Oi Review Africa issue 3 2012

ORA 3 2012 Cover_cover.qxd 07/06/2012 12:51 Page 1

■ Geology - p34 ■ E&P - p36 ■ Gas - p 42 ■ Technology - p46

Volume 7 Issue Three 2012

www.oilreviewafrica.com

Africa

Covering Oil, Gas and Hydrocarbon Processing

Europe m10, Ghana CD18000, Kenya Ksh200, Nigeria N330, South Africa R25, UK £7, USA $12

Oil Review Africa - Issue Three 2012

More investment called for Skill shortage today skill absence tomorrow?

Mozambique - Africa’s new gas frontier

Nigerian local content taking effect

Protective coating systems Improving online pipework repair Well control and intervention The next generation of volume visualisation has arrived

www.oilreviewafrica.com

“If we insist on local manufacture, we will gradually achieve industrialisation.”Ernest Nwapa, Executive Secretary, NCDMB. See page 22.

REGULAR FEATURES: ■ News ■ Contracts ■ Events Calendar ■ IT update ■ Company profiles ■ Products & Innovations

S01 ORA 3 2012 Start_Layout 1 07/06/2012 14:11 Page 2

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S01 ORA 3 2012 Start_Layout 1 07/06/2012 14:11 Page 3

■ Geology - p34 ■ E&P - p36 ■ Gas - p 42 ■ Technology - p46

Contents

Volume 7 Issue Three 2012

www.oilreviewafrica.com

Africa

Covering Oil, Gas and Hydrocarbon Processing

Europe m10, Ghana CD18000, Kenya Ksh200, Nigeria N330, South Africa R25, UK £7, USA $12

More investment called for Skill shortage today skill absence tomorrow?

Mozambique - Africa’s new gas frontier

Columns

Nigerian local content taking effect

Protective coating systems

Industry news and executives’ calendar

4

Improving online pipework repair Well control and intervention

Analysis

The next generation of volume visualisation has arrived

More investment called for

12

Skill shortage today: skill absence tomorrow?

14 “If we insist on local manufacture, we will gradually achieve industrialisation.”Ernest Nwapa, Executive Secretary, NCDMB. See page 22.

Country Focus

REGULAR FEATURES: ■ News ■ Contracts ■ Events Calendar ■ IT update ■ Company profiles ■ Products & Innovations

Mozambique

16

A young man in practical training at the Bourbon Training Centre near Port Harcourt.

Africa’s new gas frontier.

The keys to SAPETRO’s exploration strategy and campaign in the Mozambique Channel.

Nigeria

22

The Nigerian Content Development & Monitoring Board is making rapid gains.

Developing local talents for offshore excellence.

Liberia

28

Oil potential ignites interest among upstream elite.

Would oil strengthen or weaken Liberia’s peace and security?

Gabon

32

Grow-ahead Gabon: economic diversification.

Geology & Geophysics Developments

33

Deepwater seismic activity spreads through West and East Africa.

E&P Developments

36

A round-up of recent exploration and production activity from around the region.

Gas Developments

42

Editor’s note MOZAMBIQUE NOW HAS the prospect of becoming a global natural gas hub after the discovery of more than 30 trillion cubic feet (tcf) of gas. With further drilling planned, it's widely thought that ultimate recoverable resources from the offshore Rovuma basin could be even bigger than expected and as much as 100 tcf. These discoveries will not only lead to large-scale development and economic growth in the country, but will also boost the region's energy supply and attract more exploration. They are also well placed for markets in Asia.

Eni plans to build its own LNG terminal in Mozambique to handle gas from the discovery while Anadarko also believes that the size of its resource merits the use of at least two five-million tonne per annum LNG trains.

These discoveries are likely to lure other international oil companies into deepwater exploration, and not just in Mozambique but also in Kenya and Tanzania.

On the other side of the continent, Nigeria’ local content rules are beginning to take effect, with the Development & Monitoring Board playing a decisive role in making sure things happen, with the result that extra value will find its way into the Nigerian economy.

All in all, Africa’s oil and gas sector is on an upward growth curve.

New gas find for Eni off Mozambique and also for Anadarko.

Technology Offshore personnel transfer solutions

46

An interview with Reflex Marine’s Kate Hallowes.

Protective coating systems

48

Keeping West Africa’s deepwater infrastructure working.

Maintaining pipeline integrity

50

Improving online pipework repair with compliant composite technologies.

Pipeline expansion joints

54

An interview with Sherwin Damdar of Garlock Sealing Technologies.

Well control and intervention

58

How Remote Open Close Technology is allowing operators to work differently.

Innovations

62

Information Technology Emerging technologies

64

36 The Pazflor development plan is strikingly innovative.

The next generation of volume visualisation.

Managing Editor: Zsa Tebbit - Zsa.Tebbit@alaincharles.com Editorial and Design team: Bob Adams, David Clancy, Andrew Croft, Prabhu Dev, Immanuel Devadoss, Ranganath GS, Prashanth AP, Genaro Santos, Nicky Valsamakis, Julian Walker and Ben Watts

Africa

Covering Oil, Gas and Hydrocarbon Processing

Publisher: Nick Fordham

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Serving the world of business

Oil Review Africa Issue Three 2012 3

Industry News & Events

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Executives Calendar 2012 JUNE 18-20 19-20 19-21 19-22 26-28

TOG 2012 4th MidEast North African Upstream Conference GOG 15 ZIMEC 2012 Nigeria Oil & Gas Technology Exhibition 2012

TRIPOLI GENEVA MALABO LUSAKA LAGOS

www.wahaexpo.com www.petro21.com cwc-news.com www.zimeczambia.com www.cwcnogtech.com

Upstream & Downstream Oil & Gas Expo 2012

ABUJA

www.expowestafrica.com

9th MidEast-North Africa-Mediterranean 2012 Upstream Conference Libya Summit 6th NGO Oil & Gas Summit

GENEVA TRIPOLI ACCRA

www.petro21.com www.cwclibyasummit.com www.ngosummitafrica.com.

East Africa Oil & Gas MOC 2012 Gastech 2012 Mauritanides 2012 Ignite! Energy Recruitment Show TOG 2012 DRC Oil & Gas Forum Artificial Lift Conference and Exhibition Practical Nigerian Content 18th African Oil Week

LONDON ALEXANDRIA LONDON NOUAKCHOTT LONDON TRIPOLI KINSHASA CAIRO PORT HARCOURT CAPE TOWN

eastafrica-oil-gas.com www.moc-egypt.com www.gastech.co.uk www.mauritanides2012.com www.igniteyourcareer.co.uk wahaexpo.com www.drc.ipad-africa.com www.spe.org www.ncipnc.com www.petro21.com

Logistics West Africa ADIPEC 2012 Power-Gen Africa 2012 Sudan Oil, Gas and Energy Exhibition World LNG Summit Oil & Gas Recruitment Summit

LAGOS ABU DHABI JOHANNESBURG KHARTOUM BARCELONA CAPE TOWN

www.cwc-logistics.com www.adipec.com www.powergenafrica.com www.expoteam.info world.cwclng.com eliteic.net/en/upcoming-events

AUGUST 21-23

SEPTEMBER 10-11 24-26 25-27

OCTOBER 1-3 7-9 8-11 8-11 9-10 16-18 17-18 22-25 23-25 29-2 Nov

NOVEMBER 5-7 5-8 6-8 21-23 27-30 30-2 December

Readers should verify dates and location with sponsoring organisations, as this information is sometimes subject to change.

GDS joins forces with Africa’s oil & gas elite IN SEPTEMBER ACCRA will host a consortium of 65 C-level executives from the region's leading oil and gas companies for three days as they attend GDS International's highly anticipated sixth Next Generation Oil and Gas Africa Summit.

