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John Daly

John Daly

Dr. John C.K. Daly is the chief analyst for Oilprice.com, Dr. Daly received his Ph.D. in 1986 from the School of Slavonic and East European…

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More Oil Discovered in Nigeria - Surprise, Surprise

On 8 November French company Total S.A. announced that its local subsidiary, Total E and P Nigeria Ltd (TEPNG), struck oil in the southeastern corner of its Oil Mining Lease (OML) 102, 40 miles offshore of the southeastern coast of the country in the Atlantic, about 10 miles southeast of the country’s Ofon field.

The Total S.A. test well was drilled to a depth of nearly 1.5 miles in 270 feet of water. One of the three reservoirs encountered tested at 8,500 barrels of oil per day. According to a Total S.A.  press release, “The well encountered three main hydrocarbon bearing intervals and confirms the extension of the reservoir sands discovered previously in the Etisong Main structure by Etisong-1 well, drilled in the last quarter of 2008 some 2 ½ miles to the south.
The extension of the reservoir to the northern panel of Etisong Main is a significant exploration result, as it increases significantly the potential of the Etisong pool.”

According to a Total S.A. statement, this is the second discovery in the lease, following its Etisong Main find in 2008, increasing the feasibility of a new development hub on OML 102.

Total S.A. Senior Vice President for Exploration Marc Blaizot said, "With the exploration being undertaken in Nigeria, Total intends to strengthen its growth strategy. This strategy is focused on two priorities. On one hand, to strengthen exploration near our production hubs in the conventional offshore exploration to maintain our production levels. On the other hand, amplify deep offshore exploration on riskier prospects of large size around the Akpo and Usan field to grow our reserves."

Total S.A. has been present in Nigeria for nearly fifty years, and in 2010 its production rose to about 192,000 barrels of oil per day and 301,000 barrels of oil equivalent, gas included. The development is not insignificant, as Total S.A. is the world’s fourth-largest publicly-traded integrated oil and natural gas company.

The OML 102 lease is operated by TEPNG, which retains a 40 percent stake with partner Nigerian National Petroleum Corporation (NNPC), which retains the remaining 60 percent.

In 2010 Total S.A. production surged to 300,000 barrels of oil per day. Total S.A. currently operates in over 130 countries in the fields of exploration and production of oil and natural gas, refining and distribution, power and trading and chemistry.  According to its website, total Nigeria, “Established in 1962, TOTAL Upstream activities are carried out by three subsidiary companies in Nigeria, TOTAL E&P Nigeria Limited (TEPNG) and TOTAL Upstream Nigeria Limited (TUPNI) for oil/gas and TOTAL LNG Limited for gas. We are committed partners in Nigeria's growth and improvement: what we take out of the ground, we put into the economy. Our long term vision is to remain Nigeria's preferred operator, promoting the nation's economy through our various activities, and all the while contributing positively to the sustainable development of its communities.”

Other foreign energy companies have made recent hydrocarbon discoveries in Nigeria as well. In 2010 China’s China Petroleum & Chemical Corporation Limited, or familiarly known as Sinopec, reported that its Addax subsidiary struck oil in its offshore Nigerian concessions after expanding its African presence in 2009. Sinopec reported that one of its test oil wells in the Niger Delta showed a heavy oil flow of 3,365 barrels and 28,300 cubic meters of natural gas per day.

The Nigerian economy remains heavily dependent on the country’s oil sector which, according to the International Monetary Fund, accounts for over 95 percent of export earnings and about 40 percent of government revenues.

So, the march to develop Nigerian energy reserves continues apace. According to the U.S. Energy Information Administration, besides oil, Nigeria holds the largest natural gas reserves in Africa but still has limited infrastructure in place to develop the sector.

Accordingly, one should expect to see yet more interest in the country’s energy reserves from foreign companies. And sporadic announcements similar to Total S.A.’s recent press release.

By. John C.K. Daly of Oilprice.com


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