Oil Production in Nigeria
In recent months, Nigeria has experienced increased pipeline vandalism. In October 2005, a pipeline fire in the south-western Delta State of Nigeria resulted in the deaths of about 60 people. This was followed by a December attack, in which armed men in speed boats dynamited Shells pipeline in the Opobo Channel. In January 2006, a pipeline attack from the Brass Creek fields to the Forcados terminal forced Shell to announce a force majeure on Forcados commitments to end-February. Additional attacks made on the pipeline and the Forcados terminal in February made it necessary for Shell to extend the force majeure beyond the end-February date. Shell estimates that more than 450,000 bbl/d of its oil production is currently shut-in because of the attacks. A February 2006 attack on the Escravos pipeline, that supplies oil to the Warri refinery, caused the refinery to shutdown. Officials are unsure of how long it will take to repair the damage. Nigeria had re-commissioned the Escravos-Warri pipeline in January 2005 after 18 months of repairing the damage caused by sabotage during the 2003 Niger Delta Crisis. In addition to pipeline vandalism, Nigeria has seen an increase in kidnappings of expatriate oil workers in the Niger Delta region. In January 2006, four foreign employees of Royal Dutch Shell were kidnapped and then held for 19 days before being released on humanitarian grounds. In February 2006, nine additional oil workers were kidnapped in the Niger Delta region. On March 3, 2006, six of the nine hostages were released, with the remaining three being released on March 27, 2006. The Movement for the Emancipation of the Niger Delta (MEND) is taking responsibility for the kidnappings and for blowing up a crude oil pipeline owned and operated by Royal Dutch Shell. Despite recent attacks on Shells oil facilities in the Niger Delta region, the companys deepwater Bonga field began producing oil at the end 2005. Bonga is estimated to hold recoverable reserves of 600 million barrels of oil. At peak production, the field will produce around 225,000 bbl/d and 150 million cubic feet (MMcf) of natural gas. Oil from the field will be stored in a floating production, storage and offloading (FPSO) unit, with a storage capacity of 2.0 million barrels.
Nigeria shares a Joint Development Zone (JDZ) with neighboring SÃo TomÉ and PrÍncipe (STP), which contains 23 exploration blocks. Nigeria and Sao Tome have agreed to split revenues from the blocks on a 60:40 basis, respectively. Block One is currently the only block in the JDZ undergoing development. The block is controlled by Chevron (51 percent), with partners ExxonMobil (40 percent) and Equity Energy Resources (9 percent). Preliminary studies have indicated that the block could contain sizable amounts of oil (up to 1 billion barrels). If recoverable oil is located, Chevron plans to bring it onstream by 2010. Blocks Two through Six were also awarded, of which, three have been approved for PSAs, while the remaining two have yet to be signed. Meanwhile, several independent U.S. based companies that were awarded shares in the blocks have relinquished their awards. Pioneer Natural Resources stated a failure to agree to specific terms of operation on Block Two as the reason for its withdrawal from the project. Pioneers withdrawal has opened the door for Chinas oil and gas company, Sinopec, to invest in the JDZ.ExxonMobil produces around 750,000 bbl/d of oil in Nigeria. The company plans to invest $11 billion in the countrys oil sector through 2011, with the hope of increasing production to 1.2 million bbl/d. The majority of the increase will occur at the Erha field, which is located on Block OPL 209. ExxonMobil began producing oil from Erha in April 2006. Output from the field is expected to reach 150,000 bbl/d by the third quarter of 2006, and rise to 190,000 bbl/d by the end of the year. Oil from Erha is stored in an FPSO, with a storage capacity of 2.2 million barrels oil. ExxonMobil uses Very Large Crude Carriers (VLCC), capable of holding up to 300,000 deadweight tons to export the oil from the terminal. The company also operates the Yoho field, with current full-field output of around 150,000 bbl/d. Yoho contains around 400 million barrels of oil reserves. ExxonMobil is continuing to expand Yoho field and estimates the expansion project will increase production to 170,000 bbl/d by the third quarter of 2006. The $1.2 billion field is located in the shallow waters of Block OML 104. ExxonMobils Bosi, and Eti/Asasa fields with capacities of 120,000 bbl/d, and 25,000 bbl/d, respectively, are scheduled to come online between 2006 and 2007.