The NG O&G Africa Summit will serve as an arena for C-level executives to meet, network, and assess the rapidly evolving topography of the oil and gas industry in a lively, closed door environment. The summit has been carefully refined to cover cutting edge, region-specific issues that will be presented through a series of interactive workshops, roundtable discussions and moderated, peer-led panel discussions that give delegates the opportunity to meet with business analysts and solution

4 Oil Review Africa Issue Three 2012

providers to determine strategies and solutions for the year ahead and beyond. Key topics scheduled for discussion at this year's summit include exploration initiatives in sub-Saharan Africa, drilling and data management, through to disruptive and emerging technologies, and IT & communication solutions.

In attendance will be a selection of the industry's most prominent thought leaders who will be contributing to the direction of the summit through a series of topic-specific panel discussions. One such panel comprises William T. Drennen III, CEO Vanco Exploration; Alastair Milne, VP Exploration Sub-Saharan Africa Shell; Jay Thorseth, VP E&P, BP Angola; and Adrian Robinson, Exploration Director for African Petroleum.

The summit is set to provide the perfect environment for key decision makers to liaise and collaborate with their peers, discuss organisational strategies for the future, and establish meaningful working relationships with a dynamic selection of delegates, vendors and sponsors. Offering an alternative to the traditional conference format, the summits provide true innovation and value for money.

GDS International's NG O&G Africa Summit Director, Ben Williams, believes the exceptional content will once again place the NG O&G Summit as the definitive event in the oil and gas industry in Africa. He said: "I am particularly excited about the keynote panel discussion on the first day of the summit, and the attendance of such a distinguished delegation. There will also be some exciting workshops from some of the largest service companies in the world, such as Tenaris, Capstone and NXT Energy services, as well as a presence from Nalco, Expro Group, Oceaneering and Intels Logistics."

S02 ORA 3 2012 News_Layout 1 07/06/2012 11:39 Page 5

The world’s energy future relies on investments made today.

Energy demand in Africa is expected to be 115 percent higher in the year 2040 than it was in 2010. That’s why it is critical that we continue to invest in the development of new energy resources that can help meet demand in Africa and around the world.

In Africa, we’ve invested nearly $25 billion over the last five years to explore for and develop new energy projects. These efforts create jobs and drive economic growth. We also train local workers and help build schools and hospitals.

So whether it’s exploring for or producing new energy supplies, delivering innovative petroleum products or investing in communities, ExxonMobil is developing more than oil and gas—we are helping to support Africa’s future.

Learn more about our work at exxonmobil.com

Industry News & Events

S02 ORA 3 2012 News_Layout 1 07/06/2012 11:39 Page 6

Aker Solutions acquires NPS Energy

Total awards subsea contract to Aker Solutions

AKER SOLUTIONS HAS agreed to acquire NPS Energy, which is part of oilfield services company National Petroleum Services. NPS Energy has a strong presence in the Middle East and North Africa, which, combined, hold approximately 60 per cent of the world's proven oil and gas reserves.

"After the divestment of our non-oil and gas related business in 2010 and the demerger from the EPC contractor Kvaerner in 2011, this is our next major step in the transformation of Aker Solutions into a leading and global oilfield products, systems and services company", said Øyvind Eriksen, executive chairman of Aker Solutions.

"We have established a new operating structure, which more transparently shows our broad range of technologies and customer offerings, and we have introduced regional management in North America and Brazil, which provides our customers with a single point of contact. We are now ready to take this successful formula into a new region, and it is not just another region. It is the most prolific oil and gas region of the world," said Eriksen.

Headquartered in Dubai, NPS Energy represents a platform from which Aker Solutions will be able to provide its broad portfolio of technology and services to the oil and gas industry in the region.

"In order to succeed in the region, we need a strong distribution platform and well established customer relationships managed by a management team with a proven track record. Basically, this is what we achieve by acquiring NPS Energy," said Øyvind Eriksen.

NPS Energy currently employs approximately 900 people. The company's core offerings are well intervention services - including coil tubing, wire-line services, cementing, pressure pumping, well logging and testing - and onshore drilling services. It also provides perforation equipment.

AKER SOLUTIONS HAS been awarded a contract by Total E&P Angola, to deliver seven new subsea tree systems to the Dalia field located offshore Angola. The contract value is approximately US$81mn.

The scope of work includes seven production subsea trees, seven wellhead systems and seven well jumper systems, and may include some contract options.

"Our first subsea tree award was signed for Dalia in 2003 and we have successfully delivered 71 subsea tree systems to this field. We are very pleased to continue this positive relationship with Total E&P Angola and look forward to executing this project," says Alan Brunnen, executive vice president of Aker Solutions' subsea business area.

Management and engineering of the subsea tree systems will be performed at Aker Solutions' manufacturing centre in Tranby, Norway. Procurement, manufacturing and assembly will take place in Port Klang, Malaysia, and Aberdeen, UK. Equipment deliveries will be made in 2013 and 2014.

Aker Solutions is preparing for major growth by investing $87mn in its subsea business. This investment is set to double the capacity of its manufacturing plants in Tranby, Norway, and Port Klang, Malaysia.

The Dalia field is located in block 17 offshore Republica de Angola. The field is approximately 230 km offshore at a water depth of between 1200m to 1400 m, and covers an area of approximately 230 sq km.

Aker Solutions has established a state-of-the-art service base facility in Luanda with 130 employees.

Otto catches African charters SINGAPORE'S OTTO MARINE will charter two anchor handling tug supply (AHTS) vessels to compatriot Global Workboats to support rigs and platforms off Africa.

The first contract, worth US$14.8mn, will see the company’s Beluga 2, 7200 bhp AHTS vessel undergo a three year time-charter contract.

Its Redfish 3,8000 bhp AHTS vessel will also undergo a four month charter worth $1.8mn.

Otto said both vessels would be deployed off the coast of Congo taking the total number of vessels Otto has operating off Africa to six with deputy president Aw Chin Leng saying the company was looking to gain an even stronger foothold in the region. “[The] offshore oil and gas sector remains robust in a number of areas in the African waters and the further expansion in Africa bodes well for Otto Marine’s strategy to strengthen the ship chartering arm,” he said.

He added that, in addition to strengthening its position in existing locations, the company was also evaluating prospects across new geographical locations.

Africa bound: Otto Marine's Beluga 2 AHTS vessel.

6 Oil Review Africa Issue Three 2012

Oil & gas operators should be liable for E&P risks A POLL OF delegates attending the Offshore Technology Conference (OTC) in Houston has revealed that oil and gas professionals think operators should be liable for the risks associated with their exploration and production activity. 66 per cent of participants thought that operators should accept complete liability, while 33 per cent thought that E&P risk should be passed on to contractors.

The Industry Snapshot Poll was conducted by global independent technical advisor GL Noble Denton on the second day of OTC, which attracted nearly 80,000 oil and gas professionals from more than 100 countries. The poll was also completed online by senior players across the industry.

The poll result comes two years after the Deepwater Horizon incident in the Gulf of Mexico; a tragic event that has triggered a major re-evaluation of the industry’s risk profile.

Pekka Paasivaara, Member of the GL Group Executive Board, said: “Attitude towards risk has changed dramatically in recent years, causing discussion over who should accept liability if things go wrong.

Operators have traditionally accepted liability – except in cases of gross negligence – because they benefit from the upside of production.

“That model has begun to change since the Macondo incident, with some operators passing liability for catastrophic risk to contractors. Our poll shows that the industry at large disagrees with this move, and suggests that operators should be accountable for the consequences of major accidents.”

Two other snapshot polls were taken on the other days, which were: 6 Will gas replace oil as America's primary energy source by 2030?

56 per cent of participants thought that gas will overtake oil to become the principle source of energy, while 44 per cent thought it would not.

6 Has US investment in deepwater R&D stalled since Macondo?

The poll was split. 52 per cent of respondents said that research and development has slowed, while 48 per cent said that it has not.

S02 ORA 3 2012 News_Layout 1 07/06/2012 11:39 Page 7

Industry News & Events

S02 ORA 3 2012 News_Layout 1 07/06/2012 11:39 Page 8

Projects, prospects and economic profiles HELD IN LONDON in May 2012, the 3rd Agenda Africa forum focused on investment frameworks in Angola and Mozambique, and particularly on sustainable investment models.

