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So Much Uncertainty about Savannah Petroleum

By Prospect Mojido

Savannah Petroleum had not concluded its takeover of Seven Energy’s assets in Nigeria as of December 14, 2018, less than three weeks to the end of the year.

After signing off on the deals regarding the gas for oil swap with Frontier Oil Limited and the buy-out of minority shareholders in Universal Energy Resources Limited, Savanah has not proceeded as quickly to close out the entire transaction.

Frontier Oil is the holder of the Uquo field, whose gas reserves underpinned Seven Energy’s main gas supply business in the domestic market. Universal Energy, a producer of a marginal oil field in eastern Nigeria, was partly owned by Seven Energy.

Savannah claims it is “seeking certain further amendments to the terms of the Transaction, which the Board considers to be in Savannah’s immediate commercial interests and are expected to significantly enhance the Company’s competitive position in Nigeria”.

The transaction, initiated 13 months ago, has thus dragged out for much longer than initially contemplated.

But such lack of clarity has characterised Savannah Petroleum’s overall activity, whether in the business area or in technical operations.

The five discoveries the company claims to have made in Niger Republic are not exactly all discoveries, geologically speaking. Savannah’s own technical field reports show that the crude oil encountered were reported in largely the same reservoir units, suggesting that most of the wells have been appraisals, not new discoveries. The last well, Zomo 1, described like the rest as a “discovery”, encountered oil only in the E1 unit, the same unit in which Eridal-1 encountered oil. And Savanah’s own record shows that the reservoir is less developed in Zomo-1 and yet it says Zomo is a discovery. Once you move to other wells and compare, you find generally more or less the same pattern.

Now it is on the basis of these “significant” discoveries that Savannah submitted a prefeasibility study for Early Production Scheme, to the Niger Republic’s authorities. The deal with the government includes that the government would facilitate a crude oil marketing agreement between Savanah and Soraz Refinery, which has the capacity to process no more than 20,000BOPD and all that capacity is already taken up by supply from the CNPC. With other operators, Niger has the capacity to produce far in excess of the 20,000BOPD it processes at Soraz, but there is no evacuation infrastructure in place. The published agreement between Savannah and the Nigerien government does not allude to this inadequacy.

 

 

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ENI Hits New Pay dirt, off Angola

Italian explorer ENI reports it has made a new oil discovery in the Afoxé exploration prospect located in Block 15/06, offshore Angola. “The discovery is estimated to contain between 170 and 200Million barrels of light oil in place”, the company asserts in a release, even though it admits the well had not been tested.

The Afoxé-1 NFW well is located in the south-east area of Block 15/06, approximately 120 km off the coast, 50 km south-west from the Olombendo FPSO and 20 km west of the recent Kalimba-1 discovery. The well was drilled in a water depth of 780 meters and reached a total depth of 1,723 meters.

“Afoxé-1 NFW proved a 20 meters net oil pay of high quality oil (37° API) contained in Upper Miocene sandstones with excellent petrophysical properties”, ENI explains in a very upbeat announcement. “The well has not been tested but an intensive data collection has been carried out that indicates a production capacity in excess of 5,000 barrels of oil per day. The new nearby discoveries of Kalimba and Afoxé are now accounting together a potential of 400 – 500MMBOE of high quality oil in place and represent a new cluster that can be exploited jointly in a new development concept.

Afoxé discovery is a further confirmation of the oil exploration potential still held in southern part of Block 15/06, previously considered mainly gas prone. ENI is planning to drill up to 4 new exploration wells back to back in Block 15/06 during 2019”.

 


Nestoil Delay Pushes Completion of OB3 Over into 2019

Delays by one of the two contractors constructing the OB3 Pipeline has ensured that the crucial line will not be completed in 2018.

The Oben –Obiafu-Obrikom (OB3) pipeline is Nigeria’s largest gas transmission pipeline and its completion will create the first semblance of a gas grid in the country.

It will ferry gas from the huge reservoirs in Rivers State, in eastern Nigeria, to the industrial markets in the West of the country.

The pipeline, being constructed by the Nigerian government, will have the capacity to pump Two Billion standard cubic feet of gas a day.

