Nigeria’s growing need for oil exploration meets hurdles

With crude oil reserves said to have declined in recent times, the need for Nigeria to ramp up exploration activity continues to grow. But several hurdles are still dampening the drive to explore the country’s hugely untapped oil and gas potential.

 The country aims to grow its oil reserves, but it has seen its reserve base decline from 37 billion barrels to 35 billion barrels, according to the Department of Petroleum Resources (DPR).

 The decline has been attributed to the fact that little or no significant investment had been recorded in oil exploration in the last five years and the number of wells drilled has also been on the decline since 2006.

 Oil wells completed in Nigeria, which include development and exploration of oil and gas wells, dropped from 124 in 2011 to 107 in 2012, according to the Organisation of Petroleum Exporting Countries (OPEC) annual statistical bulletin 2013. 

Rising security problems related to oil theft, pipeline sabotage, and piracy in the Gulf of Guinea, coupled with investment uncertainties surrounding the long-delayed Petroleum Industry Bill (PIB), have curtailed oil exploration projects and impeded the country from advancing towards its target to grow reserve base.

Emeka Duruigbo, oil and gas professor, Thurgood Marshall School of Law, United States, in an emailed response to questions, said the progress of the Angola Kaombo project, for which French oil major Total took a final investment decision early this month, should serve as a wake-up call for Nigeria.

“The Nigerian government should address current safety challenges in the North as well as oil theft and pipeline vandalism in the South,” he said, stressing the need to remove or curtail any budding perception of insecurity and political instability in Nigeria, since investment opportunities in these days of sharp corporate cost-cutting would gravitate toward more stable and attractive destinations.

With the surge in crude oil theft and pipeline vandalism on the onshore and near-shore areas discouraging further investment, international oil companies (IOCs) operating in the country have increased their footprint on the offshore region.

Independent oil and gas exploration and production companies including Seplat, Afren and CAMAC Energy have identified exploration prospects, and are gearing up to drill more wells.

“We have so much unexplored. We haven’t even started to look for shale oil or shale gas in Nigeria. We are still doing conventional exploration and production. So you can imagine what would happen if we then decide that in the next decade, we want to go into the production of shale oil and gas. So we have a lot of potential,” Adedoja Ojelabi, president of NAPE had said on the sidelines of the April 2014 technical meeting of the association in Lagos.

United States-based CAMAC Energy Inc. says it has identified 10 exploration prospects and 12 leads in the country, and has currently high-graded three prospects containing unrisked prospective resources in excess of 200 million barrels of oil each.

The company, which explores for oil and gas mostly in Nigeria, said current efforts are focused on determining the first exploration well location to be drilled in 2015.

Seplat, which recently listed on both the Nigerian and London bourses, says it has well over 100 prospects and leads across its three Oil Mining Leases (OMLs) 4, 38 and 41, adding that it expects to drill at least one exploration well per year going forward.

Afren and its joint venture partners have begun the seismic programme in Oil Prospecting Lease (OPL) 310, Adebayo Ayorinde, managing director, Afren Nigeria, confirmed at a summit on April 9, 2014 in Lagos.

Exploration activity levels are at their lowest in a decade and only three exploratory wells were drilled in 2011 in the country, compared to over 20 in 2005, according to the Energy Information Administration (EIA), the statistics arm of United States’ Energy Department.

Despite the fact that 20 deepwater exploration blocks have been awarded since 2005, higher exploration costs and a high oil price led some companies to shift their focus away from deepwater exploration and into appraisal and development drilling in the shallow water and onshore areas.

Insurgency in the North-East Zone was responsible for the slow performance in oil exploration in the Chad Basin in 2013, according to the Nigeria National Petroleum Corporation (NNPC).

The NNPC has kick-started fresh exploration campaigns in offshore, onshore and the inland basins of Chad, Anambra, Benue, Bida and Sokoto, to increase the country’s crude oil reserve and production, said Andrew Yakubu, group managing director of the corporation. Yakubu added that over 1,000 square kilometres of seismic data have been acquired in the Chad Basin, despite the security situation in Borno State.

On Monday, in a newspaper advert, the corporation invited interested and reputable contractors to tender for the acquisition of 3D seismic data in the Nigeria sector of the Chad basin, covering 1,640 kilometers, with acquisition scheduled to commence in the third quarter of the year.

FEMI ASU