Key points addressed at the conference table included energy provision, and specifically opportunities for oil and gas extraction, processing, refining, and product supply. With respect to Angola, oil revenues have been particularly important, contributing to the continuity of stable political administration by the MPLA (People's Movement for the Liberation of Angola - Labour Party/Movimento Popular de Libertação de Angola - Partido do Trabalho), which has governed for more than three decades. Mozambique's profile is 'emergent' in nature, with greater reliance on donor finance.

However, continuing stability and growth may come from a variety of forms of mineral extraction, in addition to gas.

Angola and Mozambique share a common legal heritage in their historical association with Portugal.

However, there are distinct differences to European environments. Issues to consider, with respect to investment frameworks, include fresh legislation for implementation of public-private partnerships (PPPs), using contractual models for more habitual structures.

Much work remains, in both countries, beyond principles and basic structures, but dialogue in both nations is progressive. A key concern is that there is yet to be a clarification with respect to risk, and the matter of whether majority risk is to be borne by private sector investors, and what the conditions applicable to risk are or might be. The exploitation of natural resources is, as might be expected, subject to a clear concern in this matter - particularly so since there is an additional consideration with respect to clarity of governmental accounts, and particularly in Mozambique, where the investment framework may be considered less mature than Angola's.

The concepts and practices that may be associated with PPP's are new to both Mozambique and Angola. PPP engagement and structures are worked out on a case-by-case basis in both countries - and the emphasis on financial and legalistic aptitude is, at least, clear - with promising prospects for the evolution of pertinent frameworks in the future, driven by the need to develop infrastructure and commerce internally, and to comply externally with such financial strictures as applied by supranational bodies such as the IFC. The priorities for Mozambique as well as Angola, with respect to the development of a culture of

commerce for economic advancement, primarily include investment in mining, petroleum, infrastructure, and agriculture. Concessional credits are available to the investment community. There are concerns with respect to building in the concept of local content requirements into the law. It may be noted that Nigeria offers an example of a nation where local business generally took what may be regarded as an inordinate period to benefit from foreign direct investment.

The basic template for raising finance needs to consider local content as well as export potentials.

Local supply, typically, exceeds local demand, and so the structure of risk in relation to performance requires at times extraordinary sensitivity in Mozambique, where the legislative framework is less sophisticated than Angola's, but the resource portfolio is demonstrably greater.

There is a real risk of a funding gap, as the Eurozone crisis affects foreign banks, and local content rules may actually prove unhelpful to those attempting to ameliorate such strictures. What models change or are introduced to address this issue remains to be seen, but caution was a watchword at Agenda Africa this year, if with a measure of optimism borne of financial and legislative progress undertaken and in prospect.

Subsea 7 vessel headed for refit

OTC 2012 reached record number of attendees

SUBSEA 7’S COMBINATION pipelay and heavy lift vessel Seven Borealis, is at Huisman's facility in the Netherlands for two months to complete outfitting before a planned mobilisation to West Africa.

The 182-m-long ship arrived under its own power in Rotterdam to complete the integration of pipelay equipment including the S-lay firing line and stinger.

In S-lay mode, Seven Borealis has a tension capacity of 600 tonnes and is designed to lay up to 46-inch diameter pipeline.

It will also sport a J-lay tower that can lay up to 24-inch diameter pipe with a tension capacity of 937 tonnes.

The combination of pipelay capacity with the 5000-tonne mast crane installed in Singapore unlocks more opportunities for work, enough for Subsea 7 to propose the Seven Borealis alone to conduct the entire scope of work for offshore construction projects, from laying flowlines, risers and subsea manifolds to setting jackets and topsides modules.

“We see the Borealis working in the SURF market,” Bullock said, referring to Subsea, Umbilicals, Risers and Flowlines.

“We’re moving more toward SURF,” said Lee Taylor of McDermott, which started out decades ago as a fabricator and installer of conventional platform jackets and decks.

More wells are turning out to be subsea completions which require different types of construction vessels, Taylor noted.

“It’s all about the right tools and the right people,” he said.

EXPERTS FROM THE offshore energy industry around the world came together 30 April-3 May for the 2012 Offshore Technology Conference in Houston. Attendance at the conference reached a 30year high of 89,400, the third highest in show history and up 14 per cent from last year.

Attendance surpassed the 2011 total of 78,645, and the sold-out exhibition was the largest in event history, with 2,500 companies representing 46 countries, including 200 new exhibitors.

“OTC 2012 was the most successful event we have had since the early 80s,” said Steve Balint, Chairman of OTC. “In terms of strength of the technical sessions and technology on display, OTC reached a record-breaking number of people and offered the most ways to connect, educate, and conduct business. The industry is on the rise and challenges are ahead, making it more important than ever to collaborate and share best practices with colleagues all over the world.

OTC is the place to do that.”

This year’s event featured eight panel sessions, 29 executive keynote presentations at luncheons and breakfasts, and 300 technical papers.

Speakers from major, independent, and national operators; global government officials; and academia presented their views on the current challenges and future directions of the industry.

Technology is always at the forefront of OTC and was evident by the 13 technologies winning OTC Spotlight on New Technology awards. The recipients were recognised for their innovation in allowing the industry to produce offshore resources.

OTC also introduced new technical topics and ways to connect through two focused networking events one on health, safety, and environment professionals and the other on women working in the industry.

“What we hoped to accomplish in this session was to bring women together to network and talk about what’s on their minds and how the industry can help,” said Cindy Yielding OTC, Board of Directors. Attendees in both sessions may continue the conversation on LinkedIn subgroups under the Offshore Technology Conference 2012 group.

The 2013 OTC takes place 6-9 May 2013 at Reliant Park.

8 Oil Review Africa Issue Three 2012

S02 ORA 3 2012 News_Layout 1 07/06/2012 11:39 Page 9

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Industry News & Events

S02 ORA 3 2012 News_Layout 1 07/06/2012 11:39 Page 10

Mozambique ‘third largest LNG exporter’ MOZAMBIQUE COULD BECOME the world's third largest exporter of LNG, an Anadarko Petroleum Corp. executive told attendees at the Mayer Brown Seventh Annual Global Energy Conference in Houston recently.

Ramsey Fahel, vice president & general manager – commercial with Anadarko Mozambique, said the company is working with the Mozambique government to establish the framework and fiscal regime for LNG development "of a caliber not seen before in continental Africa."

The company plans to develop two-train LNG facility associated with the Prosperidade discovery, which contains between 17 and more than 30 trillion cubic feet (Tcf) gross recoverable resources. The plant will be situated in the far northern part of the country on the southern side of Palma Bay, which provides a natural shelter from typhoons.

The facility will create the foundation for future LNG trains to be added, Fahel noted. He acknowledged that Anadarko has set an ambitious schedule for its LNG plans, with a final development decision for Prosperidade expected by late 2013. Anadarko is pursuing this timeline in order to establish a market presence before neighbouring Tanzania begins exporting LNG and before LNG projects in the US, Australia and Canada come online between 2016 and 2018.

Anadarko is planning to begin sales of LNG exports from its project in 2018, according to a presentation on the company's website "Mozambique is positioned similar to Qatar in that [it] could potentially supply LNG demand to countries east and west of Mozambique," Fahel said.

However, the regulations in Mozambique are still evolving, and certainty is needed by 2013 in order to meet the deadline. Asian buyers are likely to be the recipients of Mozambique gas but Anadarko's proposed LNG facility will be competing with other LNG projects globally.

Smit Lamnalco launch signals growth agenda THE OFFICIAL LAUNCH of Smit Lamnalco as a distinct entity has coincided with the global marine services group’s first commitment to new growth-driven investments, following the 2011 acquisition of Smit’s terminal and anchor handling tug supply activities by Lamnalco. Daan Koornneef, Smit Lamnalco Chief Executive, said that the new identity has been adopted to reflect the extent of the turnkey services offered by the expanded group across the O&G sectors.

