Angola edges out Nigeria as region leader
Marshall DeLuca
International Editor
Mobil's Zafiro Producer, offshore Equatorial Guinea.
With the Gulf of Mexico and the North Sea in a downturn, Southeast Asia reeling in economic turmoil, Venezuela undergoing political change, and Brazil just now awarding its first round of licenses, West Africa has been given the chance to flourish as competition from other regions has begun to lag. Activity in the West African region over the past year has been racing forward with several major new discoveries, especially in the deepwater regions off Angola and Nigeria.
However, not immune to the problems plaguing the rest of the world, the pace has, and will continue to undoubtedly slow down, and countries without major established deepwater plays could fall by the wayside. Also, smaller fields, deemed economical for development a year ago, are being delayed until the economics return to levels to support their production. But, for the past year, it seems that all along the coast every country has been trying their best to get the attention of the international oil and gas players. Even miniscule countries such as The Gambia and Sao Tom? and Pr!ncipe have offered their acreage up for bidding, hoping to cash in on the big plays of their neighbors.
Angola
In the past year, Angola has taken the lead as the hottest offshore area in West Africa, beating out long time leader Nigeria. Angola, while still relatively new to the game and not as developed compared to Nigeria, has come on strong with a rash of deepwater discoveries to add to its several existing major fields. This activity has caught the eye of almost every operator in the world. Angola already holds three fields boasting reserves of one billion bbl or greater: Elf's Girassol (1 billion bbl) and Dalia Fields (1.3 billion bbl), and Chevron's Kuito Field (2 billion). But several new discoveries have added to the country's dominance.
The awarded and speculated deep and ultra-deep Angolan concessions.The hottest issue in Angola for operators has been the award of the much-coveted deepwater Blocks 21, 22, 24, and 25, and the ultra-deepwater 31, 32, 33, and 34 tracts. Winning bids on Blocks 31 - 34 have been estimated to be between $200 and $400 million per block. The government finally announced the awards of the four deepwater blocks, while the industry remains to speculate on the ultra-deepwater. Block 21 went to BHP, Block 22 went to Texaco, Esso was awarded Block 24, and Agip will operate Block 25. It is speculated that BP-Amoco will take Block 31, Elf will take Block 32, and Esso will take Block 33, and Angolan SONAP is expected to take Block 34. The awards for these blocks have yet to be announced as final negotiations are nearing completion. These awards should prove to result in a marked increase in drilling within the next two years in the country's deepwater.
On the discovery side, Exxon's subsidiary Esso came out as the leader for the year, followed closely by Chevron and Elf. Esso made major gains with four deepwater discoveries. Its first deepwater well, Kissanje, in Block 15 was deemed a discovery and was shortly followed by Marimba, Hungo, and later Dikanza - also on Block 15. Kissanje, Marimba, and Dikanza tested 10,000, 6,800, and 4,400 b/d of oil, respectively, while Hungo encountered 575 ft gross oil column in seven reservoirs. These discoveries have put total reserves for Block 15 to over 1 billion bbl.
Chevron made its mark on its only deepwater concession, Block 14, home of the Kuito Field. The company has three major discoveries, besides Kuito. Well D14-9x discovered the Benguela Field, which was followed by the Landana and Belize discoveries.
As if two billion-plus-bbl fields weren't enough for one block, Elf added two more fields to Block 17. Elf drilled the Rosa-1 well which tested at over 5,600 b/d of oil in a separate channel of the Girassol structure. The company then followed with the Lirio-1 well which tested at 11,000 b/d of oil. The company also drilled two additional Dalia wells, Dalia-2, and Dalia-3. The latter being the first development well on the field.
On the development side for Elf, the company chose fast-track development for Girassol. The company contracted with a joint venture of Bouygues and ETPM for an FPSO for the field. Elf, however, has decided not to fast-track Dalia. Although the company is leaning toward an FPSO similar to Girassol, other alternatives are being examined. Development work is also planned on the other fields in the block this year.
