Major deepwater thrust driving many exploration programs
Dev GeorgeOffshore rig utilization in West Africa is the highest in the world - 100% for semisubmersibles and 92% for jackups, and the region has comparable bookings well into 1998. Driven by an abundance of new discoveries and a dash for alluring deepwater prospects, West Africa is probably the most dynamic offshore play in the world today. The Gulf of Guinea has surged ahead of all predictions to a level of activity equal to or greater than the world's more established plays.
Aside from the tragic events in Nigeria last year and the civil war in Liberia, this volatile region seems to have ceased fighting and gotten down to business. That is not to say the situation is idyllic throughout West Africa - certainly not in Nigeria and Liberia - but it is getting better by far. Several stable regimes have been established, and an atmosphere for exploration and development is paying off.
From Senegal in the northwest around Cape Palmas to the Gulf of Guinea and south to the Namibian frontier with South Africa, discoveries have been made not only in the traditional venues, but in totally new locales and in several deepwater sectors - a total of 44 commercial discoveries over the last 18 months, with approximately 14 more predicted before the end of the year. In fact, the region has been so phenomenal in its achievements that last year and this year there has been an almost constant flow of major operators, drillers, service, and suppliers to the Gulf of Guinea and South Atlantic - primarily from the Gulf of Mexico and North Sea.
Most of that new migration has been to Nigeria, Gabon, Congo, and Angola, drawn by new deepwater and frontier concessions and terms that have been improved considerably in an effort to attract renewed activity. But these aren't the only aquatories offering deepwater and frontier areas among the mix of offshore concessions that are seeing a flurry of exploration and development. Smaller countries are inducing smaller companies (and some of the majors) to test their waters as well, and they're finding big reserves - as Côte d'Ivoire and Equatorial Guinea discoveries will attest.
Nigeria is banking on development of its deepwater province, the improvement of production from its marginal fields, and the recovery of its fast gas reserves to boost it over the 2 million b/d hurdle from its current 1,860,000 b/d in oil production. Offshore reserves are down from 1994 levels to 17.21 billion bbl. Even with governmental/NNPC creative accounting, however, it is unlikely to reach that goal this year.
Petroleum resources minister, Dan Etete, has launched a program to maximize oil production from Nigeria's multitude of marginal fields. He says approximately 800 million bbl of such oil reserves are still undeveloped in the Niger Delta alone and plans to emulate the marginal fields programs being conducted in the North Sea and Venezuela.
Nigeria's Babatunde Bakare, of the Nigerian Gas Co., maintains that the country has an estimated 106 tcf of proven gas and another 45 tcf in recoverable gas reserves, making it the world's ninth largest in gas reserves, yet only a modicum of these reserves are being produced. Nigerian Gas Company has been made responsible for gas gathering, treatment, and transmission.
Nigeria's second deepwater well was a major oil discovery and has spurred bluewater prospectivity. Shell's Bonga-1, in almost 4,000 ft water depth on OPL 212, with more than 300 ft of oil in at least five sands, is the most significant find in the deepwater campaign offshore Nigeria. The well was tested in three zones between 2,500-3,000 meters. Although the company is not releasing test data, the flow rate has convinced Shell to start working up a development program.
In its first deepwater well offshore Nigeria, on the largest prospect on OPL209, Exxon may be setting two records - it is drilling at a record water depth (1,458 meters) for the Gulf of Guinea, and the proposed TD is 18,372'MD, which, if achieved, will be the deepest well in Nigeria. Exxon is drilling with the semisubmersible Sedco 709, which also drilled the Bonga-1.
Agip's first deepwater well, Abo-1, on OPL 316, was plugged for lack of commercial hydrocarbon, but its second, Abo-2, just southwest of the first, drilled with the aid of 2D seismic data, encountered 100 ft net oil sand at 6,552 ft, a level that Agip had expected on seismic profile.