Smit Lamnalco owns, operates and crews one of the most modern terminal and ship-to-ship transfer auxiliary fleets in the world, as well as delivering a full range of dive support services. Its interests span pilot boats, mooring boats, utility craft and high performance tugs.

“Combined, Smit Lamnalco operates over 50 terminal contracts, employs close to 3,000 staff on around 180 vessels and is active across 30 countries,” said Mr Koornneef. “The new identity is an external sign of the work that has been going on behind the scenes to amalgamate the two companies to support further growth. By combining, we have significantly extended our reach in the FPSO and LNG sectors, in line with our target of becoming the leading supplier of cost effective marine support services in the world.”

Royal Boskalis Westminster N.V. and The Rezayat Group of Saudi Arabia each continue to own 50 per cent shares in Smit Lamnalco.

Around one third of Smit Lamnalco’s contracts relate to vessels in and around the Middle East, with one third operating off West Africa. A further third covers vessels operating in diverse locations with significant growth potential, including other markets in Africa. The merged operation has been restructured around four key regions that reflect the historical focus of both entities but also point towards Smit Lamnalco’s future ambitions. These include Africa and Nigeria as two separate regions.

Nigeria seeks 4mn bpd crude oil capacity NIGERIA PLANS TO increase oil production capacity to four million barrels a day by 2020 and expand its crude reserves to 40bn barrels, Petroleum Minister Diezani Alison-Madueke said.

Africa’s largest oil producer also aims “in the years ahead” to boost output of liquefied natural gas by an additional 20mn metric tons a year from the current level of 26mn tons, she said in a speech delivered at Howard University in Washington, according to Levi Ajuonuma, a ministry spokesman.

Nigeria pumped an average of 2.1mn bpd of oil in April, according to data compiled by

Bloomberg. The country estimates its current crude reserves at 37bn barrels and its gas reserves at 187 tcf, Ajuonuma said. These figures correspond with data that BP compiled for the end of 2010.

“With expansion of capacity by almost one million bpd over the next few years, Nigeria can significantly contribute to global supply additions and diversification, thereby alleviating the challenge of supply concentration around the Middle East,” the minister said in her speech.

Attacks by militant groups in the southern Niger River Delta cut the country’s crude output

by more than 28 per cent between 2006 and 2009.

However, disruptions eased after thousands of fighters, seeking a greater share of oil revenue for the region’s inhabitants, laid down their weapons and accepted an official amnesty.

Nigeria’s Movement for the Emancipation of the Niger Delta refuses to disarm, saying the government hasn’t met the group’s demands for local control of the delta’s oil. MEND threatened on April 14 to mount strikes on all pipelines and energy facilities.

BP recommences exploration in Libya

Huge expectations for MOC

ROYAL DUTCH SHELL has confirmed it is to suspend its interests in oil and gas exploration blocks in Libya, while BP has announced that it is to recommence oil exploration in the country A Shell spokesman confirmed the move to Dow Jones Newswires by saying the company, “intends to suspend and abandon drilled wells and stop exploration in [its] Libyan licenses.”

Shell stressed that it will remain in Libya and continue to engage with the National Oil Company (NOC). Shell’s decision is in stark contrast to BP’s move to lift force majeure concerning its Libyan exploration and production sharing agreement (EPSA) with the NOC. Force majeure has been in place since February 21 last year when the civil war between pro- and anti-Gaddafi forces broke out in Libya.

The NOC and BP signed an agreement on May 29 detailing how the force majeure will be mitigated within BP’s existing contract which commits the company to five wells offshore and 12 wells onshore.

The agreement was signed by Dr Nuri Berruien, NOC chairman, and Felipe Posada, BP’s regional president for North Africa, during a visit to Tripoli with Dr Michael Daly, BP’s executive vice president for exploration.

ORGANISED BY THE Egyptian Petroleum Sector in partnership with IES International Exhibition Services and OMC Offshore Mediterranean Conference in Ravenna, Italy, MOC 2012 Conference & Exhibition has become, through the years, the most important international meeting focusing on the oil, gas and energy issues targeting Mediterranean countries. This is thanks to a high targeted audience which rises up every time and meets in Alexandria to present the latest discoveries and up-to-date technologies on the Southern Mediterranean Basin.

MOC 2012 covers the fields of exploration & production, NGL and LNG processes, environmental aspects, oil & gas economics, management and marketing of offshore hydrocarbons including their supportive services. The technical conference is held in the Bibliotheca Alexandrina Conference Centre, adjacent to the exhibition grounds located in Qota Land.

The overall success of the last edition witnessed once again the importance of MOC for the offshore petroleum industry.

10 Oil Review Africa Issue Three 2012

S03 ORA 3 2012 Analysis_Layout 1 07/06/2012 11:41 Page 11

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S03 ORA 3 2012 Analysis_Layout 1 07/06/2012 11:41 Page 12

Analysis

Oil Review Africa reports on a new study on oil from one of the USA’s leading suppliers of business intelligence, and compares it with the industry’s own longer-term views. All come to the same conclusion.

More investment

called for There has been a substantial increase in oil and gas discoveries, notably offshore in Mozambique and Tanzania (gas).

A

NEW REPORT covering most aspects of oil market development through 2016 is available from Global Business Intelligence Research of New York*.

The extended sub-title sums up the main findings - both up- and downstream - and their relevance here in Africa: “Deepwater discoveries worldwide and rising industrial demand in emerging economies driving the industry”.

Concludes the team optimistically: “Maturing conventional oil fields and a surging demand for crude are intensifying exploration efforts in the hope of boosting production.” Their study – most details of which are available in the form of abundant tables and graphics , the full titles of which can be read on the website (below) – shows that substantial increases in investment in E&P means that recent global discoveries have grown exponentially in number. Sub-Saharan Africa has played a full role in this, and there are likely to be plenty more to come.

Thus, “world crude oil reserves increased from 1,268.8bn barrels (bbl) in 2000 to 1,620.3bn bbl in 2011 ... Crude oil production globally increased from 24,759.1mn bbl in 2000 to 27,156.6 mn in 2011 … The crude oil industry is expected to grow at a steady pace, increasing further to 28,925.4 mn bbls in 2016.”

Maturing conventional oil fields and a surging demand for crude are intensifying exploration efforts in the hope of boosting production.

And as icing on the cake, “There was a substantial increase in oil discoveries worldwide during 2011 ... Asia-Pacific led with a 29 per cent share ... Middle East and Africa with 22 per cent.”

12 Oil Review Africa Issue Three 2012

Since then of course those new discoveries have kept on rolling in, notably onshore in northern Kenya (oil) and offshore in Mozambique/Tanzania (gas) – both within the last few months. So as a major resource province East Africa seems to be catching up with the West at last; the World Bank says that high energy costs remain a major drag on this region’s economy.

Medium-term reports from independents like this are fine, but the upstream investment decisions that will need to be implemented by 2016 have already been made. So to look (much) further ahead Oil Review Africa checked out what some of the specialised NGOs have been saying.

First we looked at OPEC’s World Oil Outlook (WOO) 2011. This survey from the majority producers’ group looks ahead all the way to 2035.

OPEC is well known for its campaigning about the need for more stability in the market, again expressing concern in this year’s first quarter about bullish price trends and excessive volatility in the market, which it blames on the “financialisation” of the market in general and “herd behaviour, speculation and, most recently, high-frequency trading” in particular.

So the officials in Vienna must be pleased to have seen the average price of their (premiumgrade) Reference Basket drop by more than US$10 since its $123 high in March. WTI of course still trades substantially below this.

Indeed in the first OPEC Bulletin of 2012 it was hinted that the “fundamental level” could be $20 lower, as it now (mid-May) nearly is.

“Balanced, rational dialogue has a key role to play here and is welcomed by OPEC,” is what they said. Forecasting contributions like GBI’s seem to fall clearly into this category.

