As Nigeria’s Oil Reserves Rise to 37 Billion Barrels…

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The Nigerian National Petroleum Corporation (NNPC) last week disclosed that the country’s oil and gas reserves have increased to 37 billion barrels (bbls) and 192 trillion cubic feet (tcf), indicating an appreciable growth. Chineme Okafor writes

In his end of the year message to staff of the Nigerian National Petroleum Corporation (NNPC), the Group Managing Director, Dr. Maikanti Baru, disclosed that Nigeria has recorded some addition to its oil and gas reserves.

Baru said the country’s oil and gas reserves had increased to 37 billion barrels and 192 trillion cubic feet respectively. He ascribed the growth to the relative peace that was instituted in the Niger Delta following repeated disruption of crude oil production activities by militants in the region.

Nigeria’s oil production had largely experienced severe disruptions from the activities of militants in the Delta. Starting from February 2016, outputs from the country’s oil fields diminished to all-time lows. Coupled with low oil prices, this impacted heavily on the country’s oil sector.

Though with no details on the reserve growth, Baru said the NNPC would continue to find sustainable solution to the challenges posed by insurgency in the Niger Delta to keep this up.

He explained that the corporation had created security management platforms that would enable it identify and evaluate risks, develop and superintend implementation of investigations, as well as aggregate and deploy necessary resources to guarantee a peaceful business environment in the region.

His disclosure came barely two months after United States’ oil giant, ExxonMobil Corporation, announced the discovery of up to one billion barrels of oil reserves in the Owowo field which is offshore Nigeria.

Already, reports indicated that Nigeria’s crude oil reserves was depleting and had subsequently dropped to 28.2bbls and 186tcf. This prompted the President of the Nigerian Association of Petroleum Explorationists (NAPE), Nosa Omorodion, to in October, 2016, raise the alarm over the development.

Decrying the lack of new exploration in the country,Omorodion requested the Federal Government to begin seismic work in the frontier sedimentary basins, which include Bida Dahomey, Anambra, Gongola, and Sokoto, to improve Nigeria’s hydrocarbon reserves.

Even though Baru did not disclose how the country managed to ramp up its reserves to the current levels, the discovery by ExxonMobil, however, coincided with his announcement, and this provided a boost to Nigeria’s efforts to increase her crude oil reserves from the prior levels to 40 billion barrels target, which was set for 2010 but could not be achieved as a result of lack of investment in exploratory activities.

The development also means that the country was perhaps 3bbls away from hitting its 40bbls proved reserve mark, though a function of oil prices and available technology.

Input from ExxonMobil

According to reports, the Owowo field where ExxonMobil made its recent huge discovery spans portions of the contract areas of Oil Prospecting License (OPL) 223 and Oil Mining License (OML) 139.

The Texas-based oil and gas company had stated that the huge discovery has a potential recoverable resource of between 500 million and one billion barrels of oil, and that the Owowo-3 well, which was spud on September 23, 2016, encountered about 460 feet (140 metres) of oil-bearing sandstone reservoir.

According to the company’s statement bearing the news then, the Owowo-3 well extends the resource discovered by the Owowo-2 well, which encountered about 515 feet (157 meters) of oil-bearing sandstone reservoir.

Then, its President, Stephen Greenlee, said on the discovery: “We are encouraged by the results and will work with our partners and the government on future development plans.”

ExxonMobil further added that the Owowo-3 was safely drilled to 10,410 feet (3,173 metres) in 1,890 feet (576 metres) of water by its affiliate Esso Exploration and Production Nigeria (Deepwater Ventures) Limited and proved additional resource in deeper reservoirs.

As per interests, ExxonMobil reportedly holds 27 per cent interest and is the operator for OPL 223 and OML 139 where the discovery was made. Its joint venture partners include Chevron Nigeria Deepwater Limited (27 per cent interest), Total E&P Nigeria Limited (18 per cent interest), Nexen Petroleum Deepwater Nigeria Limited (18 per cent interest), and the Nigeria Petroleum Development Company (NPDC) Limited, a subsidiary of the NNPC (10 per cent interest).

Also, ExxonMobil had recently announced the sale of its 60 per cent stake in Mobil Oil Nigeria Plc to NIPCO Plc, thus exiting from the Nigeria’s downstream oil and gas sub-sector.

What this means to Nigeria

Considering that Baru’s 37bbls reserves disclosure may have been confirmed by the corporation and the Department of Petroleum Resources (DPR) as quantities of petroleum which by analysis of geological and engineering data, are estimated with reasonable certainty to be commercially recoverable from a given date forward, known reservoirs and under current economic conditions, operating methods and government regulations, it could as well be said that they are already proved reserves.

Additionally, the NNPC’s disclosure also means that with oil at its fluctuating prices, the fields where the new findings were made are thus economical to produce from by operators. As stated by ExxonMobil, production from the Owowo field will in this regard start after stakeholders meet and decide.

THISDAY, however, contacted the Chief Executive Officer of the International Institute for Petroleum, Energy Law and Policy (IIPELP), Dr. Timothy Okon, for an expert view on the development, what Nigeria stands to benefit from it.

Okon, a former top officer at the NNPC however said: “I think there has been a new discovery but when it comes to reserve definition, the price of oil features in the definition of what is proved and probable reserve.

“So, we need to be careful in the way this is presented because the definition of reserve needs to be clear.”

He further stated: “There was a discovery in the deep offshore and ExxonMobil has the estimate but the discovery is a function of the ability to monetise what was found and oil prices are down now.

“However, generally, there have been one or two recoveries and it is correct to say there are new discoveries but it is better to be careful in saying you have increased reserves.”