In August 2005, Canadian Natural Resources (CNR) brought their Baobab oil field onstream, with initial production averaging 48,000 bbl/d. The field is located offshore in Block CI-40 and production on the field is expected to reach capacity of 65,000 bbl/d in 2006. Block CI-40 is estimated to contain 200 million barrels of recoverable oil reserves. CNR is operator of the block with a 57.6 percent interest and is joined with partners Svenska Petroleum Exploration (27.4 percent), Petroci Overseas (10 percent), and Petroci Holding (5 percent). CNR is also operator of Block CI-26 and holds an interest in Block CI-400. The Espoir field, which is located in Block CI-26, had first oil come onstream in 2002. Espoirs recoverable reserves are estimated at 93 million barrels of oil and 180 billion cubic feet (Bcf) of natural gas. Production at the field, which has a life expectancy of 20 to 25 years, is expected to peak at 35,000 bbl/d of oil. Espoirs oil production is exported by shuttle tanker, while the natural gas is piped to shore where it is used to generate electricity. CNR announced that development of the West Espoir field began in mid-2005, with production expected to start in mid-2006. CNR holds 58.7 percent interest in Block CI-26 and is joined with partners Tullow Oil (21.3 percent) and Petrosi (20 percent). In 2003, Tullow Oil discovered oil in the Acajou prospect, also located on Block CI-26. Devon Energy Corporation operates the Lion oil field on Block CI-11, with production averaging 20,000 bbl/d of oil. Recoverable oil reserves on the block are estimated to be 210 million barrels. Devons partners on Block CI-11 include Petroci, Pluspetrol of Argentina, and the International Finance Corporation. In addition to Block CI-11, Devon holds interests (ranging from 35 percent to 80 percent) in several other blocks in CÔte dIvoire including offshore Block CI-01, which contains the Kudu, Eland and Ibex fields; Block CI-02, which contains the Gazelle field and Block CI-105. Vanco Energy Company has estimated that 2.7 billion barrels of oil is located in the San Pedro ridge and other deposits in Block CI-112 off the western coast of CÔte dIvoire. Indias Oil and Natural Gas Corporation (ONGC) (21.2 percent), Oil India (10.4 percent) and Chinas Sinopec (27 percent) signed on to the CI-112 project in December 2004, reducing Vancos stake to 27 percent. This is the first African deepwater exploration venture for all three state-owned firms. In March 2005, Vanco drilled the San Pedro 1 well on Block CI-112, but later plugged the well due to a lack of hydrocarbons. In October 2005, Vanco signed two production sharing agreements (PSAs) with CÔte dIvoire for Blocks CI-401 and CI-101.
In 2005, Saltpond Offshore Producing Ltd (SOPL), which is owned by the U.S.-registered Lushann-Eternit (60 percent) and the state-owned Ghanaian National Petroleum Company (GNPC) (40 percent), signed a $5 million redevelopment project that will restart six wells on the Saltpond oil and natural gas field. SOPL hopes the additional wells will increase production from the current 500 bbl/d to 1,500 bbl/d. The former operator of Saltpond field, Agripetco, had shut the field down in 1985 due to decreasing output. Scottish-based Dana Petroleum is currently analyzing exploration targets in the deepwater section of its West Tano Block. The company previously drilled two successful test wells, WT-1X and WT-2X on Tano field, and made estimates that the field contained oil reserves of 200 million barrels. However, Dana Petroleum indicated that only a small amount of the oil would be recoverable due to geological reasons. Dana Petroleum operates the block with 90 percent interest and is joined with GNPC (10 percent). In 2002, Oklahoma-based Devon Energy and Canadian independent EnCana entered into an agreement with the GNPC to explore for hydrocarbons offshore of southeastern Ghana in the Keta Basin. The companies are currently analyzing seismic data on the Keta Block. Devon has been active in Ghana since 1997 when it acquired the Keta concession. Houston-based Vanco Energy also signed an exploration agreement with the Ghanaian government in August 2002. In May 2005, Vanco Energy completed 3D seismic research on its Cape Three Points Deepwater Block, and the company plans to drill its first exploration well on the block in 2006. Finally, Dallas-based, Kosmos Energy signed a seven-year oil exploration agreement with Ghana. Kosmos will search for oil in the Tano Basin, adjacent to Vanco Energys Cape Three Points Deepwater Block. Kosmos is operator of the West Cape Three Points license with 86.5 percent interest and is joined with GNPC (10 percent) and E.O. Group (3.5 percent).
