high, and gas production will likely grow, particularly if liquefied natural gas (LNG) exportation becomes viable.

Majors, such as Royal Dutch/Shell, are investing huge amounts of money to develop offshore fields. Shell and its Nigerian partners plan a $7.5 billion investment over the next five years. A large portion will go toward the Nigeria LNG project.

Large offshore fields like Shell's Bonga continue producing at high levels, and more fields are likely to move into production soon.

In February, Eni's Agip Energy announced commencement of production at the Okono Field, which is scheduled to reach production of 25,000 b/d by mid-year, with a total production of 50 MMbbl. Okono production will be followed by production from the neighboring Okpoho Field, where development is underway. Okpoho is scheduled to begin producing by the end of next year. Eni expects cumulative production from the two fields to reach 50,000 b/d.

Seismic surveys continue to map the subsea geology to target potential plays. Petroleum Geo-Services ASA's Seafloor Seismic division will carry out new four-component (4C) seismic acquisition offshore Nigeria and will process the data in the first purpose-designed application of 4C technology in West Africa. ChevronTexaco hopes to pinpoint new areas for development using the new surveying technique.

Mauritania

Last May, Woodside Petroleum announced its deepwater Chinguetti-1 exploration well in Block 4 off Mauritania had encountered oil. Woodside and its partners are planning a $100-million exploration program to determine the extent of oil and gas discoveries in the region.

This well sparked interest in Mauritania's offshore, and in February, Energy Africa Mauri-tania Ltd. got its foot in the door with a 20% interest in Block 2, south of Block 4. This is Energy Africa's first participation offshore Mauritania.

Exploration and appraisal wells will be drilled to more fully evaluate the area.

Sao Tome and Principe

Sao Tome and Principe has turned its border dispute with Nigeria into a huge opportunity. The two countries have started implementing an ambitious and far-reaching agreement on hydrocarbon exploration in the waters that mark the overlap of their boundaries. The shared area is called the Joint Development Zone (JDZ).

Nigeria immediately contributed $8 million toward the functioning of the JDZ Authority, which will be based in Abuja with a staff of 30. One of the high points of the agreement is that the commission will work up the Hercules prospect, which lies in the JDZ. A 3D seismic survey conducted by PGS will allow this prospect to be effectively mapped and ease the picking of an optimum location for drilling.

Congo

Eni drilled the Awa Marine-1 well offshore Congo at 2,730 m water depth in November. A second well is planned to provide data for a more extensive evaluation of the discovery, which is in an area considered mature for exploration activities.

Elf-Congo, TotalFinaElf's Congo subsidiary, expressed interest late last year in increasing offshore oil exploration in search of new discoveries that would replace older fields that will soon be depleted.

Côte d'Ivoire

The biggest news off Côte d'Ivoire is the Canadian Natural Resources (CNR) announcement that the Baobab oil discovery in deepwater offshore Block CI-40 could hold recoverable reserves exceeding 150 MMbbl. The company's next step is to test the Kossipo structure 8 km southeast of Baobab. Kossipo is similar to the Baobab structure, and test results will help CNR decide how to develop the area. Baobab is near the Espoir Field, which began production in February.

Ocean Energy is also planning exploratory wells offshore Côte d'Ivoire. The company has interest in offshore Block 19 with operator TotalFinaElf and in Block 24 with operator ExxonMobil. Two exploratory wells each are planned on Blocks 24 and 19 this year.

Ghana

The government of Ghana plans to offer 36,000 sq km of deepwater acreage for bid early in 2002. The government is restructuring state oil company Ghana National Petroleum Corp. and is planning to entice investors through regulatory incentives, including scaled back royalties and legislative reforms.

Ghana produces about 3,000 b/d of crude. If incentives bring investors to the region, there is hope of a sizable deepwater discovery. The country would like to raise production to more than 100,000 b/d over the next five years.

Republic of Guinea

This small country in northwest Africa is taking its first steps toward entering the oil and gas industry by giving HyperDynamics Corporation exclusive rights to gather seismic data offshore and to market the results.

This exclusive agreement gives the company total exploration and data marketing rights to the Republic of Guinea's entire continental margin, which covers 210 miles of coastline and up to 150 miles offshore. Under the agreement with US Oil, SCS will operate the exploration operations for an area covering 31,000 sq mi.

The $2.5 million first phase of the exploration program, scheduled to begin last March, covers seismic surveying that will use new technology to improve stratigraphic analysis at greater depths.

Geologists claim that offshore Republic of Guinea matches that of Trinidad and Tobago on the other side of the Atlantic, where a 2.5-tcf gas discovery was recently made.

Namibia

Things are looking up again in Namibia. Shell has gone back to the offshore Kudu Field, and Vanco Energy is looking at its assets.

Shell's renewed interest in Kudu stems from the promising outcome of talks with the electrical utility as well as municipal authorities in South Africa. Shell contracted a semisubmersible rig for four wells over a period of between six and nine months in 2002.

Shell hopes to raise proven reserves at Kudu from 1.3 tcf to 5 tcf by 3Q 2002. The company is aggressively drilling more wells to increase this number.

In the meantime, Vanco has identified two prospects, Kunene and Hartmann, on Block 1711 in the deepwater Namibe Basin. The company schedule 2D seismic for early this year.

Planning for the future, Namibia is working on gas legislation that could enable it to join with its Southern African neighbors to become sub-Saharan Africa's major gas hub.


South and East Africa activity

South Africa

Last July, South Africa's Sasol Petroleum Ltd. announced discussions with the Petroleum Agency of South Africa to pursue gas exploration rights off the country's Western Cape province. Sasol was interested in an E&P agreement that would entitle it to acquire additional geological and geophysical data and to conduct exploration drilling. Sasol got approval to look for natural gas in a 28,395 sq km area off the west coast in January and has already completed a work program covering 300 sq km of new 3D seismic data. In March, other companies petitioned and secured government approval to carry out gas exploration.

Pioneer will invest money in 2002 to complete its Sable development in the shallow water offshore South Africa. The field is scheduled for first production late this year.

Tanzania

In September of last year, Canada's Atrim announced it would begin deepwater drilling offshore Tanzania. The company secured a license in 1997 and deferred activity until 2001. Atrim was authorized to begin work and announced it would spend $15.2 million on the venture. So far, there has been no further word on deepwater development.

Madagascar

Last July, a Vanco Energy Company subsidiary contracted TGS-Nopec for a 2D seismic survey of its Majunga Offshore Profond Block offshore the Republic of Madagascar, East Africa. The survey covered 2,000 km of the deepwater block located in the northwestern sector of Madagascar. In March, Vanco Madagascar Ltd. signed a PSC for this block, the first awarded in the Majunga Basin since 1997. The block covers 3.57 million acres with the primary interest areas ranging between 1,000 and 3,000 ft water depth, 40 km offshore.

More in Home