Mobil has spudded its first deepwater well, Adaka 1 in OPL 221, and the Statoil/BP Alliance is now drilling the first of three additional wells based on new seismic in Block 213.
Encouraged by the results of the first round of deepwater wells and particularly by Shell's and Exxon's deepwater campaigns in water depths beyond 1000 meters, the Department of Petroleum Resources is trying to persuade international oil companies to take up the six newly carved out leases, located south and west of the present 20 blocks. The leases, numbered OPLs 242,243,244, 245, 246, and 247 generally lie within 1,200-2,500 meters of water depth, in an area already christened Outer Deepwater. Their sizes are constrained by the water depth and the maximum area that the department specifies for a lease, which is 2,500 sq km.
Abacan and its partner, the indigenous license holder Yinka Folawiyo, have drilling the Aje-1 well in Block 309, near the border with Benin Republic with the same objectives, the lower Cretaceous reservoirs as those being produced in Benin's nearby Seme Field. The well is situated approximately 30 km offshore at a water depth of 100 meters.
This is Abacan's first well in the Benin Basin.
The other major discovery and the latest in a series of discoveries Mobil has made in Nigerian waters over the past 18 months, Kpono West Field, has tested 17,000 b/d. The NNPC-Mobil joint venture, in just 150 ft water, will likely be unitized with Elf's Amenam Field once the terms can be ironed out. With 650 million bbl reserves, Amenam, flows at 9,000 b/d. Located in the southeast sector of the Niger Delta Basin, it and the Kpono Fields are actually one structure straddling the leases of Elf and Mobil. Elf maintains that 80-90% of the field is within its concession and that it has been more successful with its four wells than Mobil has with its three. Mobil has countered with its experience and ability to tie into its Ekpe Field for easier and less expensive development. The Nigerian Dept. of Petroleum Resources is arbitrating.
Two further important discoveries have been Ashland's Okwori South in OPL90, which tested 6,184 b/d oil, and Atlas Petroleum's Ejulebe Field, which has tested 6,000 b/d oil.
Ashland has completed drilling its third well on the Okwori prospect, Okwori South-3, which was drilled back to back with the very successful Okwori South-2, a deviated appraisal well drilled near the Okwori South-1. Okwori South-2 encountered a combined 669 feet of hydrocarbon, of which 297 were net oil, in a number of reservoirs. The location is about 40 miles offshore in waters 450 ft deep. Under the NNPC/Ashland/Total PSC, Ashland operates OPLs 90 and 225, which cover about 450,000 contiguous acres. Ashland and Total each have 50% interest in the PSC.
Atlas Petroleum, an independent Nigerian oil company in partnership with American firm Summit International, hopes to be able to produce up to 10,000 b/d oil from its Ejulebe Field, which lies in OPL 75 in 13 meters of water northwest of Chevron's Mefa Field, through the latter's facilities. Canadian Occidental (CanOxy) is funding the development of the field for 7.5% of the profits.
Lastly, Conoco is to put the Ukpokiti Field, in OPL 74 off the Western Niger Delta, onstream by the first quarter of 1997. The field was discovered in 1993, some seven km to the west (seaward) of Chevron's prolific Meren Field (which flows 55,000 b/d oil). The development plan calls for drilling three directional wells in addition to completion of two of the three existing wells, which are Ukpokiti-1 and 2. Ukpokiti-3 did not find oil. OPL 74 is held by Express, a domestic Nigerian company. Conoco has a 40% equity and is the technical partner.
Recently, NNPC, fearing US sanctions against Nigerian crude, decided to diversify its concession holders even further by awarding some new licenses to several Asian and perhaps a South African company. In addition, the state oil company has made a reasonably successful effort to reduce its billion-dollar debt to foreign oil company joint venture partners. Its two huge involvements, the giant Nigeria LNG export project with Shell, and the Mobil-led project to reduce flaring of the estimated 2.5 bcf/d gas, are ongoing. With costs set now at US$4.5 billion, the LNG project will probably be coming on stream in 1998-99. And the gas will continue to be flared at least through next year.
