Get ready for a new phase of West African development

Bruce Nichols
Tuesday, April 16, 2013

Exploration is expanding from West Africa’s Sierra Leone to Namibia, explains Bruce Nichols, led by sustained high oil prices, improving technology, relative political stability and a more supportive operating environment.

Cobalt’s potentially huge Cameia discovery in the deep pre-salt off Angola is one sign. There are smaller, shallower finds by Eni, Hess, Kosmos and others off Ghana, discoveries that will be tied together around hubs or linked to existing infrastructure to make their production financially viable.

Expanding exploration from Sierra Leone to Namibia, outside the West African offshore oil heartland in the Gulf of Guinea, is stretching the province’s boundaries. Ever-larger production systems under construction by Total and BP are adding infrastructure.

The Cameia discovery in the deep, presalt trend off Angola by Cobalt is one sign of a new phase of West African development.

Growing maturity is taking hold off West Africa, and with it will come tighter focus on more efficient, more complete recovery of the oil and gas. And that means more projects of all sizes and new ways of doing things.

“Once the infrastructure is built… we suspect that as Africa moves forward, the elephant projects will begin to slow down, and there’ll be increased focus on smaller satellite projects. We’ll see many more projects, but the sizes are reduced to six, nine wells rather than the 30, 40 we’re currently seeing,” says Jim Tait, FMC Technologies sales manager for the Caspian and Africa region.

Even Cobalt’s Cameia pre-salt discovery – heralded as possibly the first of a new herd of elephant finds — could have a counterintuitive impact. As big as it could be, it could actually mean fewer wells and more centralized production, experts say.

The reason: pre-salt development is deeper and will allow greater directional drilling reach. The post-salt West African geology is shallower and has yielded big finds but has dictated sprawling fields with many wells because reservoirs are too shallow to turn drill bits safely and strike oil from a distance.

“When I think of deeper reservoirs, I do think of the ability to have fewer drill centers and potentially promote a single deepwater facility, which could be a better answer because you can be right over the wells. This may permit lower development and lifeof- field costs per barrel, offsetting the higher drilling costs,” says Dennis McLaughlin, a veteran of deepwater development in the Gulf of Mexico and off Africa.

“But until you have a real application, and run the technical, commercial, risk and timing tradeoffs, it’s not so easy to say what will be the best development plan. It’s pretty hard sometimes to say absolutely this is going to turn out to be the best approach,” says McLaughlin, now retired, who was a Kosmos senior vice president and was project director for the big Jubilee field off Ghana.

The rifted margins of South America and Africa have similar oil producing basins.

A lot remains to be proved. Cobalt has great hopes for its pre-salt discovery, which has generated considerable excitement. Companies have flirted with the pre-salt in the past. There’s even an onshore pre-salt field in production. But there has been nothing of this scale and development potential.

Analysts say Cameia could contain 1.7 billion barrels of oil equivalent (boe). This is smaller than the 7.5-billion-bbl Tupi presalt find off Brazil in 2006 but much larger than the biggest discoveries off West Africa.

Parallel basins along the east coast of Brazil and the west coast of Africa developed after a split apart 145 millon years ago, creating the South Atlantic Ocean.

The coastlines fit together like pieces of a puzzle and have similar oil-bearing geology, a key reason that the US Geological Survey estimates that sub-Saharan Africa contains more than 71 billion boe, much of it under waters off West Africa.

Cameia is the hardest evidence yet of that potential.

“Cameia is truly the first of its kind in West African deepwater pre-salt,” says Jim Farnsworth, chief exploration officer at Cobalt International Energy, adding that it “confirmed the presence of a world-class petroleum system and highly productive reservoirs in the pre-salt.”

Lots of work remains to make the pre-salt productive. Farnsworth said that “2013 will be the year where we move beyond proof of concept wells that de-risked the play, to testing multiple giant structures within the core of this new province.”

Smaller discoveries in overlooked parts of the post-salt also are important. Developments with acronyms for names – CLOV, PSVM, TEN, which combine the first letters of multiple fields – point the way to more complete recovery using a hub and spoke system.

