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Accra based Springfield on a Historic Deep-water Journey

By Toyin Akinosho, Publisher

In a matter of weeks, Springfield E&P will be the first home-grown, African owned E&P operator to spud a well in a new deepwater licence.

Its planned drilling of Oak-1, for which it had contracted the Stena Forth drillship, is significant history making.

The 11 year old company plans to follow up the well with another, the Afina-1, both of them in West Cape Three Points (WCTP) Block 2, offshore Ghana.

By all accounts Springfield will be drilling the wells as a full blown operator.

Oak-1 is on trend with the Beech structure, on which Hess Corp. discovered oil in Beech-1 in 2013, in 1,713 metres of water.

Both prospects are to be tested on the basis of interpretation of an 800 sq kilometre, three dimensional (3D) seismic data, acquired by PGS and paid for by Springfield, in 2017.

It will not be the first time that a company owned by African businessmen would drill, or be part of drilling, in deepwater, but there’s a context.

“Other African owned E&P companies with licences in Ghana, including Amni, Oranto, Brittania U and Sahara, were all awarded their different blocks in the country before Springfield.”

The Nigerian founded Erin Energy, now in bankruptcy, was drilling wells in over 400 metres of water offshore western Niger Delta. It was running a 40,000BOPD Floating Production Storage Offshore (FPSO) facility, the Armada Perdana, until it stopped being a going concern in mid-2018. Its licence to OML 120 was revoked by the government in June 2019.

London listed Afren discovered the Ogo field in 2013, said to be one of the largest discoveries in the world in that year, with, in part, funding raised by LEKOIL, the AIM listed firm founded by a Nigerian entrepreneur.

But Erin Energy (formerly Allied Energy, a subsidiary of Camac, and listed in NYSE Amex), was an operator by default; it came from being a non-operating partner to Statoil, which discovered the asset, Oyo field, in 1995, and ENI, which put it on stream in 2010 and was producing it until it pulled out of that asset. At no time from discovery to commissioning was Erin in operational charge of Oyo field.

LEKOIL, meanwhile, was, on Ogo discovery, also a non-operating partner to Afren, a company founded by a diverse mix of nationalities and which also has ceased to exist.

Springfield was awarded the WCTP Block 2 in 2016, with Ghana National Petroleum Corporation (GNPC) and its operating subsidiary, GNPC Explorco, as carried partners.

Other African owned E&P companies with licences in Ghana include Amni, Oranto, Brittania U and Sahara. They were all awarded their different blocks in the country before Springfield but have not announced any concrete drilling plans.


ENI’s New Discovery to Add a Trillion to Nigeria’s Reserves

The new gas discovery by ENI, the Italian explorer, will add a trillion cubic feet (Tcf) to Nigeria’s estimated gas reserves of 200Tcf.

The reservoir was encountered at a previously untested deep level in what is otherwise a brown field; the Obiafu-Obrikom twin structure. In Oil Mining Lease (OML) 61, onshore Niger Delta.

“The well (Obiafu-41 Deep) can deliver in excess of 100Million standard cubic feet/day of gas and 3,000 barrels/day of associated condensates, and will be immediately put on-stream to increase NAOC’s gas production”, the company says.

NAOC, which is acronym for Nigeria Agip Oil Company (NAOC), is one of ENI’s upstream subsidiaries in Nigeria.

Obiafu-Obrikom is the eastern end of the grid line gas pipeline, the Oben-Obiafu-Obrikom (OB3) pipeline, which is under construction by the Nigerian Gas Company. But the immediate market for the newly discovered gas reserves is the Nigeria Liquefied Natural Gas NLNG Train 7 project. ENI also supplies gas to the Okpai Plant, the 450MW power plant it constructed and operates in the Niger Delta region.

ENI is 20% operator, with the state hydrocarbon company NNPC holding 60%, and Oando having 20% in OML 61.

“The well reached a total depth of 4.374 m encountering an important gas and condensate accumulation within the deltaic sequence of Oligocene age comprising more than 130m of high quality hydrocarbon-bearing sands”, ENI says.

The discovery, part of a drilling campaign planned by NAOC JV and aimed at exploring near-field and deep pool opportunities as immediate time to market opportunities, has further potential that will be assessed with the next appraisal campaign.

 

 


DPOC Reportedly Hits Mother Lode in South Sudan

By Mbongeni Jolosho, East African Correspondent, in Kampala

South Sudan’s top oil producer, Dar Petroleum Operating Company (DPOC), has reportedly made a discovery in Block 3, in the country’s Upper Nile state.