Angola is steaming ahead of any other West African country in deepwater exploration. Peace has finally settled upon the country, and it is being rewarded for settling its civil war with a resurgence of exploration and production, and, as in Nigeria, deepwater is definitely leading the way. Eight wells seem sure to be drilled in deepwater before the end of the year, five exploratory wells.
Chevron and Elf, Angola's two major producers, began their planned $1.5 billion in expansions last year, and this year, Chevron revved up its five-year 55-well offshore program for Cabinda areas B and C, with an expected production increase of 500,000 b/d. Elf, on the other hand, began its five-year exploration drilling program. Other Western companies are also expected to invest an additional US$1 billion in new exploration. Texaco, for example, started spending the $600 million it expects to pay over the next five years to boost output from its Soyo concession in Block 2 from 60,000 b/d to 90,000 b/d oil. As operator, Texaco is contributing about $118 million of that amount, its partners the rest - Braspetro 27.5%, Total 27.5%, and Sonangol 25%.
Sonangol expects to double 1995's drilling activity this year, with as many as 27 wells. Rather than holding rounds, the state oil company is licensing deepwater acreage via direct negotiations. To date, it has granted several Lower Congo Basin deepwater concessions, including Block 14, the extension of offshore Cabinda Block C, to Chevron; Block 15 to Esso; Block 16 to Shell; Block 17 to Elf; Block 18 to Amoco; and Block 20 to Mobil. And exploration has followed rapidly.
Of all the majors, Chevron, Angola's leading operator, has come late to operating any leases in West Africa's deepwater. (It did not participate in the 1990-91 Nigerian deepwater bidding rounds, but took a partnership with Elf in Blocks 222 and 223 in 1993.) It took its first step into deeper waters with its Kokongo Field in Area B of the Cabinda Enclave, now producing 60,000 b/d oil with ultimate production of 390,000 b/d. Its first deepwater well anywhere in West Africa will be spudded in Block 14 offshore Cabinda.
Elf's lack of hesitancy has paid off, however. After conducting a very promising 3D seismic survey of Block 17, it is developing its small Margarida 1 oil and gas discovery in 3,280 ft water depth and has discovered another major Angolan field, Girassol 1, in 1,365 meters water depth. The company is conducting further tests, but initial flows were about 3,000 b/d.
Exxon has also done a 3D survey over its Block 15 deepwater tract and drilled a wildcat.
Shell has completed drilling its M'Bridge 1 deepwater well in Block 16, and Mobil had drilled a 2,000 ft water depth well in Block 20.
Production from Chevron's North N'Dola/South Sanha oil field in Area C will commence by the end of the first quarter of 1997. And the joint South Nemba/Lomba Field in Area B will come onstream in early 1998, after on-going construction work is completed. Together they are expected to boost Chevron's worldwide earnings by ultimate net far in excess of US$400 million.
West Africa's largest offshore installation, Cobo Field, which went on production in May, is to be linked with nearby Buffalo, Palanca, Pacassa, and Impala, Fields via production lines connected to a 46 km pipeline system in an EPIC contract awarded by Elf Angola to Stolt Comex Seaway. The project calls for Mideast sale of the produced gas.
Angola's offshore production is approximately 700,000 b/d oil this year, its offshore reserves, over 2 billion bbl.
Although Gabon's economy has been weak and occasionally plagued by labor unrest, the political situation has settled down and prospects appear to be improving, with exploration and production on the rise. Nevertheless, the country completed its withdrawal this year from the Organization of Petroleum Exporting Countries because membership dues were too burdensome and a strain on the country's economy.
The country was buoyed, however, by Marathon-Santa Fe's discovery on Gabon's Kowe permit of the 4,545 b/d Tchatamba Marine Field in just 151 ft of water, which has spurred further exploration and development this year, particularly in Gabonese deepwater prospects.
