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Petroleum Exploration and Production

Posted by on 12/23/2003 3:48:10 PM | Views: 338 |

Petroleum Exploration and Production


Historically, the Nigerian petroleum scene opened as far back as 1908, when a German com pany, the Nigerian Bitumen Corporation, was attracted to what is now known as the south-west ern Nigerian Tar Sand deposit. After World War 1, Shell-D'Arcy, a consortium of Shell and Royal Dutch, resumed oil exploration in 1937, this time in Owerri, on the northern frame of the Niger Delta. On June 5, 1956, after drilling 28 wells and 25 core holes, all dry, the new operator, Shell-BP, struck oil at Oloibiri in what is now Bayelsa State.

Thenceforth, the Niger Delta became Nigeria's bumper scene of feverish exploration and produc tion. From an initial output of 5,100 barrels per day in 1956, the nation steadily rose to the sixth position on the production chart of the Organisation of Petroleum Exporting Countries. By the mid-1970s Shell, the leading producer, had exceeded the one million barrels a day production mark.

After over three decades during which the oil industry was dominated by foreign companies, a private indigenous oil company, Consolidated Oil, recorded its first discovery, Bella - 1, in 1991. Since 1992, following the release of new concessions in the Niger Delta to indigenous exploration and pro duction companies, the number of indigenous com panies has increased to 12. So far, out of some 870 oil fields discovered in Nigeria, only 120 fields are currently producing. Most of the fields are not producing because the country has to abide by OPEC's production quota of 1.8 million barrels per day to Nigeria. Violence in the oil-producing communities has also disrupted production, causing the shut-up of most land and swamp wells. Production is sustained by offshore fields.

Certain notable achievements and develop ments in Nigeria's petroleum exploration and pro duction ventures deserve to be highlighted. In order to raise the country's proven petroleum reserves from 23 billion barrels to the target 25 bil lion barrels set for. 1995, the Federal Government not only opened new acreages for exploration, but also offered a package of fiscal incentives to petro leum companies. Among the incentives is the reduction of petroleum tax to boost exploration in the deeper offshore. Potential reserves in billion barrels are estimated for the new blocks which hold good prospects for smaller fields with less than 50 million barrels. Generally, in the Niger Delta, about 73 per cent of crude oil discoveries are in fields hav ing less than 50 million barrels of proven reserves. The overall wildcat success ratio is 42 per cent. However, in some years the success ratios of exploratory and appraisal/development wells are substantially higher (83.5 per cent in 1989).

Petroleum prospects in the offshore Niger Delta are most attractive, with a potential 1.10 billion barrels of crude awaiting discovery in recently awarded Oil Prospecting Licences (OPLs). Oil Prospecting Licences in the deeper Offshore (200-150m water depth) have received highly competitive bids, which extensive regional seismic and geochemical sur veys have shown to be quite attractive. A new development in Nigeria's petroleum prospecting is the unitisation scheme. Under this arrangement, petroleum prospecting companies, in order to reduce cost, conduct joint exploration and development of undeveloped oil fields which strad dle their common concession boundaries.

Shell Petroleum Development Company (SPDC) of Nigeria and Chevron Nigeria have formed such an alliance. Apart from reducing operating cost, the intention is to maximise the exploitation of adjoining fields. The first SPDC-Chevron initiation scheme involved Shell's Belema field and Chevron's Belema North field, which are to be developed with Shell as the operator, while utilising the facilities of both companies. Under the Unitised Development Statement of Principles of Co-operation, funds will be contributed by both companies based on the size of petroleum reserves found in each of the companies' sector of the fields. The equity share of production allocated will also depend on the reserve held.

New exploration technology has also made substantial impact on Nigeria's petroleum potential. High resolution seismic technology involving enhanced 2-D seismic and the advent of 3-D seis mic technology have revealed petroleum prospects at greater depths than before. Consequently, sub tle traps and deep-seated structures have been dis covered which, in many cases, are larger reservoirs than their shallower and more structurally complex counterparts. As a mature petroleum province such on sophisticated tools are needed to increase reserves.

Also, Shell has successfully conducted 3- D seismic surveys over swampy terrain. Similar improvements in drilling technology have been beneficial. Wells can now be drilled in less than half the time it took in the fifties and sixties. Also, with Shell blazing the trail, horizontal drilling is now possible in Nigeria. This involves the use of top drive drilling and flexible drill pipes. Drilling through deep temperature overpressured shale into deeper reser he voirs is now also feasible. in Chevron has embarked upon secondary oil on recovery from fields where the reservoir pressure is too low to lift crude oil to the surface. Secondary recovery is through the injection of water into the reservoirs. In Delta South and Merton fields where the natural pressures have declined, Chevron has conducted successful secondary recovery. The Delta South Water Injection facility has raised the of recoverable oil reserves by 51.8 per cent, while at Mere, 485 million barrels (44 per cent of the original crude oil in place) are available.

A major boost in crude production was the coming on stream of Mobil's Oso Condensate Project. Discovered in 1967 by the then Mobil Exploration Nigeria Inc., the predecessor of Mobil Producing Nigeria Unlimited. The Oso field holds a gigantic reserve of 500 million barrels of recoverable con K- densate, the Oso field is located in the NNPC/Mobil Joint Venture Oil Mining Lease No. 70, some 35 km offshore of Akwa lbom State in the eastern delta. Joint venture finance agreement to develop the Oso in field was concluded in April 1991, after long and complex negotiations and detailed investigation.

Conservation of the associated gas that is pro ell duced from Mobil's fields is an important feature of of the Oso project. About 100 km of a gathering an pipeline system collects associated gas from he Mobil's Edop, Etim, Inim, Ubit and Utue production platforms to the Oso Gas compression platform. Here, the low-pressure associated gas is com i's pressed and re-injected into the Oso reservoir, thereby minimising gas flaring. The Edop field is of the largest offshore platform in Nigeria, producing 165,000 barrels a day, with a daily production target of 250,000 barrels. With the development of the he Edop field, the complex stratigraphy of which could he only be unravelled using 3-D seismic, the of NNPC/Mobil Joint Venture will earn an additional 10 he billion dollars of revenue.

In spite of its enormous crude oil reserves and substantial production by world standard, in 1992, Nigeria spent about 216 million pounds sterling importing heavy crude from Venezuela, at the rate of 50,000 barrels per day. Heavy crude is needed in the Kaduna refinery where it is used as base oil for blending with products such as lubricants and greases. Harnessing Nigeria's heavy crude from some Niger Delta oilfields and especially from the Tar Sand deposit in Ondo State (with 31 billion barrels of heavy crude), Nigeria will avert this import expenditure.