However, Angola is still awaiting first deepwater production. Chevron is doing its best to reach that goal with the Benguela Field on Block 14. The company expects to bring the field on production this year at 50,000 b/d of oil and rising to a level of 200,000 b/d. Chevron is also planning to bring its billion-plus-bbl Kuito Field onstream by the second half of this year. Kuito will be developed using an FPSO, export buoy, subsea wellheads, and piping, and is expected to initially flow at 75,000 b/d of oil, with a peak rate of 100,000 b/d by 2002.
Chevron already produces more than half of the country's total production solely from Cabinda Block O located east of Block 14. Chevron, as part of the Block O Cabinda Association, a group of operators working for the overall development of the block, pledged to boost Angolan oil production to 600,000 b/d by the year 2001. Chevron's partners in this effort are Sonangol, Agip, and Elf. Production is currently at 510,000 b/d of oil.
Chevron has several platforms installed on the block including platforms on the Nemba, Lomba, and Takula fields. Lomba is producing at 27,000 b/d of oil and Takula is currently producing 130,000 b/d of oil. The company also has the Banzala Field in Area A of Block O. Banzala has one billion bbl of reserves, but only 100 million bbl of oil in place.
Elf and Ranger also brought fields onstream. Elf began production on the Oombo Field on Block 3/91 at 9,500 b/d of oil as a satellite of the Cobo/Pambi Field, and Ranger brought its Kiame Field onstream at 7,000 b/d of oil.
Shell, on the other hand, seems to be the only one having trouble off Angola. The company has had only marginal results with its drilling campaign in deepwater Block 16. The company tried to spin-off 10% of its interest in the block to Repsol in exchange for a 35% interest in the Upper Egypt Block in Egypt. The government, however, denied the transaction. Shell also pulled out of Block 1 by selling its 50% interest and operatorship to Texaco.
Nigeria
While Angola may have several billion barrel fields and operators racing to get into its deepwater, Nigeria still holds the crown as the continent's leading producer. The country also boasts the only other billion bbl field in the region: Shell's Bonga Field in OML 212. Nevertheless, while production continues, exploration is in a slow down.This is due in part from Nigeria's lack of governmental commitment of a fiscal framework to support the large investments needed by companies operating in its deepwater. To counteract this problem and help boost exploration budgets, the government recently announced an investment tax credit for companies that signed deepwater production sharing contracts in 1993. This has resulted in several majors such as Shell, Exxon, Mobil, and Elf reportedly pledging to double their deepwater exploration programs.
The government also attempted to increase deepwater activity with a bidding round for seven ultra-deepwater concessions. But, a few weeks before the death of former ruler, General Sanni Abacha, and shortly after the announcement of the round, the Abacha government awarded several of the blocks to indigenous companies. These included OPL 246 to Star Atlantic Petroleum, OPL 245 to Malabo Petroleum, OPL 247 to FEMAC, a company owned by the wife of a high-ranking official in the Abacha administration, and OPL 244 to DICS, a company owned by a well-known supporter of Abacha. Mobil was also reported to have won OPL 250. But, when the new government of General Abdulsalami Abubakar took office, the awards were put on hold until investigations could be done. The government later gave the concessions a six-month term to run until new procedures could be put in place. Later in the year Total and partner Petrobras took operatorship of Star Atlantic's OPL 246.
While Nigeria did not hold comparable finds to that of Angola, several key discoveries were made. Elf drilled the highly controversial Ekanga-1 and 2 wells in OML 102 on the border of Nigeria and Equatorial Guinea. The well confirmed at least two oil reservoirs in the area. The controversy over the wells stems from their close proximity to Mobil's Zafiro Field. Elf was thought to be testing whether the field extends to Nigeria's area. Elf does plan to develop the discoveries. The company also drilled Ebwa discovery in OPL 223 and the Ukot discovery in deepwater OPL 222. Ukot-1 reportedly tested 7,000 b/d of oil and the field is estimated to hold between 200 - 300 million bbl.