The Tchatamba Marine #1 discovery, only 18 miles offshore, ended a string of dry holes, including one near the Tchatamba Field and two dry deepwater wells drilled by Occidental over the last year. As a consequence, Marathon has conducted a 2,500 km 2D survey over the permit and is appraising the discovery with Tchatamba 2, a km north of the discovery well.
Furthermore, the company has taken a second lease, the Akoumba Marin permit, which ranges in water depth from 600 to 6,000 ft. An exploration and PSC agreement, Marathon is committed only to seismic over the 636,000-acre block, which lies 30 miles offshore in the North Gabon Basin.
Marathon's partner in Tchatamba, Santa Fe Energy, has likewise been granted a contract for Mondah Bay Block, which lies in the Atlantic Salt Basin. The basin holds some billion bbl of recoverable oil reserves, according to the company, which has already targeted several prospects where water depth is 100 ft and drilling depth less than 5,000 ft. First drilling will be next year.
Occidental Petroleum, operates five of Gabon's 12 deepwater blocks, but has not found oil on any of them yet. It has drilled two new wildcats, however, one on its 1.2 million acre Chaillu Block and the other on its 3.3 million acre Meboun Block. The company recently acquired the adjacent 1.1 million acre M'Pola Block, for a total of 5.6 million acres in offshore Gabon holdings.
Elf, on the other hand, has had more luck. The leading operator in Gabon, its first venture into Gabonese deepwater, the Apari Marine Block off Cap Lopez, at just over 300 ft water depth, was a discovery that tested 1,604 b/d. Six more wells are being drilled, with start-up scheduled for the end of the year. A second deepwater permit, the Sika Marin Block in the extreme northeast has been licensed but is yet undrilled, except for an earlier dry hole.
Amoco and Phillips have signed a production sharing contracts and exploration agreement for the Gryphon Marin Block (R93) in the extreme southern aquatory.
Gabon's offshore production is approaching 360,000 b/d oil and more than 252 million cf/d gas, with offshore reserves now at 550 million bbl oil and condensate and 400 bcf gas.
The Congolese government's recent policy of signing production sharing contracts with all comers is attracting quite a bit more activity to the small Congo aquatory, and several very important fields are included in these contracts. Chief among them have been two separate agreements with Elf for the N'Kossa Field and the Haute Mer permit surrounding that field, where Elf has since discovered a second deepwater field, Moho 1, and two separate agreements with Agip for the Kitina Field and the Marine VI and VII acreage surrounding that field.
N'Kossa, until recently West Africa's development at the greatest water depth (560 ft), went on production this summer at about 85,000 b/d, but is expected to be producing more than 100,000 b/d oil by yearend from some 14 wells, and 120,000 b/d at peak production early next year. N'Kossa's high quality crude is comparable to Brent. Liquefied petroleum gas will also be produced from the field beginning next month.
Elf's Moho Marin 1 well, 75 km offshore in the Haute-Mer on the Marine X Block in 4,265 ft water depth, has flowed at 3,500 b/d oil and 2,200 b/d oil from two levels, and the Moho Marin 2 has flowed at 4,700 b/d. Further evaluation is underway, but the field is expected to be quite large, somewhere near 300 million bbl. Partners in the production-sharing contract are Chevron, Hydro Congo, and Engen.
Exxon and Shell have joined Elf in the Congo's deepwater Mer Profonde Sud license, awarded in May. Elf retains 40% interest, with the other 60% equally divided between Exxon (Esso E&P Congo) and Shell E&P Africa. Located entirely in waters in excess of 1,500 meters depth, the new lease is 32 km west of N'Kossa and perches NW of Chevron's Block 14.
Agip expects to drill six more development wells on Kitina, but the field, also online this summer, was to start up with an output of 30,000 b/d. Yombo, already in production, has an output of 9,300 b/d. Its new owners, CMS Nomeco Oil & Gas, operator, and Nuevo Corp., plan nine wells this year to complete development drilling that should put output at 23,000 b/d - up from last year's 10,400 b/d.
