London-based Tullow Oil has unveiled plans to drill for oil and gas in Ghana's offshore Tweneboa Enyenra Ntomme (TEN) oil fields in the deepwater Tano Block as the company embarks on a work program that could see it increase its production in West Africa by 10% in 2019.
Tullow said this week it will, in coming months, drill and complete seven new wells both at the offshore TEN and also the Jubilee fields to the east, barely months after the company secured Maersk Venturer rig for the next four years and informed shareholders of plans to spend $200 million to $500 million in maximizing oil and gas production in Ghana.
Completion of the seven wells in 2019 could trigger a surge in Ghana's gross oil production to 180,000bdp by the end of the year.
Earlier, Tullow had expressed satisfaction at the drilling of two new producing wells and one water injection well, the NT05-P, which was completed in the third quarter of 2018 and said to be “performing very well” while the second well, EN10-P, is nearing completion and could be commissioned next month.
Tullow is optimistic of its oil and gas projects in Ghana especially after production from offshore TEN fields exceeded the company's expectations for 2018 with gross production averaging 64,500 bopd that could rise to 83,000bopd in 2019. The 800sq km TEN oil field, which is the second major oil field after Jubilee with discovered resources of an estimated 555 million barrels of oil, is also expected to produce around 2,100 boepd of gas this year according to the Tullow's prediction early this year.
Drilling of additional wells at the offshore TEN oil fields, which is part of Tullow's projected drilling a total of 24 wells by the end of the final phase of development of the $4.8 billion TEN project, is highly anticipated by both the Ghanaian government and Tullow itself as both seek to maximize the oil and gas resources to generate additional revenue that can enable the State reduce her budget deficit and Tullow to offset its high level debt.
Despite a gross domestic product (GDP) growth of 5.7% in 2017, partly fueled by oil production from the TEN oil fields, Ghana is grappling with a budget deficit of nearly 3% of the country's total production and which the government of President Nana Akufo-Addo wants to reduce through increase of domestic revenues such as loyalties from the oil and gas operations in the country and also tightening State expenditure programs.
On the other hand Tullow has been developing the TEN project under what the company says was “at a level of equity that had not been anticipated” largely because of the fall in global oil prices and the also the proceedings at the International Tribunal for the Law of the Sea between Ghana and Cote d'Ivoire. Tullow has partnered with Kosmos Energy, Anadarko, Petro SA and Ghana National Petroleum Corporation in the TEN project whose development was launched in 2013.
Development of the TEN oil fields is supported by a floating, production, storage and loading vessel (FPSO), a Centennial jewel trading tanker that was converted at the Jurong Shipyard in Singapore for Tullow's Ghana offshore upstream and midstream operations. It has a capacity of 80,000 bpd.
The TEN hydrocarbons project has been a costly affair for Tullow, which said it resorted to own equity for the oil field's development program. Although the project created value in terms of share of production from the oil fields, Tullow said by early 2017 “the debt position, while manageable, was restricting our ability to invest in the business.”
Even though the volatility of the global oil prices remains unpredictable, Tullow is determined to develop a total of 240 million barrels of oil at the TEN project hence improve its chances of increasing its revenues and bring down its current debt levels.
Nevertheless, the planned drilling of new oils wells in the TEN oil fields is likely to buttress Tullow Oil's Ghana strategy of pursuing “low-cost and long-life production” at a time when the company expects to spend up to $150 million for exploration works.