WOO 2011 does the same. This takes a really long-term look at the impact of upstream investment costs, measured in five-year chunks up to 2035. And it points out that, even though OPEC’s members account now (and will still then) for the majority of the world’s oil output,

non-members’ investment decisions will have to exceed an annual average of $90bn by that time, compared with the anticipated $40bn/yr that its members will need to be putting in.

Just as well that OPEC will still be holding the majority of the world’s surplus capacity by that time, therefore; this was down to just 4bn bpd last year, with 8bn being anticipated over the medium term.

Striking the right balance “Given the industry’s long lead times and high up-front costs,” the latest WOO says, “it is indeed an extraordinarily challenging task to strike the right balance for investment in new capacity. The ever-evolving dynamics of supply and demand, as well as other market uncertainties, adds further to the budgeting and planning complexity.”

And it notes that E&P costs last year were already back to the same high levels as seen back in 2008.

Nevertheless a net increase in OPEC’s conventional (liquids) capacity is estimated to be 7mn bpd above last year’s level, and with more to come, which should lead to “comfortable levels of spare capacity”.

Second we looked at what is effectively the main consumers’ group, the International Energy Agency, says about the prospects ahead. “Has the tide turned?” and “Foggy horizons” are the conclusions of its April and May 2012 short-term Oil Market Reports. For what the Agency has to say far beyond this we had a look at last November’s weighty World Energy Outlook which – like OPEC’s forecast – measures conditions ahead all the way through 2035.

Like OPEC it concluded that major investments in the oil industry upstream will be needed if any one of its alternative marketdevelopment scenarios turn out to be anywhere near the actual outcome.

Under its radical ‘New Policies’ scenario “gross capacity additions of 47mn bpd … are needed just to compensate for declining

S03 ORA 3 2012 Analysis_Layout 1 07/06/2012 11:41 Page 13

Offshore Africa is certainly accounting for a substantial slice of the enhanced spend.

Five of Africa’s top inwards-investors – BP, Chevron, ExxonMobil, Shell and Total - spent a total of $100bn in 2010 and indicated a six-point increase in this likely for 2011.

Meanwhile global national oil company (NOC) investment last year was projected to rise by eight per cent; for other independents the rise indicated was 12 per cent. With independents well represented here offshore Africa is certainly

Analysis

production at existing fields”. And they point out that there are already considerable differences of opinion about what even proven reserves increased by in 2010 - from 0.5 to 8.5 per cent worldwide. They highlighted the growing role of East Africa. And they pointed out the growing level of investment in oil and gas combined last year, to a new record of $550bn-plus, up nine per cent on capital spend in 2010. This was based on the announced plans of 70 leading O&G companies, of which the top 25 were itemised.

Downstream spend is likely to exceed upstream, they added.

Total is one of Africa’s top inwards-investors. Akpo was Total’s first deepwater development in Nigeria.

accounting for a substantial slice of this enhanced spend.

In short it was all looking quite healthy even before this year’s price hikes. Nevertheless, “Upstream spending will need to continue to rise in the medium and longer term … In the longer term, the required increase in the rate of investment accelerates,” the industrialised countries’ energy watchdog concluded last year.

And, reflecting the turbulence of 2012’s first four months, “Who’d be a forecaster?” the IEA

wearily asked at the end of its 11 May summary.

Another report available from GBI deals with similar aspects of gas development in the medium term (to 2017 in this case). One of the key drivers they see in this field is “emerging technologies in consumption infrastructure”. ■

*Crude oil industry to 2016 ... , May 2012; US$3500 for single-user licence; details at www.gbiresearch.com

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Oil Review Africa Issue Three 2012 13

S04 ORA 3 2012 Training_Layout 1 07/06/2012 11:42 Page 14

Analysis

Short-term approaches to hiring in the past are having adverse effects on the skill base of today’s oil and gas industry. But things could get even worse, as Matt Christensen of AXA Investment Managers explains to Vaughan O’Grady.

Skill shortage today:

Skill absence tomorrow?

S

KILL SHORTAGES IN the oil and gas industry are hardly news. This is, after all, an industry that is at the mercy of often vast and sudden fluctuations in the price of its main saleable commodities; questions of how much, and even whether, to invest in finding the right people can become quite challenging.

As Matt Christensen says: “It’s so much easier to do boom/bust hire and fire.” But he is also aware that the resulting skill shortage problem is becoming more critical than ever. And there’s a good reason for that awareness. Christensen is global head of responsible investment at AXA Investment Managers, a multi-expert provider of investment solutions that recently published a report on the issue of skill shortage in the oil and gas industry.

Policies pursued some years ago have made it a serious problem for today’s oil and gas industry — and it could get much worse.

The AXA report, Mind the Gap: Experienced Engineers Wanted* puts it bluntly, saying: “Analysis within an ESG (Environmental, Social & Governance) framework reveals that the O&G’s short-term approach to hiring decisions taken roughly 15 years ago, based purely on financial considerations, has sown the seeds of a labour supply crunch that now threatens firms’ employee safety, the environment, and capital expenditure projects for exploration & production — all potentially destroying shareholder value.”

Citing a now significant gap in the 35-44 yearsold engineer segment, the report says: “There is a real and irreversible risk of knowledge loss given the lack of experienced professionals available to replace retiring workers”.

And you can’t just rely on bringing newer recruits forward a bit faster. As the report says: “According to Schlumberger Business Consulting, it takes 10 to 15 years to train petro technical professionals so that they are fully autonomous, properly managing projects and preventing/responding to accidents.”

If, that is, projects go ahead in the first place. Oil and gas will increasingly need to come from unconventional sources, hard-to-reach areas and deepwater wells —‘frontier’ E&P. Investment will also need to be much higher. If experienced professionals aren’t there to deal with these challenges and justify those investments, projects will be delayed.

Training today for future professionals But the professionals of the future also need to be trained today and oil and gas companies will need to prove they are adapting their approaches to training to meet these new challenges. As Christensen says:

14 Oil Review Africa Issue Three 2012

Nigeria’s Minister of Petroleum, Diezani Allison-Madueke - maybe an encouragement for women to see a pathway.

“If you go in and do complex projects, what are you doing to ensure the quality of your training — which we think also has a link to your safety?”

It doesn’t help that many would-be recruits are shying away from the industry. Why? Firstly, says Christensen: “Competing industries will tend to draw out more of the best talent.” Secondly the notion of an industry working on dangerous and complex projects and, increasingly, in remote, unwelcoming regions, isn’t that appealing. As he puts it: “Being on oil rigs might be less interesting to some of the employees of the future than in the past.”

A problem with gender Those employees of the future should, in theory, include the larger number of relevantly qualified women that have emerged in recent decades. It probably won’t, however, and not just because dangerous or remote areas are going to be more frequent destinations for engineers. Christensen explains: ”If I’m a woman and I see the whole board of the company is men and the whole senior management team is men, what confidence does it give me that there’s any path that makes it interesting for me to start my career here? If you want to recruit people that might be more diversified — or in this case a gender mix — what are you doing at the top to show there’s a pathway? That’s where we see there’s a business problem.”

And it’s not the only one. It’s more common these days for both men and women to try to find places that work for their family structure. Thus, as Christensen says: “The oil sector will have to change and adapt newer types of policies around recruitment. And,” he adds, “we see that not just in

the oil sector but in a number of other sectors.

Engineering talent is already hard to find. The demands of workers are shifting over time as well as in terms of what they’re willing to deal with.”

Even in the developing world, he points out, there are office jobs opening up that are going to be more palatable than the potentially dangerous fieldwork the O&G sector offers, There are other reasons why building an expert base in developing countries may be difficult. One of these is poor quality education systems that may not provide sufficient technical knowledge to create an adequately qualified labour supply. The AXA report offers such examples as lack of pay and incentives for quality professors in Uganda, and poorly equipped engineering schools in Nigeria.

The right sort of help Companies are often encouraged to help, but is it the right sort of help? Christensen says: “Technology transfer is critical for countries and it’s something they often put into contracts. But that doesn’t answer the human capital question. Physical capital is different from human capital”.

