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Perspectives on growing Hydro Carbon reserves in the next decade

Total has been in Nigeria since 1962, and we shall be Celebrating our 50 years presence in the country next year. We commenced in 1962 as SAFRAP, then Elf Petroleum Nigeria Ltd, now Total E&P Nigeria Ltd, which is the NNPC/TEPNG JV (fully based in Port Harcourt); as well as a purely Deepwater arm, managed from our Deepwater District, based in Lagos through TUPNI, (Total Upstream Nigeria Ltd) & TEPNG.

Worldwide, TOTAL is the 5th integrated oil and gas company that is reputed for excellence in oil and gas exploration and production but that is increasingly adding renewable energy to its list of competences. This signals a movement from an oil and gas producer to Energy Group.

The Total Group is in 130 countries all over the world. In Africa we are present in 49 countries, with 16 countries having upstream activities in Exploration & Production, representing some 330/0 weighted average of activities in the TOTAL Group worldwide.

It may not have occurred to most of you that Africa’s population today is about one (1) Billion people, similar to India and even comparable to China. Africa has a bright future, full of opportunities, and is a good business hub for TOTAL.

In our Upstream business, by Ql 2012, TOTAL would have 6 (six) Operating FPSO(s) or FPU(s) in the GOG (Gulf of Guinea) in Offshore West Africa, from Angola to Nigeria; the Girassol Angolan Deepwater Project bagged an OTC Award in 2003, a first in Africa.

By 2018, the number of Operating FPSO(s) or FPU(s) would have increased to at least 11 (eleven) in West African waters. These would represent huge investments in Africa, systematically adding to the growth of reserves for the next decade by the Total Group in West Africa.

In Nigeria, we are Operator in 8 Blocks, and non-operator in 41 Blocks. Our current daily production is over 470kboepd (100%). Since the year 2000, it can be observed that, we have been gradually and systematically building our reserves and operated production, from about 1Sokboepd in the year 2000, to over 470kboepd in 2010. Our strategy is:

?    To sustain this growth through very active exploration in parallel to the oil & gas projects coming on stream, practically every two years.

Our first deepwater field in Nigeria, Akpo, came on stream in Ql_2009, on schedule and within budget, with an estimated peak production of 178,000boepd (it’s actually doing more today). Our second deepwater development, the USAN project, whose FPSO is already in the Nigerian waters since October 2011, is currently undergoing intense activities and preparations for “First Oil”, due on stream by Ql_2012 with about 180,000 boepd production capacity and a total of 11 million man-hours of employment .

We also have the Egina deepwater development with a planned production of 200,000 barrels per day, which will commence production in 2015. Egina will be a major new step forward for TOTAL’s growth in Nigeria, with a record-breaking level of anticipated Nigerian Content, in line with the application of the NOGICD Act.

According to the Oil & Gas Journal, the current Oil Reserves of the world stands at some 1.471 Trillion barrels of oil. Africa is in the Fourth (4th) position with 124 Billion Barrels of Oil reserves (which translates to 8.4% of world total reserves). The Middle-East is by far the first in the world with an estimated 753 Billion barrels of Oil, some 51.2% of world total reserves, source: Oil & Gas Journal.

Nigeria is today the number 10 country in the world with the most reserves, estimated at 37.2 Billion barrels, and representing ONLY 2.53% of world reserves. At a production rate of about 2.5 Mbopd, the country depletes about 1Billion barrels of oil equivalent from its reserves annually, without replacing production.

The country must strive to have an aggressive policy of reserves replacement through Wildcat Exploration, near field, as well as Deep Reservoir (HPHT) Exploration as a matter of urgency. Realistically, policies must be put in place for industry to gain “A LOT OF TIME” in the “Contracting Cycle”, especially by drastically shortening and reducing the time to “Access Rigs For Exploration” in the Nigerian waters, the country should make “Reserves Replacement” a priority.

The world population is increasing, just as the Nigerian population and still very much reliant on the oil and gas industry for fuel to run the hospitals, our factories, move our vehicles, fly the planes and heat or cool our homes, etc.