The EPC contract was awarded by the Nigerian cabinet of Ministers (Federal Executive Council) in the third quarter of 2012, to Messrs Nestoil Limited (Lot A) and Oilserv Limited (Lot B).

Lot A involves the EPC of 64.15km x 48” Class 600 gas pipeline and Custody Transfer Metering Station at Obiafu/Obrikom in Rivers State. Lot B involves the EPC of 47.13km x 48” & 18km x 36” Intermediate Pigging Station and Gas Treatment Plant at Oben, Edo State.

Contractual project completion date for both Lots is 31st July, 2018.

But whereas Lot A (OILSERV) is mechanically finished, Lot B (Nestoil) is stagnant. There are contractor issues with Lot B and the project is stalemated.

 


Drilling Contractors Hold Their Seventh Summit

The International Association of Drilling Contractors (IADC) Nigeria Chapter has held its 7th Annual General Meeting (AGM) in Lagos.

Ote Enaibe, current Chairman of the group, listed the activities of the outgoing year, which included Technical Sessions, Government and Regulatory Events, HSE AWARDS Ceremony, 2018 IADC Conference participation and five (5) new members joining the body.

L-R, Chuks Enwereji, Marvelyn Ehika, Juliet Adesunloye and Ote Enaibe, IADC NIGERIA CHAPTER Exco

Vice-Chairman Chuks Enwereji reviewed the year’s overall Health Safety and Environment performance, which is the most crucial set of metrics in the drilling industry.

In spite of its importance, members’ participation in the HSE review is low. For three years running, 2016-2018, only seven out of the 25 corporate members have participated in the HSE Review. The Vice Chairman pleaded for increased member participation. Drilling activities man-hours done in Africa accounts for the third highest amount in the world-wide drilling space. Conversely the continent accounts for the second highest amount of fatalities. Nigeria is a major African player. Reducing Total Recordable Incidence Rate (TRIR) is an IADC targeted mandate. Cardinal Drilling won the HSE Award for 2018. The next HSE Award ceremony holds Q2 2019.

Enwereji applauded members for supporting the Biennial Conference of the Department of Petroleum Resources (DPR). He promoted the 2020 IADC African Drilling Conference, which though championed by Host Chapter Nigeria, will be held in Ghana based upon the cloud of perceived security challenges bedevilling the country.

IADC NIGERIA CHAPTER 2018 AGM Attendees present.

IADC NIGERIA CHAPTER HSE AWARD Objectives

The 2018 IADC Nigeria Chapter Financial Report was presented by Marvelyn Ehika, who was officially confirmed as the new Treasurer of the association at the meeting. Her findings show the association’s 2017 budget was operated with a deficit of 4.5% amounting to a million naira shortfall. At year end 2017, only eight (8) members had fully paid up their association dues. A fall-out of the slump in hydrocarbon business activities occasioned by low oil prices. The 50% drop in subvention fees from membership dues had largely been covered by savings of 2013 bumper harvest. The Draft Budget for 2019 totalling up to Eighteen Million One hundred and Ninety Thousand naira only (N18,190,000.00) was presented by Chairman Enaibe. It is expected to cover the year-long activities of two Technical Sessions- Business Outlook in Q1, HSE Awards Event and Technical Session in Q2.Q3 involves organising training for the Chapter’s field personnel alongside Government and Regulatory Events and Q4 wraps up with the AGM. The draft budget also covers International travels for IADC Conferences, The Secretariat, General Administration and Auditors fees.

Representatives of IADC NIGERIA CHAPTER Member companies in attendance

Olusola Ismail, Secretary of Board Of Trustees (BOT) IADC NIGERIA CHAPTER questioned the rationale of holding the Nigeria Chapter-hosted African Drilling Conference in Ghana, factoring costs, logistics and practicalities rather than Nigeria. Hisham Zebian, Regional Representative IADC Body for Europe, Middle East and Africa whilst agreeing that perceived misinformation about Nigeria contributed to the decision, highlighted cumbersome visa application process by interested attendees from other IADC Chapters as a contributory reason. Ben Agadagba, Member Board Of Trustee IADC NIGERIA chipped in the need for increased participation by heads of drilling companies. Uche of SeaDrill pressed for increased involvement of the IADC NIGERIA CHAPTER in hydrocarbon industry policy drafting process.