In other words, equipment may arrive, but are enough people able to operate it? Is a maintenance programme, with qualified people to run it, in place? “The more technology-complex projects are, the higher the level of education that is needed,” says Christensen, “There’s already — as we point out in this paper — an issue on the level of education in these countries. The notable exceptions will be China, India and Indonesia. But if you look at a lot of other countries you still have a very difficult cycle to break.”

S04 ORA 3 2012 Training_Layout 1 07/06/2012 11:42 Page 15

The report offers some possible solutions.

“Increasingly,” it says, “developing countries are asking international companies to favour local hires.

Greater investment in education of future E&P workers in regions where qualified labour is expected to be lacking would allow companies to cultivate the next generation. This can be done through partnerships with universities, schools and government of developing countries to finance the training of students.”

Positive example in Gabon This has in fact happened. The report mentions Total Gabon, which recently announced a partnership with the government of Gabon, to create a petroleum technical skills school in order to address the lack of appropriately skilled people in the workforce.

But an even greater effort is surely needed from the oil and gas giants. Put very simply, wherever you look for oil or gas in the developed or developing world you need the right people. And you need to

ensure they are properly trained and supported. The ‘boom/bust hire and fire’ approach by contrast could cost much more than it saves.

One might, for instance, argue that if training and expertise can help make another Deepwater Horizon disaster less likely, surely the outlay of hundreds of millions of dollars on finding and training the right people for the long term outweighs the tens of billions of dollars that may be required as compensation for an environmental or human tragedy that may be the consequence of not having the right people.

Some might counter with the argument that outsourcing to skilled people is a good way of plugging the gap. However, the report isn’t so sure, suggesting that outsourcing can “increase complexity in the management of projects, confusion in responsibilities, lack of communication, and poor co-ordination — all leading to increased safety risk”.

Many of the main analyses of the AXA report can be summarised as follows: career development, working conditions and growth in staff — especially qualified staff — are important to the oil and gas industry’s continuing productivity — and safety. And yet a skills crisis is looming which could undermine that productivity. Even worse, it’s hard to say whether the oil and gas industry is preparing now to avoid more such crises in the future, largely because many companies aren’t willing to discuss the problem.

As the report says: “Our analysis revealed the extent to which companies disclose information on their management of skill shortage. We found that in many cases there is room for significant improvement. Only one of the firms analysed disclosed information on all of the principal key human capital management indicators related to skill shortage. Three companies — Total, Shell, and Eni — currently deliver information regarding their staff, while BP and Chevron deliver almost no information at all.” It adds: “While it is positive to observe that current training efforts are in place, investors find it difficult to evaluate these efforts, primarily because of poor disclosure.”

Nevertheless, AXA’s involvement in the skill shortage debate is important because it isn’t just going to be the media or politicians that influence this corporate culture but also investors — and this report could encourage them to do so. Christensen summarises: “Part of this is about investors asking the tough questions and forcing oil companies to focus on them. So as much as oil companies look at it we hope investors [do]. Because the more investors focus on this, the easier it becomes to get better disclosure.” ■

*The AXA report: Mind the Gap: Experienced Engineers Wanted is available for free download at www.axa-im.com/en/responsible-investment

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Oil Review Africa Issue Three 2012 15

Analysis

If experienced professionals aren’t there to deal with these challenges and justify those investments, projects will be delayed.

Mozambique

S05 ORA 3 2012 Mozambique_Layout 1 07/06/2012 11:45 Page 16

The recent natural gas discoveries off the coast of Mozambique are important because of the size of the reserves as well as the country’s relative proximity to markets in Asia. Jon Offei-Ansah reports on recent developments and strategies.

Africa’s new

gas frontier M

OZAMBIQUE IS TO increase the maximum stake it holds in future oil or gas blocks from the current twenty-five per cent to forty per cent in a bid to keep a greater share of profits in the country. Recent major discoveries by US oil and gas giant Anadarko and Italy’s Eni have increased interest in the country as a major global gas producer.

“The plan is to go up to 40 per cent in all future projects, to improve state control of the companies and get more income for the country,” Nelson Ocuane, chairman of state-owned oil company Empresa Nacional de Hidrocarbonetos (ENH), said in the capital, Maputo, recently. ‘It will be possible to do it as we get income from the projects in which we are participating at the moment,’ he added.

ENH currently holds a 25 per cent stake in the Pande/Temane onshore field operated by South African petrochemical group Sasol and a 10 per cent stake valid for the exploration phase run by consortia operated by Anadarko, Eni and Norway’s Statoil.

Recent discoveries of huge gas deposits offshore Mozambique have placed the country at the heart of a rush for East African gas, analysts have said. They believe firms are looking in new locations for gas because historically-producing areas such as the Middle East are tricky to break into. Peter Kiernan, energy analyst at the Economist Intelligence Unit (EIU), claims the ‘biggest story’ is offshore gas in Mozambique with Anadarko and Eni making ‘significant discoveries’ recently. ‘Traditionally the oil and gas sector has been focused in the western countries like Angola and Nigeria but there’s been more exploration in East Africa.’

Such is the interest in the Mozambican fields that Anglo-Dutch oil and gas giant, Shell has made a US$1.8bn bid to acquire UK’s Cove Energy, which holds 8.5 per cent stake in the Rovuma Offshore Area off Mozambique. Rovuma has potential recoverable reserves of 30 trillion cubic feet (tcf).

Cove announced early May that it had received written confirmation from the Mozambique government agreeing to Shell’s offer.

The government’s endorsement gives an advantage to Shell to secure Cove by removing a key condition of the deal, and putting any new bidder for the explorer on the backfoot as it would likely have to also gain the country's approval.

There had been hopes that a takeover battle would emerge for Cove after a rival suitor, Thailand's PTT Exploration and Production, refused to rule out

16 Oil Review Africa Issue Three 2012

making an offer when Shell launched its latest bid in April. Analysts said in April that Shell's expertise in developing gas fields would likely mean Mozambique would give the oil major its blessing, helping Shell to be seen by Cove as a preferred buyer.

Anardarko estimates it has found huge reserves of as much as 15 to 30 tcf across four locations while Italian offshore major Eni found around 22 and a half tcf. Norwegian oil major Statoil and Malaysian national oil firm Petronas have interests in the region. “Offshore is the next big frontier,” Kiernan suggested, admitting “it’s already here but when looking for more resources it tends to be offshore now, say the Falklands or East Africa, or other areas such as the Gulf of Mexico.” Claudio Descalzi, chief operating officer of Eni’s exploration and production division said its field discovery was “one of the most important we’ve had in our history, in terms of the quality of the reservoir, its dimensions and the markets it’s close to. It’s transformational for us. East Africa is easier to break into than places such as the Middle East where gas fields in countries including Saudi Arabia are usually run by state firms, or Iran, where there are political sanctions to contend with,” suggested Kiernan. Although it’s ‘still early days’ for many of the gas discoveries, the East African coast is well placed to supply growing markets such as India and China with gas, he said, as well as Australia.

Exporting gas to these regions would be more likely than to Mozambique’s domestic market because it has a smaller gas demand, he said.

Recent discoveries of huge gas deposits offshore Mozambique have placed the country at the heart of a rush for East African gas.

Good location for export to Asia Adi Karev, global oil and gas leader at Deloitte Touche Tohmatsu in Japan, agrees with Kiernan’s suggestion, saying, the recent natural gas discoveries off the coast of Mozambique are important because of the size of the reserves as well as the country’s relative proximity to markets in Asia. “This is rather close to the largest potential market for liquefied natural gas (LNG), which is Asia. It is easier to export from offshore Mozambique to Asia than it is from many other places,” Karev said.

Mozambique’s concessions.

“This could be one of the most important natural gas fields discovered in the last 10 years, with significant long-term benefits for Mozambique,” said Jim Hackett, Anadarko chairman and CEO, in a recent statement. “In parallel, we’ve continued to advance an expandable LNG development that will support this world-class field.