On the development side Elf has signed a contract with Dresser-Kellogg for a $10 million engineering study on the $1 billion Amenam-Kpona project in OML 99. Once the study is completed, the company will invite tenders for the main contracts. The proposed development plan will involve a two wellhead platform and a main production platform. The field is scheduled for start-up in 2000 at 100,000 b/d of oil.
Conoco also made a discovery in the eastern deepwater OPL 220. While the company remained tight on the information, the well Chota-1 was reported to have encountered oil in two pay zones. If the result is accurate, it confirms an oil play in the eastern portion of the deep offshore Niger Delta, which has been regarded as mostly gas-prone.
Texaco and Famfa also announced a major discovery on OPL 216 in the deepwater Niger Delta. The Agbami-1 well encountered 420 net ft of oil pay in multiple zones. Reserves are estimated to be several hundred million bbl.
Shell also got back into operation in the southeast Niger Delta after almost nine years. The company drilled the Ki-6 well on the OML 71 prospect, which encountered over 250 ft of net oil in nine reservoirs. The drilling of the well was part of Shell's goal to move its operations offshore following several clashes with local rebels on its onshore installations. The company has also announced plans for development of its deepwater Bonga Field and shallow water EA Field. The company is planning additional development wells and FPSOs for both fields. Production of EA to its FPSO is set to begin this year, with Bongo beginning in 2002.
Nigeria also added to its production leadership with several fields being brought onstream in the last year. CanOxy brought the Ejulebe Field onstream at 10,000 b/d of oil to the Ukpokiti vessel. Chevron's Opolo Field in OML 95 was also put into production from four wells.
Mobil, Nigeria's most active offshore producer, began production from its Oso NGL project. The project is expected to recover 350 million bbl of NGL over its life. Production began at 30,000 b/d and has increased to 50,000 b/d.
The most notable development in Nigeria is the final approval of Chevron's West Africa Gas Pipeline Project. The 620-mile pipeline will carry gas from the Escravos Field in OPL 91 to power plants in Benin, Togo, and Ghana. The project is also expected to end gas flaring off Nigeria's coast by creating a market for the gas.
While Elf, Exxon, Chevron, and Shell have announced plans for drilling throughout 1999, activity will continue to remain slow. The new incentives in the deepwater may spur some increased activity, but this is expected to be counteracted by a drop in shallower water activity as operators continue to delay projects until the economic situation improves. This will not, however, have much impact on Nigeria keeping its position as the chief producer for the next several years.
Equatorial Guinea
The 300 million bbl Zafiro Field has given small Equatorial Guinea quite a bit of clout as one of West Africa's prime producers. As a result, the government opened a deepwater licensing round that includes all the country's offshore concessions in excess of 200 meters. The new round will close on May 10 and the license conditions will be governed by the country's newly revised hydrocarbons law. The new law limits royalties to 10-16% and uses a more conventional cost oil limit and profit oil sharing.However, discoveries have seemed to slow down in the past year, with most activity centered on production. Most notably, the Zafiro and its surrounding fields. Mobil and Ocean Energy have announced plans to increase Zafiro's production from 80,000 b/d of oil to 120,000 b/d by the year 2000. This is despite the government's cutback of their interests in the concession from 75% to 71.5% for Mobil and from 25% to 23.5% for Ocean Energy.
Scattered around the Zafiro are several separate major oil fields which are planned to boost the country's production. Mobil and Ocean Energy have commenced production on the Jade and Opalo East fields. The fields are producing 9,862 b/d and 24,365 b/d, respectively. Other notable fields include Serpentina, Opalo, Rubi, and Tsavorita. The last of which, Tsavorita in Block D, confirmed a separate geologic play in the region. Another field, Topacio in Block B, is currently producing via a tie-back to the Zafiro Producer FPSO. Mobil has made mention of installing a $1 billion platform-based development to handle the production from these fields.
On the licensing side, Elf made news when it was granted a 6,800-sq km exploration area in the deepwater Block C southwest of Bioko Island. The concession is in water depths between 1,000 and 2,700 meters and is located near several producing fields. Elf was also involved in a minor boundary dispute when it drilled the Ekanga-1 well just across the Nigerian border from the Zafiro Field. The Nigerian government has been pushing for a unitization of the field, which is thought to extend across the border. Elf contends that the well was not drilled to confirm the extension of Zafiro.