The news, announced by the African Chamber of Energy (ACE), contains no more details than that the reservoirs encountered may contain 300Million barrels of crude oil recoverable.

DPOC is a consortium of companies, led by the Chinese E&P behemoth CNPC, and including Petronas, Nilepet, Sinopec and Tri-Ocean Energy. The company’s website is not up to date and it doesn’t issue press releases.

DPOC has been the only operator producing oil in the five years since civil war broke out in the country in December 2013. Other companies have resumed production since late last year, riding on the new impetus in the country, bought on by a July 2018 peace accord with Sudan, the northern neighbour (through whose ports South Sudan imports equipment) and the signing of a peace agreement, in early September 2018, which reinstated rebel leader Riek Machar as vice president, formally ending five years of bloody civil war.

The company did announce, at a conference last year, that it had launched a drilling campaign at Paloch, Moleeta, Fal and Gumry fields, in its operated Blocks 3 and 7 with an estimate of 50 wells planned to be drilled in 2019.

ACE’s report of the discovery says that the well, which it did not name, was drilled at a total depth of 1,320 metres near the Adar oilfield in Block 3.

South Sudan had signed earlier this year an exploration and production sharing agreement (EPSA) with South Africa’s Strategic Fuel Fund for Block B2, described by ACE as highly prospective. It is hard to determine how that EPSA would work. The Strategic Fuel Fund is not an E&P company, even though it shares the same parent company, Central Energy Fund, with PetroSA, the South African state hydrocarbon firm.

The ACE report says that South Sudan will be launching a new petroleum licensing round at the upcoming Africa Oil & Power conference in Cape Town on October 9th, 2019


BW Energy Spuds the Hibiscus Off Gabon

Drilling has commenced on the Hibiscus Updip prospect on the Dussafu Marin Permit, offshore Gabon. This exploration well is being drilled with the Borr Norve jackup drilling rig, and is the first well in an intensive six well well campaign planned on Dussafu during 2019b and 2020. The operator is BW Energy.

The Hibiscus Updip well (DHIBM-1) is located about 56 km offshore Gabon in 116m water depth. The well is planned as a vertical well to test the highly productive Gamba and Dentale reservoirs.

The DHIBM-1 well is also located approximately 1.5 km southwest of the Hibiscus well (HIBM-1) drilled by Arco in 1991 based on two dimensional (2D) seismic data, and which found good quality Gamba reservoir with live oil shows. The new well is positioned to intersect the Gamba at what is believed, based on three dimensional (3D) seismic data acquired by Panoro in 2013, to be an updip position from the HIBM-1 well.

Following the DHIBM-1 well, the rig will move on to drill four consecutive horizontal production wells at the Tortue field, followed by an additional exploration well in 2020.

The location of the 2020 exploration well will be based on 3D seismic data that is being currently re-processed with the latest techniques. Based on the results of the processing and exploration wells, a further two additional exploration wells may be drilled once the initial six well campaign has been completed.

 


Kolmani River Looks Good, NNPC Contracts DST

By Fred Akanni, Editor

The Frontier Exploration Services (FES) Unit of the NNPC, the Nigerian state hydrocarbon company, has awarded contracts to Halliburton to run drill stem tests (DSTs) and tubing conveyed perforation (TCP) on the Kolmani River-2, in Bauchi State, in the Gongola Basin, in the country’s northeast.

In the industry, the application of DST (a tool for measuring reservoir flow rates), is usually an indication that the results of wireline logging have signaled that the well has encountered some commercial pool of hydrocarbon.

The company has kept a tight lid on information, but Africa Oil+Gas Report learns that several feet of natural gas and oil may have been encountered, although the case for commerciality is up in the air.

“The sand is better developed at this location and when we were to hang the 9 5/8 inch casing at some few feet deeper than 10,000feet (3,048metres), we were hardly able to find a shale level to hang”, one source enthused. “We are drilling with a water based mud, so there are no issues about the stability of the well bore”. The story changed in the 8 ½ inch hole, according to our findings. The rate of penetration of the drill bit was so low from 13,100ft to 13, 250ft, according to field report, indicating tighter formation.

Kolmani-River-2 is being drilled to appraise the 1999 gas discovery made by Shell in Kolmani River-1. The Anglo Dutch major drilled the discovery well to a depth of 3,000metres (9,842feet), and Kolmani River-2 is planned to go close to 5,000feet deeper, to 4,350metres (14,270feet) than that, even though the location of the appraisal well is updip of the discovery well.