This is great news for Mozambique, as our on-going activities will continue to spur meaningful investment in the region, generate significant revenue for the government and offer a multitude of opportunities for the people of Mozambique.”

The World Bank ranks Mozambique 204 out of 215 nations in terms of per capita income. That brings the question up about governance and if the wealth will affect everyone there fairly. It could turn one of the world’s poorest nations into one of the richest.

World attention on Mozambique’s gas According to Karev, there is currently substantial ‘world attention’ on Mozambique’s gas reserves. He said many more companies are likely to join the action. “This is deep water offshore. There aren’t that many players that have the capacity to in fact invest in this by themselves because this is very expensive. Consequently I suspect there will be a lot more joint ventures.”

The impact of the findings on Mozambique’s economy “will depend very much on how the government is going to, in fact, set up the framework that allows Mozambicans to be part of what is going on here, and assuming that they will set up the right levies and assuming there will be sufficient financial incentives for other players, the effect can only be positive,” Karev said.

He said although there are many cases in Africa where significant discoveries of oil and gas led to economic ruin, one has to be optimistic. “You can always find a worst-case scenario, and indeed they exist. We hope this will be a little different. But is it

S05 ORA 3 2012 Mozambique_Layout 1 07/06/2012 11:45 Page 17

We [South Africa] now have enough gas on our borders to generate all the electricity we could ever use.

Karev said that the Mozambican government could review its taxation and regulatory policies, possibly delaying large investments until there is more clarity. “One of the things that usually happen is that the government tends to realise that what they have is a gold mine, and that they have to rethink from a regulatory and levies perspective in

order to properly participate in the game. I think, if I remember correctly, there have been some publications about the fact that the [Mozambican] government is now rethinking some of their tax and levies and regulatory environment, in order to make sure there is sufficient participation by the citizens of Anadarko’s selected LNG site.

Mozambique. That would tend to delay major investment decisions.”

There have also been calls in South Africa for the country to reconsider its energy policy and to embrace neighbouring Mozambique’s gas reserves.

“The significance for South Africa is that these discoveries should wipe the nuclear option off the table. We now have enough gas on our borders to generate all the electricity we could ever use. It will be the easy way to reduce our carbon emissions,” said Michael Bagraim, president of the Cape Chamber of Commerce. Karev agrees, noting that it would make sense for South Africa to at least review its energy policy in light of Mozambique’s gas discoveries, but that “every country should aspire to have some level of energy

Mozambique

guaranteed that it will be a little different? The world is full of examples of where this was a boom to a country, an incredible push for the growth of an industry, for the growth on an economy, for labour, education, you name it. On the other hand there are examples where it became nothing but a selected few’s opportunity for enrichment.”

John Craven, chief executive of UK’s Cove Energy, a junior partner in one of the newlydiscovered fields, also believes the discoveries will be hugely beneficial to Mozambique. “For the economy of Mozambique, this is a huge project.

They will have the ability to transform their country if they play their cards right,” he said.

independence. It wouldn’t be smart to jump the pendulum and swing it all to natural gas just because Mozambique has it.”

Meanwhile, according to Ocuane, the country will need to raise US$3bn by the end of 2013 to retain its 10 per cent stake in the Rovuma Basin offshore projects as they move to the next phase.

The actual stakes ENH would take in individual blocks would be decided on a case-by-case basis, depending on funding required. The authorities plan to launch the next bidding round for blocks in Rovuma by the end of this year. Companies including Eni, ExxonMobil, BP, Malaysia’s Petronas, Shell, Tullow Oil, Vitol and Noble Energy, have expressed interest in future bidding rounds. ■

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Oil Review Africa Issue Three 2012 17

Mozambique Channel

S05 ORA 3 2012 Mozambique_Layout 1 07/06/2012 11:45 Page 18

The keys to SAPETRO’s exploration strategy and campaign in the Mozambique Channel and elsewhere in sub-Saharan Africa are utilising the best available (and in some cases the newest) exploration technology as well as solid geological reasoning based on plate tectonics and depositional reconstructions of past earth history.

“Africa is our home” philosophy targets opportunities

in sub-Saharan Africa S

APETRO BEGAN ITS evaluation of the Mozambique Channel (MC) opportunity based largely on historical data gathered by scientific oceanographic expeditions over the past 50 years.

These data, while primitive by today’s standards, were sufficient along with limited modern ‘non-exclusive’ seismic data sets to establish several key points; the presence of a thick sedimentary section, a wide variety of geological structures, and continental crust rather than entirely oceanic crust underlying certain large portions of the Mozambique Channel.

However, to establish the value of its newly acquired licenses, the company turned to some of the most technically sophisticated new seismic and geochemical exploration technology available in the world; PGS’ GeoStreamer/GeoSource GS complimentary source and receiver technology produces ‘ghost free’ broadband seismic data, containing information from the very lowest to ultra-high frequencies. SAPETRO contracted for what is currently the largest such 2-D survey (12,500 km) yet conducted in the world and the first in waters around Africa.

On the geochemical front SAPETRO employed the European Space Agency’s radar satellites through their affiliated companies Astrium and Infoterra to search for evidence of hydrocarbon ‘slicks’ on the ocean surface which could be evidence of natural seepage from hydrocarbon reservoirs. Slicks can also result from shipping, pollution, and other natural causes and so a data set must be built up over time with repeated satellite missions in order to select what could be slicks of exploration significance. The satellite imagery can be obtained by day or night and through cloud cover, because it uses radar rather than visible light; however successful slick detection requires a narrow ‘window’ of wind speeds on the water surface (3-10 meters per second) and so radar images may show nothing of interest if wind speeds on the ocean surface are too low or too high when the satellites are passing overhead.

After recording persistent seeps at certain locations and finding some of these related to seismic anomalies called DHI’s (Direct Hydrocarbon Indicators) below the ocean floor, the company set out to locate and collect material from these slicks for geochemical analysis using Gore Technologies C5-C25 analysis methodology. This method uses a ‘sorbent’ on a fishing pole-type apparatus to float on the surface of the slick; the collected material is then sealed in a bottle for analysis in a laboratory by Gas Chromatography and Mass Spectrometry (GC-MS).

This analysis can establish the presence of natural oil and gas seeps and sometimes even characterise them with respect to source, age, type etc. SAPETRO staff aboard smaller ships in the seismic flotilla collected more than 40 samples over a three month period in the central Mozambique Channel.

The application of these cutting edge seismic, satellite, and geochemical technologies has allowed SAPETRO, even at this early exploratory stage, to identify the probable presence of oil with affinities to Anadarko’s ‘Ironclad’ oil discovery (the famous ‘first discovery’ of oil in offshore East Africa.) more than 700 km to the north. The new broadband seismic data has already permitted the identification of large ‘geobodies’ which could represent basin floor fan reservoirs more than 20 km in width. These findings are by any standard, remarkable achievements for an exploration campaign only six months old.

18 Oil Review Africa Issue Three 2012

Anadadarko

Exxon

Sapetro

The Mozambique Channel where the SAPETRO, Anadarko, Exxon acreage blocks are shown in pink.

Solid geological reasoning The Central Mozambique Channel is not, as previously thought by many, a largely volcanic terrain sitting on oceanic crust; instead it is now understood to be a sunken fragment of continental crust once adjacent to Kenya, Tanzania, and Mozambique with thick sedimentary section and minimal volcanic cover. These features make it much more prospective as a petroleum province. It is easy to understand this earlier misperception; the water depth is great, and the few islands and banks which appear above the water are built on volcanic features. In addition,

S05 ORA 3 2012 Mozambique_Layout 1 07/06/2012 11:45 Page 19

Placing our behind your

deals.

Mozambique Channel

S05 ORA 3 2012 Mozambique_Layout 1 07/06/2012 11:45 Page 20

SAPETRO's slick samples from >700 km away, indicating very similar oils from probable Mesozoic source rocks.

