WEST AFRICA

Fred Akani
Lagos

BP's 26.6% Angola Block 16. [47,423 bytes]
UMC's Tsavorita-2, Block D, Equatorial Guinea. [65,587 bytes]

South Africa's Block 9 containing the Oribi and E-A-R [62,086 bytes]

BP hopeful in Angola, Mozambique

For all the widely publicized disappointment of the BP/Statoil drilling campaign in deepwater concessions offshore Nigeria, the BP arm of the alliance is determined to continue upstream activity in West and Southern Africa. The British oil company is banking on their 26.6% interest in Exxon-operated Block 16, in the prolific deep offshore Angola waters.

The BP/Statoil alliance has been the most active single partnership in deepwater operations in Nigeria. In the last two years, the alliance has drilled five (38%) of the total 14 wells drilled by six operators. But, all the wells have been plugged and abandoned, either as outright dry holes or as uneconomic wells. The partnership's 1998 drilling schedule indicates three wells, the outcome of which will determine whether the BP/Statoil alliance will continue in Nigeria or pack out entirely.

Meanwhile, at the Upstream Africa'97 conference in Cape Town, last October, a BP spokesman said that the company, on its own, is staking hope on the Zambezi play in Mozambique. Recent 3-D coverage indicates that the two wells drilled earlier on the prospect were wrongly located. The company has come up with an exploration model that is likely to prove oil in the Zambesi. BP plans to "test the model in detail" within the next two years.

UMC makes good in West Africa

United Meridian (UMC) has plenty of reasons to feel good about its entry into offshore West Africa. The firm's total oil production in the region is more than 20,000 b/d of oil, or 55% of its' total worldwide production. Estimated recoverable resources are 39 million boe. This is quite impressive for a 10-year oil independent, which only entered international operation six years ago.

"Our market capitalization has risen from $3.10 million to $140 million, owing largely to our activities in West Africa," said UMC Chairman John B. Brock, at the Africa Upstream '97 conference in Cape Town, South Africa recently. The New York Stock Exchange share price has risen from $10 to $38.

UMC's successes are owed largely to its involvement in upstream activities in Ivory Coast and Equatorial Guinea, two countries that have been largely ignored by other operators, especially the majors. Its major asset is the Zafiro field in Block B offshore Equatorial Guinea, where it has a 25% partnership with operator Mobil. The field currently delivers 50,000 b/d of oil. UMC's continues to be the most important oil company in Ivory Coast, where it has:

Established the local gas market (via offshore Panthere Field located in 240 ft water depth)
Helped map, engineer, model and present the deepwater play.
Set up and operates the first commercial natural gas/power project in Sub-Saharan Africa.

"We have caused the investment of over $1 billion by year end 1997 into West Africa," Brock said of the company's role in the region.

Equatorial Guinea: More than the Qua Iboe

If UMC succeeds in appraising the oil discovery in Tsavorita-1, in Block D offshore Equatorial Guinea, it would have delivered a strong geological statement; to wit, the country's crude oil fortunes are not entirely tied to the fate of a single geologic sequence.

Up until the Tsavorita discovery, all economically extensive oil pools found in Equatorial Guinea have been located in reservoirs within the Qua Iboe shale member of the Agbada Formation. In fact, no commercial pool of oil was discovered in that country until Mobil came and found that the Qua Iboe sequence extended down there from offshore Nigeria.

For example, all the wells drilled in the Alba field, east of Block D missed the Qua Iboe, which is generally located between 4,000-7,000 ft, only to encounter gas condensate sands between 7,000-12,000 ft. Even after the Mobil discovery (Zafiro), some wells have turned out unsuccessful simply because they missed the intra Qua Iboe sands.

Now, from a geologic reservoir chart presented by the UMC at the Upstream Africa '97 conference in Cape Town, South Africa, in October; the Tsavorita reservoirs are located between 3,000-4,000 ft MD, which is shallower than Qua Iboe. Tsavorita-1 encountered 79 ft of oil in two sands, which flowed a total of 1,800 b/d of 34-38 degree API oil until mechanical problems curtailed testing.

The first appraisal well, Tsavorita-2, was drilled under a tight status and additional drilling is planned for the second quarter 1998. It may take a while to understand the Tsavorita play but, if it can deliver even half as well as Qua Iboe, the industry's concept of the petroleum geology of Equatorial Guinea will have changed for good.

Gabon: Another Campos Basin analogy

The Gabonese government is marketing its ultradeep offshore leases on the premise that the plays are all analogies of the prolific Campos Basin, offshore Latin America. The Minister of Mines, Energy and Petroleum, Paul Toungui, told participants at the Upstream Africa'97 in Cape Town South Africa last October, that the ultradeep water Gabon was comparable to the Angolan segment of the deepwater salt basin, which has been cited as having a close genetic relationship with the Campos Basin.

Toungui announced a new non-exclusive 2D geophysical survey to be acquired in conjunction with the 8th International Licensing Round of 12 hydrocarbon exploration blocks.

"Petrolin and Geco-Prakla offer this new 2D survey, which will tie Petrolin's existing GDW-89 and GDWI-92 surveys (acquired by Geco-Prakla), which will in turn tie into GWA-88 survey and several wells on the continental shelf, thus offering complete coverage of Gabon's offshore coverage.