Esso (Exxon) holds exploration rights for the Mer Profonde I area and is negotiating for a percentage of Shell's Marine IX permit.
The Congo's offshore oil production over the past year held to its current 180,000 b/d. Offshore reserves are a little over 900 million bbl of oil and 3.2 tcf of gas.
Côte d'Ivoire appears to be slowly emerging as a true oil producer. For years the country was a net energy importer, since its only production was from the declining Belier Field, but that was until Mobil/UMC dramatically altered the country's offshore production profile from 1994's footnote 500 b/d oil to more than 20,000 b/d oil and at least 50 million cf/d gas by the end of this year. Likewise, reserves have jumped from only 50 million bbl oil to well over 150 million bbl oil and 65 bcf gas. This as a result of Mobil/UMC Petroleum's incredible series of discoveries on Block CI-11 - eight consecutive successful wells - making the Lion and Panthere Fields major producers. The Lion, already producing 10,000 b/d, tested at 23,695 b/d oil and 65 million cf/d gas. The Panthere, a gas producer, is being extended by further drilling and went into production in June.
Block CI-27, with its Foxtrot gasfield, has been granted to Apache. The company plans seismic studies then a deep well to test for oil before proceeding with gas production.
The Ivorian state oil company Petroci, is actively seeking other companies to undertake exploration of the country's other blocks. In addition, it hopes to attract joint venture partners for the Belier-Outpost and North Espoir Fields and Blocks CI-1 and CI-2, surrounding the 10 million-plus bbl Belier Field. The company drilled an appraisal well on the Belier Outpost at the end of 1994, confirming the oil. Nearby Espoir Field holds almost 65 million bbl oil.
Encouraged by current activity, the Ministry of Resources, Mines, and Petroleum of Côte d'Ivoire opened up the country's deepwater sector to exploration and development by international operators in September and is now accepting bids. Selected deepwater blocks are said to harbor potential oil reserves in excess of 5 billion bbl. State oil company Petroci is reaching out to investors for JVs in the B-3X gas condensate discovery (387 meters water depth) in CI-24. Other blocks on offer are CI-31-35, much of which lies at depths over 200 meters.
The now shut-in Espoir Field was the first deepwater discovery in the Gulf of Guinea, found by Phillips in 1980 in CI-26 in 363 meters water depth. It went onstream in 1982, but was abandoned in 1988 without secondary recovery, after having delivered 31 million bbl of 31° API oil and 82 bcf of gas. The Geneva-based oil trading company Addax, which holds the block, plans to use cutting edge technology with horizontal wells to produce another 100 million bbl of oil over the next 15 years. The first horizontal well is scheduled for spud in the first quarter 1997.
Just east of the Côte d'Ivoire aquatory, Addax is also attempting to re-development the Seme Field, Benin's only producing oil field, whose reservoir performance has severely declined in recent times. Seme has produced about 20 million bbl oil in the last 13 years, and now produces 75% water, with a net 1,800 b/d oil.
Addax and its Canadian partner Abacan Resource Corp. (50/50) also plans to explore Block 1, which is farther into the deepwater zone, ranging between 100-3,000 meter water depths, and just west of Abacan's deepwater exploration well Aje 1 in Nigerian Block 309. It was a 50% interest bought from Addax Petroleum.
Ghana has recently awarded Hunt Oil a PSC on its Cape Three Points lease, 4,300 sq km east of the Tano North and South Fields. The Ghanian government is still seeking investors for PSCs with state GNPC for development of the gas-prone Tano North and gas rich Tano South Fields. Hunt plans a seismic shoot right away over the area, which lies between the Tano and Saltpond Basins.
