West Africa May Lead World’s Next Oil Production Boom

West Africa May Lead World’s Next Oil Production Boom
Oil is the backbone of Nigeria’s economy

AFRICANGLOBE – Experts in the oil and gas sector have projected the West African region potentials to be among the best in the world, advocating optimal exploitation of advanced technologies that could bring the dream to reality.

Indeed, a Director at Atlantis Offshore, said Keith Millheim, said the small offshore oilfields (marginal fields) of West Africa, if exploited properly, could become the next big economical play.

Millheim however noted that, “all it takes is one adventurous company to set the ball rolling”.

Painting the North Sea scenario, he said, “Entrepreneurs such as the U.S.-owned Hamilton Brothers learned how to make small fields in the North Sea economical in the mid-1970s, specifically the Argyle Field off the coast of Scotland that brought Great Britain its first oil. The company’s game-changing technology was the first Floating Production Storage and Offloading (FPSO) vessel deployed for oil production. It changed the offshore industry forever.”

He therefore said, West Africa, particularly its small offshore oilfields, could be the next “North Sea scenario” if played correctly.

“From the typical types of reservoirs encountered offshore to their size and how prolific they are, it’s really a dream. There is possibly more oil in the small fields in West Africa than in the reserves in the big fields. How do we change our thinking to make them work?”

“Many fields are capable of producing 8,000 to 20,000 barrels of oil a day. If you can do it economically, it’s a company maker,” he said.

According to him, the continent is welcoming international investors, as the majority of its countries have done little to invest in the technology needed to extract their own hydrocarbons.

“Over the years, major oil companies have exploited the large oilfields of West Africa as they saw fit. The host countries never required that investments be made in internal technology centers or in research and development activities,” Millheim said.

He lamented that, “Nigeria has some of the largest resources and a large population, but they have never really invested in the technology that is driving 80 percent or more of their economy. That’s horrific.

“As a result, West Africa remains ripe for investors who are willing to exploit smaller fields. Who will rally? Who will be the leader? The resources are there. Who’s going to pursue them and how long will it take? Those are the questions,” Millheim said.

Chief Executive Officer of Energy and Corporate Africa, Rigzone, Sunny Oputa, said because the threshold for many major operators is roughly 200 to 300 million barrels of recoverable oil, many, including Royal Dutch Shell plc and Chevron Corporation, have abandoned many oilfields considered small or marginal in the continent to search of larger ones.

“They were not worth the economic investment to Shell or Chevron but you know what they say: ‘One man’s meat is another man’s poison,” Oputa said. “These small fields are good for small, independent and indigenous companies. Some wells could produce for 10 to 15 years. They will make money,” he said.

It should however be noted that Nigeria had taken bold step to allocate such marginal oil fields to indigenous operators who are now doing well in the fields.

Investors intrigued by Africa’s small, offshore fields are often wary of two things: the cost and availability of innovative technology that can make exploiting small fields commercial, and the fact that many small fields are located in deep water. However, unconventional types of technology can be successfully applied to developing small, conventional deepwater oilfields, Millheim explained.

“There are service companies and providers that can do it all,” he added.

 

‘Global Consumption Of Petroleum To Grow By 1.3 Million bpd’

The United States Energy Information Administration (EIA) has estimated that global consumption of petroleum and other liquids to grow by 1.3 million bpd in 2015 and by 1.4 million bpd in 2016.

In its short term energy report released last week, global consumption of petroleum and other liquids will grow by 1.1 million bpd in 2014, averaging 92.4 million bpd for the year.

According to the agency, consumption of petroleum and other liquids outside Organization for Economic Cooperation and Development (OECD) countries grew by 1.4 million bpd in 2014 and is projected to grow by 0.8 million b/d in 2015 and by 1.1 million bpd in 2016.

It added that lower forecast growth for non-OECD consumption in 2015 mostly reflects a 0.2 million b/d decline in Russia’s consumption as a result of the country’s economic downturn.

EIA estimates that non-OPEC petroleum and other liquids production grew by 2.3 million bpd in 2014, which mainly reflects production growth in the United States.

EIA estimates that OPEC crude oil production averaged 30.1 million bpd in 2014, unchanged from the previous year. “Crude oil production declines in Libya, Angola, Algeria, and Kuwait offset production growth in Iraq and Iran. EIA forecasts OPEC crude oil production to increase by 0.6 million b/d in 2015 and decrease by 0.2 million bpd in 2016. Iraq is expected to be the largest contributor to OPEC production growth in 2015. At the OPEC meeting on June 5, the group did not change its 30 million bpd crude oil production target. EIA forecasts OPEC crude oil production will continue to exceed that target over the forecast period, contributing to expected global inventory builds”, it added.

The EIA explained that Iran and the five permanent members of the United Nations Security Council plus Germany reached a framework agreement to guide negotiations targeting a comprehensive agreement. “Negotiations continued beyond the June 30 target, and July 7 was agreed as the new target date for a comprehensive agreement. However, no agreement had been reached by the time of this writing. A comprehensive agreement could result in the lifting of oil-related sanctions against Iran and a subsequent increase in Iran’s crude oil production and exports, although the timing and details of any suspension of sanctions are uncertain.

 

By: Sulaimon Salau And Roseline Okere