Energy & Corporate Africa
Making Marginal Offshore Fields Profitable for Local Companies and Independents -- By Sunny Oputa
The African oil patch is full of marginal oil and gas fields which if developed will help to boost the economy of the continent. Whether offshore or onshore, these fields which are considered marginal based on ranking of mega oil companies are abundantly “wasting” in many countries of Africa. Be it in Nigeria where there are more than 300 marginal oil fields, Equatorial Guinea, Ghana, Angola, and even in the region's new frontiers, name it, some of these fields will remain undeveloped.
When it comes to deep water exploration and production, it is certain that the Golden triangle of deep water production in the world is Gulf of Mexico, Offshore Brazil and West Africa. In these three areas, more deep water oil fields have been discovered than any other place in the world. Unfortunately, West Africa is losing abundant revenue due to many fields classified as marginal which may never be put into production
Yet, there are tendencies that more deep water fields will still be discovered in West Africa. All of the fields to be discovered in future may not be like the Bonga and Agbami in Nigeria or the Jubilee Field in Ghana.
Some of the yet to be discovered oil and gas fields may end up been marginal fields due to the level of reservoirs which big oil companies consider not commercially attractive enough for them to produce. However, some of these field have the potentials of producing up to 1 million barrels of oil or more which at today’s price of oil turns out to be billions of dollars buried and untouched, while millions of Africa’s struggle in abject poverty - some living with less than $2 a day.
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Nigeria Petroleum Amendment Act 1996 describes a marginal field as one that has been left unattended for a period of not less than 10 years from the date of its discovery. The same attains for the qualification of a marginal field by the Department of Petroleum Resources Nigeria, the regulatory body of number one Africa producing country that for now seems to have the highest number of marginal fields.
According to Nigeria’s Marginal Field Guidelines, a marginal field is any field that has reserves booked and reported annually to the DPR and has remained unproductive for more than 10 years from the time, it was discovered.
According to Dr. Keith Millheim, an expert in deep water production technology, “the simple answer why these marginal oil fields cannot be drilled is that conventional perceptions of reserves and deep water technology, costs, time, and the deployment of human resources continue to limit the development of these fields.”
Millheim went further to state that “the knowledge of the oil company ranking system is critical in understanding why many deep water fields, are ranked as non – commercial or declared non-commercial by mega oil companies. Another threshold been used by some companies are manpower necessary to do all the engineering and operations to commercialize a deep water field.”
Therefore, the bottom line to the challenges in developing deep water marginal oil fields between 50 and 100 million BOE in West Africa will not be developed in the near future, even with the present volatility in the prices of oil. This presents a challenging scenario for West African countries that rely on the major E & P companies for development of their resources. Experts believe that the application of right economics, using an experienced team and combination of conventional and unconventional technologies would be the way to go in order to make the development of such fields dubbed marginal profitable