Shell Looks For New Heartlands In Africa

Angola’s Pre-Salt, South Africa’s Shale Gas, Are Candidates

By Fred Akanni

With over two billion dollars in the pocket from divestment of its equity in 10 acreages in Nigeria, Shell is scouring the continent, looking for new exploration hotspots.

Such potential ‘heartlands’, as the Anglo Dutch major calls them, could be the pre-salt prize in deepwater Kwanza Basin off Angola and the Shale gas resources in the Karoo Basin onshore South Africa. Shell is closely watching the operations of Cobalt Energy, the media savvy American independent which has drilled four ‘pre-salt’ wells in deepwater Angola and has come up with very mixed results. The company could be interested in buying Cobalt, according to informed sources. Shell is also interested in the forthcoming Angolan pre-salt bid round.

A raucous debate in South Africa over the environmental hazards of shale gas drilling in 2011, led to the South African government imposing a moratorium on exploration of the resource. Shell was at the centre of that conversation. The moratorium was lifted in September 2012. Shell has a war chest of $250MM to drill a minimum of six exploration wells for shale gas in the Karoo, where the company’s application covers 185,000km² of the vast Karoo basin.

Sometimes, the ways of Shell are difficult to understand. The company walked out of two blocks in Angolan deepwater when everyone else was scrambling in (as they still are). Results from Block 16 (where they were operator) had turned out disappointing, but Maersk, who bought the interest from CNR who bought it from Shell, now has commercial sized reserves in the block. Shell’s earth scientists readily dismiss the commerciality of Block 16, arguing that a 300MM Barrel oil tank is not what the company would regret leaving.

The case of Block 18, however, is still a case study of what it means to leave an asset. BP today has operated production of 150,000BOPD, less than a year after it commenced production on the block.

Shell is talking up its planned drilling in the Orange Basin, offshore South Africa. The planned locations are close to the Namibian Kudu gas field, which Shell dumped about 15 years ago