Shell didn’t test the discovery well, but went ahead and booked 33Billion standard cubic feet of gas as possible estimated recoverable reserves, based on some petrophysical results. NNPC, however, aims to collect as much geosicentific data as possible. “We are taking lots of sidewall cores, lots of fluid samples for PVT. The results are looking good.” The new well is being drilled by the Drillog operated Rig 101.

A commercial sized pool of hydrocarbon in Northern Nigeria will change the entire dynamics of politics in Africa’s largest economy.


ENI Confirms 650MM Barrels off Angola

ENI has continued on its winning streak in Angolan deep-water.

Results of the first appraisal well of the Agogo discovery in Block 15/06, confirm the 650Million barrels of oil in place it had talked about at the end of the discovery well. The company wants to assess further upside that has been indicated in the north of the structure with new appraisal wells.

Agogo-2 encountered 58 metres net of light oil (31° API), in sandstones of Miocene and Oligocene age with excellent petro-physical characteristics. The result confirms the extension of the Agogo reservoir to the north of the discovery well and below the salt diapirs. The well has been planned and drilled as a highly deviated one, to reach the sequences below the salt diapirs and prove the existence of reservoir and oil charge also in this sector of the Agogo megastructure. Data acquired in Agogo-2 indicate a production capacity in excess of 15.000 barrels of oil per day.

Agogo-2 has been drilled by the Poseidon drillship, 3 kilometres north-west of the Agogo-1 discovery well, approximately 180 kilometres from the coast and 23 kilometres from the N’Goma West Hub floating production and storage facility (FPSO). The well was drilled in a water depth of 1,700 metres and reached a total depth of 3,949 metres.

The Block 15/06 JV is composed by ENI, the operator of the asset with a 36.8421% stake, Sonangol P&P which has 36.8421% and SSI Fifteen Limited who holds the remaining 26.3158%. ENI plans to start first production from Agogo before the end of 2019 with a subsea tie back to the N’Goma FPSO. Meanwhile, Eni will continue the appraisal campaign to assess the discovery’s full potential and size its development.

 


Rystad Sees Rebound in African Frontier Exploration

Norwegian oil and gas consultant Rystad Energy sees a resurgence in ambitious frontier exploration well drilling around Africa, in the next one year.

The continent, it says “appears to be emerging from a long hibernation in terms of oil and gas exploration activities,” and West Africa is the prime locale of these high risk wildcat activities and TOTAL, the French major, will be making most of the probes.

Two such supposedly significant prospects are to be drilled in the Mauritania-Senegal Basin, the flavour of the month for the past five years. “Located on the same structural ridge as the BirAllah and Tortue discoveries, BP’s Orca prospect is estimated to hold gross gas in place resources of 13 trillion cubic feet”, the Rystad statement says, adding  that “TOTAL plans to drill a well on Block C-9 in the Mauritanian basin. This particular well will target a large cretaceous oil and gas play”.

Rystad points to Egypt, where Dana Gas is currently drilling The Merak well a deep-water well in the Mediterranean, scheduled to be drilled to a planned total depth of 2,600 meters, targeting Pliocene turbidite plays along the well route.

Rystad argues that a steep drop in the number of exploration wells in 2015 fueled by budget cuts, failed projects, and poor market conditions has meant that exploration in the region has mostly been on pause and declining further until this year, where an uptick in investments has reversed this negative trend, shining some light on African exploration.

TOTAL’s anticipated first well in Angola’s Block 48, in the ultra-deep-water Lower Congo basin will be targeting a high potential new play in the Miocene and Oligocene channels and lobes. Further down along the southern African coast, the company “aims to drill the deepest well ever completed in the continent”, Rystad reveals. “The Venus prospect is located in a giant basin floor fan of the Orange Basin and is considered to be the largest prospect ever in Namibia”.

The only well that may not be drilled anytime soon is the one credited to a rank unknown company named Trace Atlantic, which  is “currently hunting for a partner to farm out 50% to 70% of its stake” to drill with a frontier deep water floater targeting the Albian age Formosa prospect. Rystad provides neither the geologic basin nor the country location of this Formosa prospect.

 


TOTAL Returns to the Cape of Storms in Q1 2020

French major TOTAL will be returning, within the next one year, for further exploration and appraisal of the prospects in South Africa’s Block 11B/12B offshore South Africa, where it discovered large gas condensate pools in January 2019.