The unique dataset, which was shot in 1988 to investigate the continental margin of Gabon and Equatorial Guinea, has been used to optimize the layout and acquisition parameters of the new survey, which will allow detailed appraisal of the blocks on offer," the Minister said.

Nigeria: Government tightens budget

In 1997, the work programs of key operating companies in Nigeria were substantially reduced, due to a one-third Government budget reduction. Next year, it could be worse. Operating companies working in Nigeria have had their 1998 budget proposals slashed by the federal government, acting through the Nigerian National Petroleum Corporation (NNPC). The proposals, submitted under the joint venture agreement, were slashed by at least 15%.

The Chairman and Managing Director of Chevron Nigeria, George Kirkland, told the press early in November in Lagos, that the operators of the NNPC joint venture agreement submitted to the federal government a budget proposal that was significantly in excess of one billion dollars (about N82 billion) for their operations next year.

Kirkland said although the companies have had detailed reviews of their programs level with the NNPC and agreed on virtually all subjects raised in the budget proposal, about $150 million was reduced for undisclosed reasons. Kirkland hoped that additional funds in this year's request would be released for their operations while waiting for what would come from the Federal Government's budget speech next year. He pointed out that the company's activity level in 1998 would be a function of what they would receive from the federal government for the execution of projects under the joint venture agreement. Despite assurances that the approved budget would be released, Kirkland said that the companies involved - Shell, Agip, Mobil, Chevron and Elf - have taken steps to protect themselves in such a way that they can easily spend more money very effectively and efficiently if the funds are released as approved.

Should the federal government renege in releasing the money on time, Kirkland said the companies have positioned themselves to limit their over-expenditure on their operations. Stressing the importance of not further tampering with the approved budget, Chevron's chief executive officer said it is not good for the future when the drilling activities of oil companies continue to drop. Besides, the managing director stated that if sufficient funds do not come to meet the budget request in the middle of the year, the companies would not only adjust their program levels accordingly, but have already taken steps to structure their business programs to ensure that they did not suffer adversely from it.

Drilling rig count firming up

The drastic reduction in the drilling activity in Nigeria has not affected the high demand for offshore rigs in West Africa. This is curious, if only for the fact that Nigeria is the biggest oil industry in the region.

Last month, Mobil Producing Nigeria, currently the most active operator in the country, released one more offshore rig, Glomar Adriatic VIII, bringing down the number of rigs in its fleet from eight to four. The reduction has resulted from the Nigerian Government's cutback in funding of operations of its Joint Venture Partners: Mobil, Shell, Agip, Chevron, Elf and Texaco.

However, any rigs that are being released are quickly snapped up elsewhere in West Africa on long term contract. The Randolph Yost and Trident IV, released by Mobil earlier in the year, were immediately fixed by Chevron in Angola. The consistent high demand for offshore rigs is indicative of the boom in activity in the region, with higher than normal drilling activity is going on in Angola, Equatorial Guinea, Congo and Gabon. In fact, Charter rates for jackup rigs have increased by an average of $30,000 per day to $75,000 over the past 18 months, for units adapted to depths of 300 ft.

South Africa luring investors

South Africa oil industry officials are bristling with excitement over the country's entry into the league of oil producing countries. The Oribi field, located in 330 ft of water is producing 25,000 b/d of oil, but it is a small field that has a lifespan of 4 years at current rates of production. The E-A-R accumulation, which is saddle separated from the Oribi pool to the northeast, has poorer quality reservoir sands and lower volume. So Soekor, the state oil company, is anxious to top up the volume. It is utilizing every opportunity to get investors interested in participating in its drilling schedule, which involves the spudding of 10 wells in Block 9, which contains Oribi and E-A-R.

At a conference in Cape Town, South Africa, the Soekor licensing unit set up a display room, where its officers addressed any number of willing participants around the clock, as the conference proper went on downstairs in the BMW Theatre. The prospects on the marketing list were: E-BD-3, E-AR-3, and E-AR-4 (the last two being development wells for the E-AR discovery, north east of the Oribi field).

Deepwater Nigeria: Agip to resume drilling

Next April, 18 months after they suspended Abo-2 (in 2,000 ft water depth) with 100 ft of pay, Agip will resume drilling offshore deepwater Nigeria. The firm will utilize the rig Robert F. Bauer for an exploratory well, to be located in 2,500 ft of water in OPL 316 on the Western flank of the deep offshore Niger Delta. Apart from Shell, Agip is the

only company that has encountered an economic size oil pool in deepwater Nigeria. This was achieved by drilling Abo-2 on a ponded slope down dip of an anticlinal structure that was targeted by Abo-1, which turned out to be a shale swell.

Equatorial Guinea goes deep offshore

Bouyed by the success of the Zafiro field and the Tsavorita discovery, the Government of Equatorial Guinea is planning to step further offshore and give out leases in the deepwater. Western Geophysical is currently shooting a 5,000-km, 2D speculative seismic survey over open shelf and deepwater acreage. The results will form the basis for a deepwater data package to be offered to interested companies.