Gabon
West African countries often promote their concessions by comparing them to a major play. Gabon is no exception. The country has touted its ultra-deepwater area as analogous of Brazil's Campos Basin. However, the country is still waiting for its first major deepwater discovery and is hoping some of the new licenses it has granted will help speed up the process.The country held its eighth licensing round in 1998. A partnership of Elf, Shell, and Amerada Hess won the right to negotiate production sharing contract rights to the 6,959-sq km deepwater H-97 and 10,000-sq km deepwater J-97 blocks. Total and Santa Fe won the rights to negotiate for 3,800-sq km Block N-97. A fourth block, N-97, was also originally on offer, but was withdrawn due to a boundary dispute with neighboring Congo.
Vanco Energy also established itself in Gabon by signing a production sharing agreement for two ultra-deepwater blocks. Vanco with partners Total, Unocal, Kerr-McGee, and Reading & Bates formed a consortium called the Vanco Gabon Group to explore and develop the blocks. The group was granted the 6,000-sq km Astrid Marin and 6,600-sq km Anton Marin. The blocks are located in water depths up to 3,000 meters. Based on data collected in a 1997 2D survey, between 20 and 32 prospects have been identified on the blocks with potential the companies are hoping to be greater than that of Girassol and Dalia. The group plans a 3D seismic program for the blocks this year with first drilling to begin next year. Total will serve as operator.
Pioneer also obtained a concession last year. The company was granted the Olowi Block under a three-year contract with an option for two more years. The field is located southeast of the Gambia oil field. Appraisal drilling is planned shortly.
On the production side, Marathon and Santa Fe brought the Tchatamba Field onstream. The field is located in the Kowe permit and is producing 15,000 b/d of oil. Reserves for the field are estimated at 20 million bbl. The companies also announced plans to bring the nearby Tchatamba South Field on production by tying into the Tchatamba infrastructure in the second half of this year.
On the exploration side, VAALCO Energy recently announced results of its second well in the Etame Marin Permit. The well encountered 17 ft of net pay in the Gamba sand. The company said that the well tested similar to the discovery well drilled last year (3,500 b/d of oil). The well has been plugged and abandoned while the company evaluates the new information.
Marathon also discovered oil last year in the East Oroyinvare concession. The well encountered 163 ft of net oil and flowed 2,460 b/d of oil. The company is also drilling on another prospect, Mpando-1, in 98 ft of water.
Arco has also been busy off Gabon. The company is in the process of shooting a 1,400-sq km 3D survey on the Tolo D-93 block. The company operates the block with partner BHP, who is also the company's partner on the Otiti Block. The first well on this block was to be drilled early last year, but was delayed due to rig availability.
The Congo
The Congo's offshore has been for the most part dominated by Elf. Elf operates the N'Kossa and Moho fields in the Haute Mer 312 Permit with partner Chevron. N'Kossa is currently producing 120,000 b/d of oil and 350 MMcf/d of gas. The Moho Field has estimated reserves of 400 million bbl and is still awaiting development. The first two discoveries on Moho, Moho-1 and 2 encountered a Cretaceous play which Elf wanted to fast-track to the N'Kossa development. However, partner Chevron insisted on additional exploration wells and a third Moho discovery, Moho-3, was made which confirmed the potential of a Tertiary play in the region. Moho is expected to enter production by the middle of this year via 12 subsea wells. The companies have still not announced whether it will be tied back into N'Kossa or to an FPSO.In addition to Moho and N'Kossa, Elf holds two other smaller discoveries, also in the Haute Mer which are speculated to be linked to deep offshore plays in Angola. The first discovery, Bilondo Marine No. 1, flowed 8,520 b/d of oil. This well initially discovered the Tertiary play which Moho-3 confirmed. The second discovery was Libonolo-1, which holds estimated reserves of 200 million bbl of heavy oil. Further appraisal drilling is planned in the area, and might lead to a deepwater Angolan-sized find.
