Total’s Ofon Phase 2: Boosting crude oil production, power generation

Ofon Phase 2, one of the projects being undertaken by Total Exploration and Production on behalf of the joint venture partners, is very critical to the power sector because its gas is dedicated to the domestic market. In spite of the fact that it has suffered some delays, the handlers say first oil is expected from the field by third quarter of 2015. OLUSOLA BELLO examines the scope of  work so far done if the target day must be realised.

Despite the hitches   which characterised its initial take-off  because of the  delays  it experienced at the approval stage, the Ofon Field Development Project Phase 2 is cruising towards completion and  commissioning slated for the third quarter of 2015.

The project continues to take giant strides towards its first oil with successful achievement of several major milestones.

The Ofon field is located in Oil Mining Lease OML 102, offshore Nigeria in 40 meters water depth and is a development  of the Nigerian National Petroleum Corporation (60 percent) and  Total Exploration and Production Nigeria (40 percent) joint venture.

The Ofon field which began production in 1997 has  produced  over 200 million barrels of crude oil. However,  the  Ofon  Field Development Project Phase  2  which was launched  10  years after, precisely in 2007, was to enhance  production from the mature Ofon field.

One of the main objectives of the Ofon Phase 2 development is  to stop gas flaring.  About one million standard cubic feet of gas is being flared every day. But this is expected to end by November when the gas facilities would have been completed and the gas that are produced are captured and processed for the domestic gas market.

By the time the project is completed in the third  quarter of 2015, the field would have been able to  produce additional  40,000 barrels of  crude oil and 106 million standard  cubic  feet of gas.  These will translate to 620 megawatts of electricity.

The additional reserves proved and probable to be developed during Ofon Phase 2 are estimated at 350 barrels of oil equivalent.

The  main goals of the projects are stop gas flaring; monitise the gas by piping it to the Nigeria Liquefied Natural Gas Company at Bonny via Amenam field; develop additional reserves while producing the remaining Phase 1 reserves; and inject water to re-pressure the various reservoir.

Emmanuel Hyset, the project manager, said the  management  of the company is at  the peak  of mobilising personnel for the projects which are now expected to be completed by the third quarter of 2015.

Ofon 2, he said, would  add about  40,000 barrels of  oil per day  to the  country’s production, and  would form  the hub of productions for future development  of  Oil Mining Leas  OML 102 such as Etisong, Uyai, Ofon S, and Ofon NE, bringing additional oil and gas resources in excess of 250 million barrels of oil equivalent.

These resources, which are located  15 kilometres around Ofon, will be very difficult to develop without Ofon Phase 2 facilities.

Two contracts were awarded in 2007. The engineering  procurement and construction and  installation (EPCCI) to Hyundai Heavy Industries (HHI) for  the construction of  the OFP2 deck, while the deck  transportation and installation was awarded to Technip.

Then in September 2011, the last five EPC contract  were awarded to NigerDock-EPC2,OFD3  and OFD5 wellhead platforms.  While Subsea -7/Globestar  got (EPC3: Sealines and wellhead platforms installation. The IRD contractor which was Eiffage was asked to handle EPC4:OfQ living quarter. Ponticelli  also got EPC5 which has to do with modifications and Tie-in to existing platforms. Saipem handles EPC8 and OFFp2 jacket and OFQ installations.

The following new facilities have been added  to the existing facilities to  enhance the production and  take up the expected volume of gas that  would be produced.

-OFP2 production platform bridge linked to OFP1, with a deck weighing 16,000 metric tons. This was installed by float-cover in January this year.

-The Ofon living quarter was installed in 2013.  This was linked with a bridge to OFP2, with accommodation for  124 people as well as offices, a central common room and a control centre as well as a helideck.

-A 12 gas-export line to Amenam  (70 kilometres), infield lines of about  40 kilometres and electrical cables linking the wellheads to the central complex. All the pipelines have been laid since April this year. Already there are 24 new wells that have been drilled with 16 of these  producing and eight  for injection purposes.