Recent announcements fit that pattern.

In March, Italy’s Eni announced its ninth post-salt discovery off the coast of Angola, Vandumbu. The company described the find in modest terms, but said it increases the resource base of its West Hub. In 2012, Hess had seven discoveries off Ghana. The company has declined to discuss their size or details of development plans but has made clear that the discoveries will be commercial grouped into a hub.

“We’re progressing predevelopment studies, so I think that’s a clue that we believe we have enough for a commercial hub there to begin development,” Greg Hill, a Hess senior executive, said during an earnings call in March.

Kosmos has had strikes off Ghana at Akasa and at Wawa, and anticipates tying Akasa into its Jubilee hub and Wawa into its TEN development, which is named for the Tweneboa, Enyenra and Ntomme discoveries that it will produce.

Geology on either side of the Mid-Atlantic Rift reflects common depositional processes, which are yielding large hydrocarbon reserves.

Off Ghana, Tullow’s TEN development plan calls for 23 production and injection wells, a leased FPSO and a total investment of $4.5 billion. First production is targeted for 2015 with a peak rate of 100,000 bpd by 2018.

The industry is building more places to tie in, filling in the blanks in the infrastructure map in areas beyond the thicket of projects and pipelines off Nigeria.

Ghana

Jubilee, a 600-million-boe field in a previously unexplored part of the post-salt section off Ghana, shows how far the industry has come in building large production centers to which smaller fields can be added.

Tullow and its partners — Kosmos, Anadarko, Ghana National Petroleum and Sabre — brought 17- well, 120,000-b/d Jubilee Phase 1 on line in 42 months, from discovery in 2006 to first oil in 2010. The industry average is seven years.

It was a major accomplishment, says McLaughlin, who led the project.

Like most West African offshore projects, Jubilee relies on a floating production, storage and offloading system to get its oil to market. But they hope to pipe ashore the natural gas that is produced with the oil, a new infrastructure trend to reduce environmentally unfriendly flaring and costly re-injection of gas back underground.

There’s a step-change in size, as well as speed, of developments. Billions of dollars are being invested in sprawling projects off Angola and Ghana, demonstrating industry capacity to execute engineering and construction on a huge scale, thousands of miles from major manufacturing and design centers.

Angola

The 220,000-bpd Pazflor project features what Total describes as “a vast subsea gathering network, the most complex ever built in Angola.” It includes 49 subsea wells, 180 km of lines and 10,000 tonnes of equipment linked to an FPSO. First oil: 2011. Budgeted cost: $9 billion.

Total, which has already spent billions building the Dalia and Girassol FPSO systems in Block 17, is now adding CLOV, which joins the Cravo, Lirio, Orquidea and Violeta discoveries. CLOV involves 34 subsea wells and an FPSO scheduled for delivery later this spring. Production start: 2014. Peak: 160,000 b/d.

Just to the northwest, in Block 31, BP is developing a project it calls PSVM. It joins the Plutao, Saturno, Venus and Marte fields around another FPSO. The plan calls for 48 wells. The first three wells delivered first oil in January. and they are producing about 60,000 b/d. FPSO peak capacity is 157,000 b/d.

Cost is undisclosed, but BP by some estimates will spend $15 billion over 10 years on PSVM and other developments in Block 31. BP also is studying addition of Phase 3 to Greater Plutonio in Block 18 off Angola.

Exxon Mobil is planning Kizomba Satellites Phase 2 in Angola’s Block 15, building on Phase 1 where it started production last July. Phase 1 is an 18-well undertaking expected to produce 100,000 b/d at peak. Details of Phase 2 are still in development.

Onshore

Onshore support for offshore development is growing.

Kizomba is an example of the region’s growing manufacturing and service capability, encouraged by the host countries with “local content” rules, but also favored by companies needing suppliers closer to projects. Exxon Mobil says $1.5 billion worth of services and equipment were Angola-sourced.