The Paris headquartered company has secured the Deepsea Stavanger for a multi-well drilling programme, beginning with the spud of the Luiperd Prospect in Q1-2020. This was the same equipment and crew that drilled the Brulpadda oil and gas discovery.  Up to three exploration wells are expected to be drilled during the forthcoming campaign.

Block 11B/12B is located in the Outeniqua Basin, located 175 kilometers off the southern coast of South Africa. The block covers an area of 19,000 square kilometers with water depths ranging from 200 to 1,800 meters. The Paddavissie Fairway in the southwest corner of the block includes the Brulpadda discovery and several submarine fan prospects.

The success at both the Brulpadda primary and secondary targets significantly de-risks the other similar prospects identified on 2D seismic.  The joint venture partnership for Block 11B/12B recently completed the first phase of the 3D seismic acquisition program over the Paddavissie Fairway.  The Brulpadda well results will be integrated with the three dimensional (3D) seismic data in advance of next year’s drilling programme.

TOTAL operates Block 11B/12B with 45% interest while Qatar Petroleum and Canadian Natural Resources Limited have 25% and 20% interests, respectively. Main Street 1549 Proprietary Limited holds a 10% participating interest.

 


Will the Drilling Industry Experience A Golden Revival?

By Gerard Kreeft

Imagine a somewhat scranny polar bear in search of his iceberg …all he can find is  barren tundra…he knows with his instincts that it was here somewhere but it is gone… is this also the case of our drilling contractor..  will he again find his iceberg?

Could the drilling industry experience a golden revival?

It is estimated  that total free cashflow for all public E & P companies, in 2018, was $325Billion  (Rystad UCube, July 2018).  A sharp contrast with the approximate $30Billion recorded in 2015. Which drillers will be in a prime position to perform the required drilling services?

At first glance the landscape is a checkered one: in the past three years companies have  reduced their dividends, are in various stages of being  in chapter 11, and still others have been taken over or merged. Yet a further glance indicates that two companies—Transocean and Ensco—are in pole position to become the sector’s dominant players: Transocean because of it’s persistent and diligent effort to position itself in the lucrative ultra-deep and harsh weather market; Ensco because of it’s merger with Rowan to become the dominant player in the jack-up market.  Two important players to watch in the current exploration market.

The Transocean strategy has been long in coming. The basic Transocean company was formed by merging  Sedco-Forex, and Sonat Drilling (prior to that Sonat Drilling had taken over the Norwegian Transocean company and its name). Along the way Global Marine/ Santa Fe and a host of other companies were taken over by the new Transocean, thus positioning  itself in the lucrative ultra- deepwater market.

The sector’s  total deepwater fleet consists of 222 rigs. Transocean has 55 harsh environmental, ultra-deep and deepwater and midwater floaters. Their average fleet age is 11 years, and in 2014 it was 21 years. It has  a pipeline of $12.5Billion projects extending to 2028.  Much of its purchasing has been financed by the street and secured to 2024.

The Ensco Rowan merger will give the new combination the largest jack-up fleet in the world: 82 rigs in total, 28 floaters and 54 jack-ups, 38 which are state-of-the art. The merged company has $2.6Billion inventory of projects.

Ensco, founded in 1975, reflects the ebb and flow of the oil market.

With its purchase of Pride International the company gained access to the Brazilian and West African markets. Rowan is symbolic of the US oil industry. A pioneering company which  established an airline, oil company, and innovative rig technology. The Gorilla Class jack-ups were larger and capable of drilling down to 30 000 feet. The company’s policy of being a close-knit family is legendary.

The Challenge

Dayrates are expected to rise. In 2010 dayrates for drillships/floaters were in the $400 -500 000 range, peaking above $600,000 in 2012-2014. Nose diving to $100,000 -$200,000 in the period 2016-2018. It is anticipated they could rise to $500,000  by 2021.

In June 2014 Transocean’s share price was $45. By December 2018 it was $7. Ensco’s shares suffered a similar fate: in June 2014 a share stood at $55 and in December 2018 it was down to $4. Rowan is no exception: June 2014 the share stood at $32,50, and in December 2018 it was below $9.

According to one industry source the oil companies are  replacing their extracted reserves at a historic low: in 2015 only 25% while the norm should be 100% . Only replacing 1/3 of their offshore production. Can the industry play catchup?

Given the free cash flow recorded in 2018 ($325Billion) can we anticipate that the industry will enhance it’s depleted reserve rate? But perhaps there is something else playing in the background. Everyone assumes that the recorded free cash flow will become the monopoly of the exploration and development budgets! Could this freed up cash also go to renewables?

