Eroton, one of Nigeria’s junior indigenous independent Exploration and Production (E&P) company will commence drilling of the OSMU-1 well expected to start in October.
OMSU-1 is expected to take about 60 days to drill to a total depth of 11,900 feet and complete, with the well to target the E4500 and E3000 formations. The well expected to be connected to the OML 18 production system according to reports by upstream online, an energy sector blog.
“Drilling the first new well of Eroton’s operatorship marks the start of a new chapter in the development of OML 18,” Oisin Fanning, chief executive of San Leon said.
“Increasing oil production at the wellhead is an important step in increasing cash flow from the asset and I look forward to providing shareholders with an update on the performance of this new well in due course, in addition to providing further information on further development activities.”
OML 18 is located in Rivers State and hosts the Akaso, Asaritoru, Awoba, Bille, Buguma Creek, Krakama, Orubiri, Cawthorne Channel and Alakiri fields.
It was reported earlier this year Eroton is planning to drill 36 new and workover wells over the next three years to boost production from the swamp licence.
Eroton E&P bought OML18, during the divestment of Shell Petroleum & Development Company (SPDC) from some of its onshore assets’ portfolio. The E&P junior took over the asset from the former operator in 2015 when it was producing about 10,000 barrels of crude a day based on the previous operator’s production output. Since then the oil asset’s has grown from a production capacity of 10,000 to 70,000 barrels a day and 73,000 barrels at peak production. The gas component has also grown to about 100 million standard cubic feet (mscf) per day which is delivered to its primary customer called Notore Chemical Industries. Notore is a fertilizer company based in Onne, Rivers State.
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However, security is a great challenge for all indigenous operators. Anybody within the swamp or land region is susceptible to security challenges. There vandalisation of flow lines and the export line because it is easily accessible.
At some point, indigenous operators experienced losses in excess of 30 percent, but now they range between 20 and 30 percent of our daily production. In value terms, “we were losing about 20,000 barrels of crude a day. Some operators produce as much as 20,000 barrels per day and that is a viable business for them. If you are losing 20,000 barrels of crude per day, it severely impacts your cash flow and the return on your investment,” Ebiaho Emafo, managing director and chief executive officer of Eroton E&P Company Limited to BusinessDay in an earlier interview.
Emafo said if the Federal Government is able to fix the security along the export lines, they will be able to realise full production potential that will bring significant returns to the business and nation.
Statistics show that most of the oil leakages and spills are as a result of vandalism and or illegal bunkering. This could naturally invoke a sense of discontent amongst the host communities who are unfortunately saddled with the negative effects of the pollution caused by vandals which could create a difficult environment for us as business to operate in.