Other pertinent issues being tackled by the association include the DPR’s newly-introduced $650 per-rig operative-per annum Offshore Safety Passport (OSP) for offshore rig operations, the combination of PLI, Annual Condition Survey and the fuel storage on rig operations all bundled into one Annual Condition Survey. Weeding out Portfolio drilling contractors and regularising registration procedure(s). Technical sessions for field operatives in oil cities of Port-Harcourt, Uyo etc. Sponsorship, increasing members and Associate Members lists from IOCs, NOCs and Service Companies. Forthcoming change of address by January 2019.

 


Aquaterra Wins the Contract for Madu, Anyala Platforms

British engineering firm Aquaterra Energy has won the contract to install the platforms for the production of crude oil and gas from Madu and Anyala fields, in shallow water Nigeria.

The contract was awarded by First E&P, operator of the Oil Mining Lease (OML) 83, in which Anyala lies and OML 85, which hosts Madu field. The Anyala and Madu field project scope will develop approximately 185Million barrels of oil and 637Billion cubic feet of gas reserves.

The contractor is expected to deploy the Seaswift offshore platform on the two sites.

Aquaterra, which is headquartered in Norwhich, UK, will work on the project in conjunction with a local partner, Maerlin Nigeria Limited, a Nigerian owned oil and gas service firm.

The companies will manage the end-to-end project scope with engineering and onsite fabrication support being performed in Nigeria. The work includes structural design, topsides engineering, equipment selection, procurement, fabrication management and logistics. Once complete, the platforms will be installed in water depths of 35m to 55m with first oil expected in late 2019.

Aquaterra Energy’s Sea Swift offshore platform is a modular system that combines an offshore platform with the rig-run benefits of a subsea development. This offers operators a flexible option to reduce their build and installation costs, and importantly reduce time to first oil in shallow water applications.

“With six Sea Swift platforms operational globally, including four offshore Africa, our team has the breadth of experience and technical know-how to solve client challenges like these in a safe, cost-effective and timely manner,” says Stewart Maxwell, the company’s Technical Director.

 


Colin Klappa Breezed In and Breezed Out

By Toyin Akinosho, Publisher

Colin Klappa had one of the briefest tenures as Managing Director of an International E&P Company operating in Nigeria.

He took charge in January 2018 as Senior Vice President and Managing Director of Addax Petroleum Nigeria Limited, the largest subsidiary of the Switzerland based, Chinese owned company, but by September 2018 he was out of the job, reported in the company’s internal memo as having decided to leave “to pursue other interests”.

Considering the gush of optimism in his January 13, 2018 letter to the staff, it is curious whether he was forced out or he simply decided he was leaving.

“It is great to be back and in this new role”, Klappa a dual British-Canadian citizen with a PhD in geology from UK’s University of Liverpool, wrote in his address to his colleagues, referencing, in a very vague way, the fact that he had worked in Nigeria once (between 1990 and 1994).

“I believe in the future of Addax Petroleum Nigeria and look forward to leading a transformation of this company that we and our stakeholders can be truly proud of. This is my goal”.

Klappa was taking charge of a company that was in distress; failing production, a large indebtedness to the Nigerian state and a plunging reputation. There were rumours stirring that Addax Petroleum Nigeria’s entire assets were to be sold and newspaper adverts arguing that if they would be sold, certain stakeholders had the right of first refusal.

“I see nothing but upside at APN”, Klappa had said in that first note. “Will it be smooth sailing and easy to revive the company and realize material growth aspirations? Of course not. But that is what we are here for and what makes the significant challenges that lie ahead of us ever more exciting”.

Depending on whom you talk to, there are varying opinions within Addax, as to why Colin Klappa left. Some tell Africa Oil+Gas Report that the scope of the challenges overwhelmed him. Others say that he didn’t move to douse the fires quickly enough and yet others argue that the Chinese leadership, some members of whom are also resident in Lagos, did not allow him a freehand to work.

Younhong Vchen, who was Deputy Managing Director operations, took over from Klappa on as Acting Managing Director on September 30, 2018.