For the first time in the history of the oil and gas  sector  sector we are witnessing that the sector must compete for funding. According to a recently published divestment report from Arabella Advisors fossil fuels divestments now total an eye-popping $6Trillion, with nearly 1,000 institutional investors having pledged to divest from coal, oil and gas under pressure from environmental groups, governments and increasingly conscientious consumers. This  revealed an increase in divestment from the 2016 figure of $5.2Trillion.

Can the track record of both Shell and ExxonMobil, as shown in this graph, be a litmus test for the future? If Post-Paris is factored in, together with a CO2 and other environmental charges what would the return of investment be? The investment power of renewable energy illustrates that the oil and gas sector must take giant strategic steps if it is to remain a dominant market force. Or are we witnessing a structural downsizing of the sector?

Have drillers  gone through a long-term pain for a short-term gain?  Will the polar bear be able to continue to habitating his iceberg home?

Article was initially published in the March 2019 edition of Africa Oil+Gas Report.

Gerard Kreeft, MA (Carleton University, Ottawa, Ontario, Canada) is a frequent contributor to Africa Oil+Gas Report. He is founder and owner of EnergyWise, a company which has, since 2001, managed and implemented oil and gas conferences, seminars and master classes throughout the world and in Angola on an annual basis.

 

 


ENI Will Define Angola’s Near Term Future

Fourth discovery in 18 months

By Sully Manope

ENI’s new light oil discovery in Block 15/06, is the fourth in Angola’s deep offshore in the last 18 months.

Ndungu-1, located a few kilometers from the company’s West Hub facilities, is estimated to contain up to 250Million barrels of light oil in place, with further upside, ENI said in a statement on May 14, 2019.

ENI’s string of discoveries in Angola’s Block 15/06 runs contrary to the trend among the majors in Africa’s second largest oil producer.
TOTAL, the country’s leading producing company and ExxonMobil, the continent’s top oil producer, are not doing so well in the wildcat exploration game in Angola.

TOTAL continues to mine large volumes of crude in the prolific Block 17.

ExxonMobil continues successfully operating the Block 15.

Neither company, however, is topping up their reserves at the pace that ENI is doing. And unlike what appears to be the standard narrative, the activities of these two companies will not significantly define Angola in the next five years, unless they both come up with significant volumes of new finds.
ENI’s Ndungu-1 follows the Agogo-1 discovery, announced in March 2019, with estimates of between 450 and 650 Million barrels of light oil in place, also “with further upside”.

Agogo-1 followed both Afoxe discovery, which was made in December 2018, after the Kalimba-1 discovery, encountered in January 2018, all in Block 15/06.

ENI reports Ndungu-1 to have proved a single oil column of about 65 meters with 45 meters of net pay of high quality oil (35° API) contained in Oligocene sandstones with excellent petrophysical properties. The result of the intensive data collection indicates a production capacity in excess of 10,000 barrels of oil per day. This means that this latest discovery is not as big as Agogo-1.

Agogo-1 proved a single oil column of about 203 meters with 120 meters of net pay of high quality oil (31° API) contained in a sub salt diapirs setting in Lower Miocene sandstones with excellent petrophysical properties, ENI had reported. The data acquired in Agogo-1 NFW indicate a production capacity of more than 20,000 barrels of oil per day.

All these discoveries are the results of the decision by the Block 15/06 Consortium to launch a new exploration campaign in 2018.

ENI acquired the operatorship of Block 15/06 during the bid round of 2006 and Production Sharing Agreement was effective from 1st December 2006. In 2008 the fir st discovery well, Sangos-1, was drilled in about 1,350 m of w ater depth, followed by Cinguvu-1 in 2009 and Mpungi-1 in 2010. In December 2013, the Final Investment Decision was taken for the West Hub project (Sangos, Cinguvu and N’goma and Mpugi fields)
ENI had indicated that Afoxe 1 could add 5,000BOPD, Agogo-1 indicates a putative addition of 20,000BOPD and now Ndungu can add 10,000BOPD, to Block 15/06 output. These estimates are based on data that do not include well tests. ENI has said that this string of discoveries “represent a new cluster that can be exploited jointly in a new development concept”. The continuous improvement in the finds (from Kalimba through Afoxe to Agogo) point to a near term cluster development that could deliver as much as 75,000BOPD.

This is an update of the report of the same title, published in the March/April 2019 edition of the Africa Oil+Gas Report..

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