In 2006, Hunt Oil plans to conduct seismic research on the Sangomar-Rufisque license offshore Senegal. Analysts estimate that the license area could contain upwards of 1 billion barrels of recoverable oil. Hunt Oil is the operator of the license with a 60 percent interest, and is joined with partners First Australian Resources (30 percent) and state-owned Societe des petroles du Senegal (Petrosen) (10 percent). In March 2005, Malaysian-based, Markmore Energy acquired a 55 percent stake in the Dome Flore Block. The block is located in a joint maritime exploration zone, which is controlled by Senegal and Guinea-Bissua and administered by the Agence de Gestion et de Cooperation (AGC). The Dome Flore Block contains an estimated 800 million barrels of heavy oil. Thirteen wells have been drilled on the block, and several have penetrated 10 - 13 API heavy oil deposits. Additionally, two wells have found much smaller deposits of 30 - 35 API light oil. Markmore Energy is joined with partners Sterling Oil (UK) (30 percent) and AGC (15 percent). Eni, as operator of the AGC-administered Cheval Marin Block, has a 48 percent interest and is joined with ExxonMobil (37 percent), Sterling Oil (10 percent) and AGC (15 percent). Seismic surveys were completed on the Cheval Marin Block in April 2002, and additional seismic surveys are being planned.
In March 2002, U.K.-independent Premier Oil announced the results of its first exploratory well on the Sinapa prospect (Block 2) offshore Guinea-Bissau. The Sinapa-1 exploratory well has been designated plugged and abandoned with oil shows. Despite the disappointing results, Premier Oil plans to retain its acreage in Guinea-Bissau, and is in the process of reviewing seismic data on its holdings. In addition, Premier Oil plans to drill exploration wells, Eirozes and Espinafre, towards the end of 2006. The national oil company of Guinea-Bissau, Petroguin, is planning to offer the countrys new deep-water acreage to prospective investors. Exploration activity in the region has sparked interest in the remaining 11 offshore blocks.
In July 2005, The Gambia awarded Philippine National Oil Company (PNOC) one of The Gambias six oil exploration blocks. The Gambia gave the award to PNOC without tender, or a technical review of the companys capabilities. Amerada Hess (80 percent interest) and Sterling Energy (20 percent) hold the rights to The Gambias Deepwater PPL Block. The license has been issued for six years and the companies are currently finalizing interpretation studies and evaluating options for a 3D seismic data acquisition.
In Benin, U.S.-based independent Kerr-McGee has exploration plans for Block 4, which include 3D seismic research and an anticipated drilling in late 2006. Kerr-McGee (operator) holds a 40 percent interest in the block and is joined with partners Kosmos Energy (40 percent) and Malaysias Petronas (20 percent). In neighboring Togo, Petronas and Hunt Oil are exploring for oil. Hunt Oil signed a PSC with Togo in late July 2002 for the countrys first deepwater well. In addition, Togo awarded Hunt Oil the exclusive rights to the countrys entire offshore area. The contract area, previously divided into 15 blocks, covers 1,570 square miles.
Although the Mano River States (Liberia, Guinea and Sierra Leone) currently produce no hydrocarbons, sporadic exploration activity is taking place. In 2005, Liberia held its first licensing round since the cessation of its civil war in 2003. Liberia awarded exploration concessions to UK-based Regal Petroleum, Repsol, Woodside, Broadway Consolidated and Oranto Petroleum. In addition, Canadian-based Ona Exploration signed a Memorandum of Understanding (MoU) with the Liberian government for oil and natural gas drilling rights in two offshore concessions. In Guinea, Houstons HyperDynamics has been meeting with government officials to discuss hydrocarbon development plans in the country. The company has exploration and data marketing rights for the entire continental margin of Guinea, which covers 210 miles of coastline and up to 150 miles offshore. In October 2005, Sierra Leone signed an agreement with Nigerians oil and natural gas company, Frazimex, allowing the company to explore for oil in Block 3 for seven years. Several test wells drilled in the 1970s on Sierra Leones continental shelf produced shows of oil. To date, no proven hydrocarbon reserves have been found in Mali. However, many oil companies are currently exploring for oil, with focused exploration on the Taoudeni basin and the Graben de Gao in the northwest of the country. In Niger, the China National Petroleum Corporation (CNPC) is choosing three sites to drill exploration wells in its Tenere Block. CNPCs contract states that the drilling must be completed by 2008. In Petronas and ExxonMobils Agadem Block, the companies discovered an estimated 350 million barrels of oil equivalent. Oil exploration has been carried out for more than 20 years in Nigers Djado region on the border with Libya, but no commercial finds have been discovered.