On the east side of its aquatory, Ghana's Tano Fields development financing has been okayed by the US Export-Import Bank, at $316 million to Ghana National Petroleum Corp. Some $253 million of that amount will go to drilling and completion of wells, pipelines and platforms. It will be Ghana's first offshore gas project.
Cameroon's offshore oil production over the past year has been approximately 110,000 b/d oil, but is expected to rise by approximately 10% a year as new developments come online. Offshore reserves are just over 700 million bbl of oil and 3.2 tcf of gas. To facilitate those increases, principal operators Elf, Shell, and Kelt are undertaking a heightened exploration and development program. Elf made a new discovery with its step-out Betika 30, which tested at 1,890 b/d oil, and will be tied back to the BTF1 Platform. Perenco likewise was successful with its Kribi F2 well. Elf also plans a seven-well development drilling program on its Kol? Field. Shell continues to develop its Makoko Field, while Kelt is attempting to pump up production from the Moudi Field. Phillips and Fina are to spud their Sanaga II well in PH61 early next year at about the same time that Cameroon will be offering its deepwater concessions.
"Zafiro" has practically been a synonym for West Africa's booming offshore industry over the past year, and still stirs the imagination, even though the Equatorial Guinea Block B field went onstream just over a month ago via a fast-track FPSO scheme undertaken by Mobil and partner UMC. Initial production was 40,000 b/d oil, which will double after eight wells are completed, to 80,000 b/d by early next year.
Before Zafiro, the country was hardly known for petroleum production, having just the small Alba gasfield to show for itself. It has given a big boost to exploration of the whole Gulf of Guinea, but in particular of its Qua Iboe structure. The Zafiro discovery wildcat tested at 10,500 b/d oil and 3.4 MMcf/d gas, and its reservoir is estimated to hold 105-210 million bbl oil. It lies on Block B, a 547,000-acre tract just 18 miles from Mobil's Qua Iboe production in Nigeria's aquatory.
As many as 18 wells may be used to develop the Zafiro Field (Zafiro/Topacio/ Opalo). The recent deepwater Topacio 1 (11,055 b/d oil and 4.2 million cf/d gas) in 520 meters of water, and Topacio 2 wells, extended the field four miles south and a mile east of the discovery well.
Mobil plans to begin further deepwater exploration of Block B later in the year following the development of Zafiro. CMS Nomeco also plans a five-well program this year, on the Alba Block.
Equatorial Guinea's offshore production is approximately 46,500 b/d oil, but is expected to rise to more than 88,000 b/d oil by 1997. Offshore reserves are expected to be 220 million bbl oil and 130 bcf gas.
Senegal's Minister of Energy, Mines, and Industry, Magued Diouf, has announced that the state oil company Petrosen has opened up frontier exploration in Senegalese waters to foreign participation. On offer are nine offshore blocks, for which seismic is needed. Petrosen is hoping to establish E&P partnerships.
Guinea has awarded its entire 16.8 million acre aquatory to USOil Corp. for exploration and development. The company has reprocessed seismic data and is currently negotiating for partners in the project. Both Shell and Monument Petroleum have been active in the area.
Little production has come from the true African backwater, and little activity transpires to stir the ennui. Petrofina (Zairep) has slowly increased production from 1994 to about 9,400 b/d, from less than 6,000 b/d, while Chevron, with production at about 20,000 b/d, has had a small discovery with its exploration well Lukami South 1, a stepout from the Motoba III production platform which tested 2,300 b/d. The company's Tshiala East Field is expected to be onstream next year.
Namibia's Kudo Field has finally seen its first well. Block 2814A operator and 75% owner Shell and partners Texaco and Engen spudded the well this summer and are anticipating production of at least 250 million cf/d gas beginning about year 2000, with intended market being power generation in South Africa. Engen, the South African refining and exploration company holds 10%.
Kudo is believed to hold considerably more gas reserves than was initially thought. NAMCOR, the state oil company, estimates the reserves at 4.5 tcf, but latest evaluations of the reserves indicate they could be as much as 14 tcf.
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