 


Nigeria Announces First Bid Round In 11 Years

The Nigerian Government has announced a Bid Round; the first such auction for licencing of subsurface hydrocarbon property in 11 Years.

It’s not a conventional licencing round. It is for uptake of natural gas that is currently being flared in hundreds of sites in the country’s Niger Delta basin.

The government expects licence winners to take over the flare sites, monetize the molecules and boost the micro and macro economy in the process.

“We invite parties interested in participating in the Nigerian Gas Flare Commercialization Programme (NGFCP), NGFCP to register and apply for the issuance of the Request for Qualification (RfQ)] package which will lead to the submission of statements of qualification (SOQs) by interested parties for participation in the programme”, the Ministy of Petroleum Resources says in a statement through Justice O. Derefaka, who is Programme Manager, NGFCP

“The auction presents a significant opportunity for domestic and international developers alike to participate in the largest market driven flare gas monetization program undertaken on this scale globally.

“Bidders will have flexibility of choosing which flare site(s) to bid for, determine the gas price, and their end – use market or gas product, as well as the technology to be deployed. Interested parties will need to demonstrate project development experience and proposed proven technology which we expect to be in commercial application. Additionally, parties will need to demonstrate technical and commercial capacity. Successful bidders will be granted title to the flare gas through a gas sales/supply agreement with the FGN.

An interested party (applicant) is not required to be a Nigerian entity in order to submit its SOQ. Following a successful bid, each Preferred Bidder will be required to act through or establish a Nigerian corporate entity, which will enter into the necessary Commercial Agreements.

Applicants may come from a variety of backgrounds including but not limited to:

  • Communities
  • Technology providers
  • project developers
  • resource and energy companies
  • industrial companies
  • infrastructure companies
  • financial investors/lenders

It is important to note that ONLY registered parties on the Programme web portal can participate in the NGFCP bidding process.

For those who have not registered, see the link below for Registration/Expression of Interest (EoI) on the NGFCP web portal:

NGFCP Registration/Expression of Interest (EoI)

It is also important to note that the interface by those interested in the Programme with the NGFCP will be through the portal ONLY.

ALL registered parties are notified to download the Request for Qualifications (RfQ), to submit their statements of qualification (SOQs) for participation on the programme as well as download the Programme Information Memorandum (PIM) from our website. Parties will only have access to relevant programme documents from the NGFCP Portal using their Log on details.
For any inquiries, please refer to the Frequently Asked Questions (FAQs) section on the NGFCP portal or kindly send an e-mail to us via: info@ngfcp.gov.ng


Delivering Impactful Reservoir Management

The Neftemer Multiphase Flow Meter measures the void fraction of the dispersed fluid phase within the continuous physical mixture of oil, gas and water …

The current, industry-wide practice of sequentially feeding the flow from each well once a month, to a central test separator so as to evaluate the well production performance and determine the flowrate of each phase (oil, gas and water) after separation, is unrepresentative and inaccurate. Wells seldom flow at constant rates and the ‘one-day’ test separator rate is a random sample of one out of thirty possible rates. This is statistically insignificant.

Furthermore, of the total flow station phase flows, only the oil rate is accurately directly measured for obvious fiscal reasons. The gas flow will usually be diverted to the flare where the bulk gas may or may not be measured. The water rate is rarely measured. Instead the samples are frequently taken either at wellhead or at separator and sent to the lab for BSW determination. The results are rarely available within six weeks! Consequently, when and if flow station flows are used for back allocation to the various wells, only the oil rate has a chance of being accurate to the extent of the limitation of the ‘one-day’ separator test rate practice mentioned above. Back allocation of the gas and water rate remain problematic.

In practice, total flow station flow rates are rarely used even when the oil rate injected into a bulk export line is accurately metered e.g. via an available LACT unit. Rather each contributory flow station is assigned a volume based on a so-called reconciliation factor, determination of which is opaque in most cases. Genuine line and other losses (theft!) are shared in a manner not entirely satisfactory to all parties leading to endless disputes between terminal owners, operators and regulators. Clearly using these reconciled rates for back allocation to the wells is a formidable challenge the industry has faced almost since the beginning. The practice simple does not make room for the representative and accurate determination of oil, gas and water rates simultaneously required for optimal tuning of the well, and effective reservoir management practices. Operators are forced to move in the blind for much of the time!