The OFP2 production platforms start-up is currently estimated to be the fourth quarter of this year and  drilling of new wells  will start in 2015.

Ofon  Phase 2 has, according  to Emmanuel Hyest, been delivering and would  continue  to deliver on the group’s ambition in terms of diversity and  Nigerian content.  The project currently has about 1,000 people working on it. There  are  four floatels mobilised to accommodate offshore personnel for the hook-up activities. This is expected to  deliver more than one million man-hour under the project and production work ongoing simultaneously-SIMOPS.

The  project has taken a leading position in the promotion of female personnel being assigned to lead roles such as package managers, company’s representative.

In line with Total commitments, the Ofon Phase 2 project has significantly contributed to Nigeria’s local content policy, not only in terms  of  construction work, but also of training for the Nigerian personnel, especially engineers and technicians.

Large parts of the project is being developed in-country delivering the group’s ambition of local content policy by creating employment opportunities, livelihood, capacity building and transfer of technological skills to Nigerians.  The contribution of value is evidently seen in five Nigerian yards, one in Nigerdock  Lagos, three in Port Harcourt and one in Warri.

The project, which has been a tremendous technical and technological offshore undertaking, has substantial Nigeria content, designed to maximise revenue for the joint venture and the federal government.

However, the project had its own share of delays and frustration as non-approval of the project segments on time  has greatly impacted negatively on the  development.

The project was supposed to have come on stream about  two years ago but could not because of delay occasioned by the alleged incompetence of local contractors and the government footdragging on the project.

This has slowed down the ability of Total Exploration and Production  Nigeria from pushing into the domestic market about 106m standard cubic feet of gas per day.

The implication is that the current efforts at improving the electricity to boost economic activities is being jeopardised as the country has been denied about 620megawatts of electricity.

Sources say that it took four years for Total to secure another approval after the first one which heralded the execution of the project. This is against the normal  practice of one to two years interval for such monumental projects which is to add about 40,000 barrels per day to the nation’s daily crude oil production.

However, Hyset said the management  of the company is at  the peak  of mobilising personnel for the projects which is now expected to be completed by the third quarter of 2015.

The issue of project contracting cycle in Nigeria is a major problem which has bedevilled all the major projects in the Nigerian oil and gas sector. In some other countries like Angola, project cycle is relatively short when compared to what is obtainable in Nigeria.

The delay of the projects has led to high costs of the project with inflation having tremendous effect on the final costs.

The NNPC  has been much criticised for an industry plagued by high hurdles and lengthy contract cycles. In recent times, the corporation has shifted the blame to International Oil Companies (IOCs) operating in the country.

The NNPC says the IOCs are tardy and have unduly lengthy tender cycles and project management delivery spans, adding that they have never delivered a project on schedule.

This claim  came  against the backdrop of the fact that Nigeria’s oil and gas sector is being choked by an unusually lengthy contracting cycle which can take as long as 36 months, while competing African nations conclude the same process within three months, a situation which worsens Nigeria’s place in the ease of doing business index.

Nigeria’s slow and winding contract processes leave a sour taste in the mouth of would-be investors interested in the country, causing them to reroute billions of dollars in foreign direct investment to competing nations, to Nigeria’s loss. This is mirrored in the fact that Nigeria attracts the least in investment dollars among its peers.

Saudi Arabia, the world’s largest producer and exporter of oil, according to the analysis, has the shortest average contract cycle time, which is three months. It is followed by Argentina and Kazakhstan, both of which have five months as the latest time for contract approval. Angola, Africa’s second largest oil producer, outperforms Nigeria.

In a bid to fast-track contract processes in the industry, online bid tendering was introduced in 2010 by the NNPC to do away with the analogue era noted for poor transparency, accountability and a lengthy contracting cycle.

The NNPC had in February 2011 said it had recorded appreciable reduction in the contract cycle time for oil and gas projects from 24 months to an average of 10 months, adding that the significant improvement in the contracting cycle was as a result of the commitment of the management of the NNPC in ensuring regular meetings of its contract review committee.