It is the challenge of World Leaders & the Oil & Gas Industry to provide consumers with fuel at affordable prices, while striving to reduce the environmental & carbon footprint, because of the impact on climate change. In fact the worlds’ 7 billionth child, certified by the United Nations is born already.

By 2030, it is estimated that the world population could hit the 9-10 Billion mark. To cope with future demands, our industry has to find and refine hydrocarbons at the cheapest possible and affordable costs. However, we know that the era of cheap oil and cheap hydrocarbon discoveries, seems to have gone, and is actually behind us.

It is becoming increasingly difficult to find cheap sources of hydrocarbons with existing technology. So, if we take a critical look at “Perspectives for Growing Reserves in the next Decade”, the answer is Exploration, Exploration & more Exploration; to run parallel to development projects, which are also becoming more and more expensive to execute, due to slippages in complex contractual environments, coupled with security challenges.

Gloomy, as we all have painted exploration recently in the Niger Delta, results in the past decade suggest that, the Exploration success ratio is well above 30%, which means that the basin is still a prolific oil & gas province & in fact a world class basin.

Although, the country’s anticipated production targets of over 3MMbbls of Oil per day in 2010, were not achieved, if proper corrective measures are put in place, to accelerate offshore projects in particular, increasing production by another 500,000 bbls per day is very feasible, in the medium or long term. A number of deep
water projects are still to come on stream.

It can be observed that, in the past one decade, discovered hydrocarbon volumes add up to some 337 Bboe. 92 of these discoveries are over SOOMboe each discovery, which add up to 177 Bboe. Of that sum, ONLY 5 countries actually found and grossed 122 Bboe .

We may then ask ourselves, in which type of plays were these discoveries made? In order to properly forecast into the future, it is pertinent to first look-back into the type of plays these exploration success stories came from. In the past decade all the Giant Discoveries in the world have been found in a limited number of plays, and most of them exist in West Africa.

These plays can only be accessed through Frontier or Wildcat Exploration. The above gives hope to growing reserves through exploration in the next decade and well into the future. If land-locked Uganda, and the relatively new Ghana can be smiling over billions of barrels of new oil finds in the last decade, why not Nigeria?

So, why has Exploration slowed down in Nigeria?

Compared to the 1980s & 1990s, the activity reports in the Oil & Gas Industry particularly in Nigeria, shows that drilling activities, had hit an all time low. It is evident that, there was more drilling and exploration activities in Nigeria from the late 1970s till the year 2000, than we can observe today.

That was when industry really built-up most of the Oil & Gas reserves that the country has today. When we compare the above with Brazil, we see that the latter has made some 36 Billion barrels discovery through frontier exploration in the past decade.

This South American Giant, is set to become the world’s number 4 or #5, with over 3 to 4 Million barrels projected daily production from 2020 and beyond ; while reserves could be declining drastically in Nigeria, if not arrested early enough by exploration .

The Brazilian Reserves BUILD-UP is actually driven by PETROBRAS and could continue to grow, because of a daring and their aggressive Frontier Exploration Strategy. May we not forget that once upon a time, there was tin mining in Osun and coal in Enugu, unfortunately it’s no longer the case today. This is not peculiar to Nigeria; many cities all over the world have abandoned their glorious mining past, in the same manner – reserves depleted without replacement.

Conclusively, we have demonstrated that;

?    Prospective exploration play types exist in Nigeria & West Africa,

?    Encouraging & world class discoveries have also been made in the Gulf of Guinea passive margin,

?    The willingness of the professionals in NAPE & AAPG to practice their profession in exploration is still very passionate, as we can see from the attendance of this             conference.

If the above is true, then we just need the ENABLING ENVIRONMENT, which the membership of NAPE are already contributing to, with this kind of professional platform, they are providing in this conference.

Guy MAURICE is Managing Director / Chief Executive, TOTAL Upstream Companies in Nigeria (TEPNG & TUPN).


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