Production engineers need to know if the well is operating within its performance envelope or not and tune it appropriately. Reservoir engineers need accurate oil, gas and water rates to carry out meaningful material balance calculations and determine total underground withdrawal for each reservoir; run realistic reservoir simulation models and generate meaningful medium and long term production forecasts for the business. Current operations practice and use of ‘one-day’ test separator rates simply do not allow for these essential and critical calculations to be accurately carried out. The practice also leads to endless disputations between the operator and the regulator over which volumes royalty calculations should be based.

One alternative to the use of test separators is the use of Multiphase Flow Meters. The key information required from a Multiphase Flow Meter includes the flow rate of oil, gas and water. The ideal way to obtain these measurements is by direct and independent measurement at the wellheads before separation.

The Neftemer Multiphase Flow Meter measures the void fraction of the dispersed fluid phase within the continuous physical mixture of oil, gas and water to determine first, the flow regime of the mixture and then determine the flowrate of each phase in a non-intrusive, continuous and consistent manner over a long period of time. It can be used to compliment or even replace test separators.

They are cheap (costing below one fifth of a conventional multiphase meter), are non-intrusive, immune to sand particles and wax deposition. They are also portable, a fact which makes them ideal for offshore applications and rerouting from well to well on a needs basis.


2018 Rounds Up With a Whimper

The big, flagship African projects that we all thought were going to take Final Investment Decision in 2018, are still largely on the drawing board.

It is the last week of November 2018 and the much anticipated Ugandan basin wide oil development has not reached sanction and will not reach sanction in the next 30 days.  That’s official.

Neither are the Nigerian deepwater Bonga West Aparo and Zabazaba likely to get closure in the year.

These are the big oil projects.

In gas valorization, the Nigerian LNG is pushing to get its >$13Billion Train 7 project out of the long process of decision analysis and into sanction. The Fortuna LNG in Equatorial Guinea doesn’t look closer to construction. Investment decision on Mozambique’s first onshore LNG plant has been moved to next year.

And the ANOH gas project in Nigeria is, for now, largely discussed in whispers.

But the November 2018 edition of the Africa Oil+Gas Report, already in the hands of paying subscribers worldwide, is not entirely about flagship projects that have struggled to gain traction.

This magazine’s drawing card is the several 200-300 word pieces of storytelling, which makes it the sunny continent’s most compelling monthly compilation of oil and gas market intelligence.

The Africa Oil+Gas Report is the primer of the hydrocarbon industry.

It is the market leader in local contextualizing of global developments and policy issues and is the go-to medium for decision makers, whether they be international corporations or local entrepreneurs, technical enterprises or financing institutions.

Published by the Festac News Press Limited since November 2001, AOGR is a monthly publication, delivered to subscribers around the world. Its website remains www.africaoilgasreport.com and the contact email address is info@africaoilgasreport.com. Contact telephone numbers in our West African regional headquarters in Lagos are +2348028354297, +2349091009800, +2348036525979 and +2347062420127.

Please click on this link to grab your copy.

 


Angolan Rig Count Inches Up

The number of rigs actively drilling in Angola has increased in the last one month.

Italian explorer ENI, brought into the country’s waters, the drillship Poseidon, owned and operated by Ocean Rig. The vessel had just finalised a well in deepwater offshore Namibia in October.

It will bring, to 5, the number of rigs active on one well or the other in the country. That is a whopping 25% increase in rig numbers, from four rigs in October.

The Angolan government is desperate for a return to a vibrant E&P sector, after five straight years of declining activity.

A November 16, 2018 report by  Reuters, noted that Carlos Saturnino, head of the state hydrocarbon firm Sonangol, indicated that ExxonMobil had shown interest in some blocks in the Namib basin, in the country’s deep South, “while advanced discussions are being held with BP, Equinor and ENI for the rights to the ultra-deep offshore blocks 46 and 47”. .

The news agency also reported that French major TOTAL, the largest producer in the country by operated volume, plans to drill its first exploration well in four years. “Beneath 3,630 metres of water on block 48, it will be one of the world’s deepest.”

 

© 2018 Festac News Press Ltd..