On the exploration side, several companies are expected to begin efforts in the deep offshore Congo this year. Elf holds the 5,070-sq km Mer Tres Profunde Nord license while its partner Agip holds the neighboring Mer Tres Profunde Sud license. The companies jointly announced a 7,500-sq km 3D seismic acquisition survey over the leases to be performed by Geco-Prakla, with drilling to follow. Elf also operates the Mer Profonde Sud Permit. Exxon is also expected to begin drilling early in the year on its nearby Mer Profonde Nord license.
Côte d'Ivoire
Côte d'Ivoire has referred to itself as the "Elephant of Africa", and the country is hoping to live up to its self-appointed title with deepwater prospects of Angolan potential. Ocean Energy, who is spearheading the deepwater search, has identified 26 deepwater structures, five of which are in the company's Block CI-105. The company said that it had identified a Tertiary channel play that is similar to the Elf's Girassol structure. One of two wells is planned on Block CI-105 this month.This deepwater surge follows the company's somewhat unsuccessful shallower water campaign. In Blocks CI-12 and CI-01 in the central offshore, the Ocelot-1 and Antelope-1 wells, respectively, were plugged and abandoned as dry holes. However, on the CI-01 lease, the Ibex South-1, drilled 16 km southeast of Antelope-1, encountered 60 net ft of oil in an undisclosed number of reservoirs.
Ranger Oil also holds concessions in the country's deepwater leases. The company was awarded production sharing agreements for the 3,200-sq km Block CI-101, and the 2,500-sq km Block CI-103. However, the company has shown interest in farming out part of its 35% holding in these blocks, as well as Block CI-40, so it could concentrate on its Block CI-26. CI-26 is the home of the Espoir Field, which was discovered in 1980, put onstream in 1982, and abandoned in 1988. Ranger is currently studying the redevelopment of the field and resuming production at 20,000 - 25,000 b/d of oil in 2000. The company is considering a 3D seismic program for this year on the field.
Apache is the third player in the deepwater of Côte d'Ivoire. The company is currently drilling the Foxtrot 1 well on the deepwater Block CI-27, with a second well, Foxtrot 2, to immediately follow. The company is also planning to commit additional seismic to the block during the year.
Santa Fe has also been active and has spudded the second of two wells scheduled for Block CI-24. The well is called Crocodile-2X and is located 500 meters from the first well, Crocodile-1X, which produced mixed results. This is part of a program that includes the neighboring Block CI-202.
On the production side, plans have been completed for the pipeline to deliver gas from the Foxtrot Field to industries and plants within the country and possibly to neighboring Ghana. Foxtrot is estimated at 500 Bcf of recoverable reserves. First gas is scheduled to flow in January of 2000.
Ghana
For the past year Ghana has been trying to boost activity and solve its energy shortage problem. Activity has been steady, but has had little luck. Several wells have proven disappointing and have kept the country from becoming an oil producer.On the exploration side, the past year has been plagued with disappointments. Ghana hoped that its 1.7 million-acre East Cape Three Points block would hold the key to its future in the oil industry. Wells in the block from Hunt Oil and Nuevo Energy each turned out to lack commercial quantities. But, Nuevo and Ghana both remain optimistic. Nuevo said that there are other prospects in the block and will complete a seismic program this year to evaluate where to drill next. Nuevo also holds the nearby 2.7 million-acre Accra-Keta Block. The company also plans a seismic campaign for this holding as well as a 1999 drilling campaign.
Ghana holds only two major offshore finds - the Saltpond and Tano gas fields. Ghana hopes that the Tano will hold one of the answers to its energy shortage. A power plant barge is currently being constructed which will use gas from the Tano to supply energy to Ghana. Installation is expected by next year.
Tano is located on blocks awarded to Dana Petroleum and West Oil. Tano is currently awaiting development by the Ghana National Petroleum Corporation.
