Lekoil Tests Otakikpo, and then Declares itself an Oil Producer - Africa’s premier report on the oil, gas and energy landscape.

Lekoil Tests Otakikpo, and then Declares itself an Oil Producer

“The oil was flowed into tanks and it will be sold, so it is first oil”.

Lekoil completed production test in one of the three wells in Otakikpo field, and then announced to the world that the field had reached first oil.

The subject is a marginal field in Oil Mining Lease (OML) 11, located on the shore line in the south-eastern part of the Niger Delta. “We are delighted to announce that Lekoil is now an oil producer”, Lekan Akinyanmi, the company’s CEO, declared in a widely circulated company statement on Monday September 8, 2015.

What’s curious about the entire statement is that it seemed to equate a successful production test with achieving commercial production. “Otakikpo-002”, Lekoil reported, “will now be temporarily suspended to allow completion and testing of its upper C5 zone, before the company commences an official well-test programme. Re-entry operations are expected to start on Otakikpo-003 in the near future, and the company expects this well to come on stream around year end”. This simply means that there are still several hoops to go through to commercial production.

‘First oil’, in conventional phrasing, is used interchangeably with a field ‘coming on stream’ and this very important term comes to play when there’s a production equipment (storage and processing of crude oil to export quality) as well as evacuation facility, either in form of a barge or a pipeline to an export terminal. The company did report, in its July 2015 operational update, that “the contracts for the Phase-1 Field Development Plan, which included a rig, well services and an Early Production Facility (EPF), were tendered and awarded during the first half of 2015”.

But even if the EPF was in place, the well still needed to be completed and hooked up. When the Africa Oil + Gas Report interrogated the idea of using the phrase “First Oil” for a successful production test, Akinyanmi replied matter of factly: “the oil was flowed into tanks and it will be sold, so it is first oil”.

Lekoil’s  statement had indicated that “Otakikpo-002 flowed oil at various choke sizes for over 24 hours at a peak rate of 5,703 barrels of oil per day”, adding that with these preliminary results, “the directors of Lekoil believe that the original production estimate of the well is likely to be exceeded.”

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