The $10 billion Angola LNG plant, much-delayed but finally set to start up this year, is an example of new infrastructure helping maximize production. It will receive approximately 1 Bcf/d of gas from offshore oil fields and produce 5.2 million tonnes/y of LNG and related gas liquids. Some of that will be used to meet Angola’s domestic needs.

Total has pioneered a number of riser improvements, including bundled risers.

To help feed the LNG plant, the Congo River Crossing pipeline project, will deliver 250 MMc/d from offshore Blocks 0 and 14 through a new pipeline. Because Blocks 0 and 14 are in the Cabinda enclave north of the river mouth, and the plant, located at Soyo, is on the south side of the river, a 140-km segment of the pipeline has to go through an undersea canyon scoured out by the river’s massive outflow. Chevron is leading the construction project.

Exploration and development success off West Africa has been helped along by relatively benign weather and metocean conditions, which meant that well-established engineering and technological approaches met most needs.

But the lack of local infrastructure and underdeveloped onshore energy markets has necessitated region-specific innovations. Companies have perfected the use of FPSOs, and a spinoff of reliance on FPSOs is advances in riser technology.

Total has pioneered a number of riser improvements, including bundled risers at Girassol (2001) and Dalia’s flexible bundled risers (2006). Most recently, Total has demonstrated seafloor gas-liquids separation at Pazflor (2011).

Typically lower reservoir pressures and temperatures in shallow post-salt fields allowed the use of technology developed in the Gulf of Mexico, but the conditions also required greater use of water injection to boost pressures and heating of flowlines to forestall clogging with wax and hydrates.

Added technological challenges likely will come with pre-salt production, assuming commercial development. For example, pre-salt reservoir pressures and temperatures will likely be higher than the post-salt reservoirs already produced.

In any case, there will be plenty of opportunities to address pre-salt challenges.

“Looking forward to 2013 and 2014, we believe drilling activity levels are set to soar,” wrote Bank of America Merrill Lynch analysts in a February report.

In Angola Block 31, BP is developing the PSVM project, joining Plutao, Saturno, Venus and Marte fields, producing into one FPSO.

Continuing high oil prices, improving technology, relative political stability and — despite delays still seen in the approval of some projects — a more supportive operating environment are driving the boom, the analysts say.

They forecast 15 to 20 wells in the pre-salt play in 2013-14, most of those off Angola, by Cobalt, Chevron, Maersk, Total, Statoil, Eni and Repsol. ConocoPhillips has said it plans to drill four exploration wells starting in 2014.

Setting the pace, Cobalt-led partnerships plan several wells. “Our Cameia success gives us great confidence in our West Africa strategy and our portfolio,” Cobalt Chairman and CEO Joe Bryant said, adding that “2013 will be jam packed for us in West Africa.”

There’s still a lot of work to be done in the post-salt, as the Jubilee discovery off Ghana demonstrated. Information and consulting giant IHS and others see expanded activity in the post-salt plays from Sierra Leone to Benin.

“There is still potential in the two main plays, namely the Upper Cretaceous and the Lower Cretaceous, and companies are looking to the Ghana success story. Nigeria also remains prospective despite above-ground issues,” IHS analysts say.

Namibia — underexplored but, like other parts of West Africa, geologically linked to Brazil — is getting increased attention. HRT, Chariot, and Repsol have pre-salt drilling ambitions in the country on the southern end of the pre-salt zone. Namibia’s sole discovery was the Kudu gas field back in 1974, which still awaits development.

And smaller companies are playing a role from one end of the West African offshore oil province to the other. Australia-based Africa Petroleum, for example, has had discoveries off Liberia.

Other lesser-known operators include Ophir (planning to drill offshore Ghana, Gabon and Equatorial Guinea), Harvest (Gabon), Nazaki (Angola), AFREN (Nigeria, Congo) and Bowleven (Cameroon),

It all adds up to an exciting outlook for offshore West Africa, says Marc Blaizot, Total’s senior vice president for exploration. “I think 2013 will be a very great – very great year for Africa,” he says. OE

Categories: Pipelines FPSO Exploration LNG

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