The energy shortage will also be aided by gas from some of its neighbors. Côte d'Ivoire is expected to provide some short-term gas supply to Ghana from its Foxtrot Field. However, the major supply will come from a recently finalized 620-mile gas pipeline from Nigeria's Escravos Field. The pipeline project called the West African Gas Pipeline, will supply gas to plants in Ghana as well as Benin and Togo. The pipeline will be in operation in 2001. This should help meet the country's shortage until a local energy supply is discovered.
Other regional activities:
- Senegal: In order to determine whether it also holds a position in the offshore play like some of its southern neighbors, Petrosen, the state oil company, awarded Benton Oil and Gas to evaluate and process seismic data covering the country's entire offshore area. Once the data has been evaluated, the company will select blocks for exploration.
- The Gambia: Hardman Resources of Australia has planned a large-scale 1999 Gambian drilling program on its 1,500-sq km PPL-98 E Block located in the shallowest portion of the country's offshore. The block is bordered by deeper acreage awarded to West Oil and Fusion International last year. The company plans to drill in locations derived from seismic shot by previous leaseholders, but is waiting to secure partners to help finance the endeavor.
- Guinea: US Oil has conducted a 1,000-km 2D survey of its concessions in the Liberia Basin off Guinea. The concessions were part of a 68,000-sq km Technical Evaluation Area awarded in 1996. The company identified two locations in the shallow water for future exploration programs, but no action has been taken as of yet, as the company is still seeking partners.
- Liberia: Xpronet was granted a six-month technical agreement for the country's E, F, G, and H offshore blocks, which could lead to a full production sharing contract. The blocks border an area the company was recently evaluating under an agreement with neighboring Côte d'Ivoire, which are speculated as being evaluated as straddle plays. The company is expected to begin a 3D seismic program over the leases this year.
- Benin: Benin has spent its time trying to prove that it has more to offer offshore than the Seme Field, and that it has the potential of its Nigerian neighbor. However, it has had no such luck. Tarpon drilled one well off the country's coast, Ike-1, which tested non-commercial hydrocarbons.
- Cameroon: While constantly in dispute with neighboring Nigeria over control of the Bakassi Peninsula, activity still continues. Elf brought the Kole and S. Asoma fields onstream in 1997 and is currently drilling in the region through a contract with Pecten. Pecten also added the Lipenja Field to production at 7,000 b/d as well as the Tiko Field. Phillips is also currently active with a drilling program underway 18 meters of water.
- Sao Tom? and Pr!ncipe: Mobil has signed an agreement with a joint venture between the Sao Tom? and Pr!ncipe state oil company and Environmental Remediation Holding Corporation to explore for oil in the country's Exclusive Development Zone. The agreement covers an 18-month evaluation of Blocks 1 through 22 with an exclusive option to acquire a production sharing contract for further evaluation through exploratory drilling. Activity is expected in these concessions this year.
- Democratic Republic of Congo: With political and social unrest and a lack of deepwater acreage, DR Congo has had trouble attracting operators. In fact, Chevron remains the sole international operator in the country's offshore waters. The company's local affiliate, who finally changed its name from Zaire Gulf to Chevron DRC, has been concentrating operations on the Tshiala Field and several satellites of old fields that produce around 30,000 b/d since the company's inception in mid-1995. However, the company has announced plans to increase the pace in 1999. It has secured a rig for a one-year drilling contract in four meters of water to begin next month.
- Namibia: The third licensing round for the whole of Namibia's offshore region is currently open. This includes the country's deepwater concessions which account for one-third of the region. The round closes next month. However, operators are making their way out of the country. Norsk Hydro and Saga have decided to relinquish their concessions following several disappointing wells. Shell also has announced that it is delaying development of its Kudu gas field by one-year.
- South Africa: South Africa has added its name to the league of oil producing countries. The Oribi Field was brought onstream and is producing 25,000 b/d of oil. The field has a life expectancy of four years.
Concessions were also granted to Energy Africa to study and negotiate a sublease for Block 3B/4B, and to Ranger Oil and partner PanCanadian Petroleum for a one-year technical study of Blocks 12B/11B.
Copyright 1999 Oil & Gas Journal. All Rights Reserved.
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