OPEC Beware: West Africa Could Lead The World's Next Production Boom
“Nigeria has some of the largest resources and a large population, but they have never really invested in the technology that is driving 80 percent or more of their economy,” he explained. “That’s horrific.”
As a result, West Africa remains ripe for investors who are willing to exploit smaller fields.
“Who will rally? Who will be the leader? The resources are there. Who’s going to pursue them and how long will it take? Those are the questions,” Millheim said.
Dynamite Comes In Small Packages
Because the threshold for many major operators is roughly 200 to 300 million barrels of recoverable oil, many, including Royal Dutch Shell plc and Chevron Corp., have abandoned many oilfields considered small or marginal in Africa in search of larger ones, said Sunny Oputa, CEO of Energy & Corporate Africa, to Rigzone.
“They were not worth the economic investment to Shell or Chevron but you know what they say: ‘One man’s meat is another man’s poison,’” Oputa said. “These small fields are good for small, independent and indigenous companies. Some wells could produce for 10 to 15 years. They will make money.”
Investors intrigued by Africa’s small, offshore fields are often wary of two things: the cost and availability of innovative technology that can make exploiting small fields commercial, and the fact that many small fields are located in deep water, Millheim explained.
However, unconventional types of technology can be successfully applied to developing small, conventional deepwater oilfields.
“There are service companies and providers that can do it all,” Millheim said.
Deepwater locations shouldn’t be feared either, especially when some African countries have reputations for insurgency and militancy.
“Deepwater fields are far away enough to avoid problems of groups seizing facilities,” he added.
“Whether they are indigenous companies or small companies that feel strong enough to play in West Africa, that’s where we will get our major activity from,” Millheim said.
Needed: Technical Innovation
To make a small play commercial in West Africa, the key will be using existing technology in unconventional ways. Just as horizontal drilling had been used for decades before its combination with hydraulic fracturing made it a powerhouse technology, the same type of application must take place in Africa for lucrative discoveries to be brought on production, Millheim said.
One way to help pave the road to a boom, so to speak, is to lower the cost of operations and infrastructure, Oputa said. An as example, he suggested riser technology that is connected directly to small production vessels called Floating Production Units (FPU) rather than relying on costly FPSO vessels.
For reservoirs with geological challenges, hiring an adept reservoir engineer and implementing an effective reservoir management plan can be a good solution, Oputa said.
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