A gas chromatogram of Anadarko's 'Ironclad' oil field. (The first oil discovered in offshore East Africa).

some early exploration wells drilled in shallow water close to the western Madagascar coast did have a number of volcanic flows. But over 100 scientific cores and drag samples collected over the years in deep water and recent aeromagnetic surveying both support the modern view of the area as dominantly sedimentary and not volcanic.

the Davie Fracture Zone (DFZ) in its exploration acreage. The western flank of the DFZ in particular, contains thick sequences of Cretaceous and Tertiary sedimentary rocks sourced from the East African coast via the Rovuma, Zambezi, and other rivers.

The central Mozambique Channel is bracketed on the NW and SE by major hydrocarbon occurrences in the Rovuma Delta and Madagascar heavy oil belt; SAPETRO believes the acreage in between has the potential for multiple petroleum systems of several different ages. Like the analogous San Andreas Fault Zone in California, the Davie Fracture Zone (DFZ) is a complex of overlapping faults with uplifted and down dropped segments. It separates the Mozambique Channel into three distinct sedimentary/structural assemblages; east of the DFZ toward Madagascar’s Morondava Basin, the DFZ itself, and west of the DFZ toward Mozambique; all three areas have significant exploration potential.

Plate tectonics Plate tectonics permit geologists to reconstruct the position of Madagascar (and India) when they were attached to Africa. Their separation began about 150mn years ago and stopped about 90mn years ago. Along the Kenyan and NW Malagasy coast it is a simple rifting story not unlike the modern Red Sea, but a little further south, in southern Tanzania, Mozambique, and offshore southern Madagascar the plates slid past each other with an oblique or ‘transform’ motion rather than simply pulling apart. The result of this is a feature known as the ‘Davie Fracture Zone’ extending for more than 1500 km under the Mozambique Channel.

The Davie Fracture Zone marks out the location of the Paleo-‘Transform Margin’ of East Africa a feature somewhat similar to the modern day West African active ‘Transform Margin’ off Ghana and extending across the Atlantic Ocean to French Guiana.

The East African Transform Margin is a ‘Paleo’ Transform Margin because it is no longer actively moving, having largely stopped when India separated from the east coast of Madagascar about 90mn years ago and left Madagascar in its present location as India ‘sped’ north (about 8 cm per year!) to collide with the Asian mainland.

Like the West African Transform margin, the East African Paleo Transform Margin contains many different potential hydrocarbon plays and traps from Tertiary deltas like the Niger and Rovuma to older deep water basin floor fan plays like Ghana and the central Mozambique Channel. SAPETRO has secured a choice section of more than 400 km of

20 Oil Review Africa Issue Three 2012

An “Africa is our Home” philosophy As a leading Nigerian independent producer SAPETRO believes in the potential of sub-Saharan Africa to be a significant contributor to regional and international energy needs. In SAPETRO’s words “Africa is our Home”, and the company is committed to finding ways to work successfully with African countries and international partners to unlock the energy treasures in central and southern Africa. In the case of its Mozambique Channel assets these were part of a series of inspired African acreage acquisitions by the late Dr. John Doran, geologist and the founder of ROC Oil in Australia. With Dr. Doran’s untimely death, all the African assets of ROC Oil were liquidated in order for the company to pursue opportunities ‘closer to home’ in Australia and East Asia. But Africa is home to SAPETRO, who welcome the opportunity in the coming years to explore this and other potential world class energy assets in their ‘big back yard’: Africa. ■

S05 ORA 3 2012 Mozambique_Layout 1 08/06/2012 12:11 Page 21

S06 ORA 3 2012 Nigeria_Layout 1 07/06/2012 11:48 Page 22

Nigeria

Just two years after new local content laws were passed, the Nigerian Content Development & Monitoring Board is making rapid gains.

A lasting

legacy S

INCE ITS FORMATION, the Nigerian Content Development & Monitoring Board (NCDMB) has worked hard to advance Abuja’s goal of seeing more local input in the all-important energy sector.

The NCDMB came about after the Nigerian Content Act came into effect in April, 2010.

It is only early days, but there are signs that the new body is already making good headway, with foreign investors spending time and money in beefing up their local capacity.

The Board is supported by most of the top international names working in Nigeria.

The local content initiative has at times been controversial but most agree that the drive is a necessary one to put Nigeria’s oil industry on a more sustainable long-term footing.

NCDMB executive secretary Ernest Nwapa insists that efforts to up Nigeria’s participation in the oil industry are not intended to drive out foreign companies, but merely to generate greater value for the local economy and to create new work opportunities for the country’s large population.

And it’s hard to disagree. While petrodollars account for more than 80 per cent of the government’s total revenue earnings, the industry’s contribution to the nation’s Gross Domestic Product is less than 40 per cent due to the low indigenous participation in the sector.

The role of foreign investors remains just as important, Nwapa reckons, especially in demanding high technology areas.

Lasting legacy Naturally, the new agency’s focus has been on the implementation of the Nigerian Content Act in the strategically-important oil and gas sector, which continues to account for the bulk of the nation’s income.

This means focusing on the establishment of critical facilities and the local manufacture of equipment used in energy operations to create employment and generate greater value for the domestic economy.

Nwapa says all major energy projects must now leave behind a lasting legacy that will employ Nigerians and support the life cycle of any project.

That means key gas projects like the Gas Master Plan and the Trans Saharan Pipeline will be expected to generate additional infrastructure such as pipe mills.

Liquefied natural gas (LNG) and floating production storage and offloading (FPSO) projects

22 Oil Review Africa Issue Three 2012

Nigerdock sets a high safety benchmark.

will also be required to develop associated dock yards and engineering centres in support of project activities.

“If we insist on local manufacture, we will gradually achieve industrialisation,” Nwapa told a recent meeting of energy associations and unions in Abuja.

“All major energy projects must now leave behind a lasting legacy that will employ Nigerians and support the life cycle of any project.”

Presidential seal There are already many concrete examples of the changes taking place.

President Goodluck Jonathan said the recent completion of projects like the Nigerian National Petroleum Corporation (NNPC) and Mobil Producing Nigeria ‘Satellite Fields Development Platforms’ was proof the local content law is now yielding results.

The construction of the Abang and Itut platforms, at the Nigerdock facility, at the Snake Island Integrated Free Zone, Lagos, marks the first fully integrated decks to be fabricated, precommissioned and tested entirely in Nigeria.

The two offshore wellhead platforms come complete with jackets, piles, boat landing platforms and subsea templates.

Like Nwapa, the Nigerian president is a firm believer that local participation in the oil and gas industry is a means for the country to accelerate the industrialiasation process.

The local content idea is not new, of course, but it has developed real momentum in Nigeria in recent years.

Shell support Although it has had a notable impact on how they do business, large foreign investors are inclined to agree, and have been keen to support the initiative.

The country’s biggest foreign investor, Shell Nigeria, recently supported one indigenous company, Caverton Helicopters, to upgrade its fleet with more advanced aircraft, the AW 139, through an US$85mn loan.

Caverton Helicopters is a major provider of charter services to the oil and gas industry in Nigeria, including Shell.

The loan empowered Caverton to place orders for six new AW 139s, making it the largest operator of the aircraft in sub-Saharan Africa.

Two of the new aircraft are to be used for Shell Nigeria Exploration and Production Company (SNEPCo).

SNEPCO managing director Chike Onyejekwe described the financing as a giant step for a Nigerian company.

“We began the journey in 2010 (with Caverton) when we awarded the biggest aviation contract to a Nigerian company,” he said.

“Both Shell and Caverton have worked hard to take the contract to a higher level, and the story will get even better in the coming years not just for

S06 ORA 3 2012 Nigeria_Layout 1 07/06/2012 11:48 Page 23

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S06 ORA 3 2012 Nigeria_Layout 1 07/06/2012 11:48 Page 24

Nigeria

important in Nigeria in recent years as operators have opened up the country’s deepwater potential, with fields such as Bonga.

In June 2012, international oil companies working in Nigeria will hire 40 indigenously-owned vessels to replace contracted foreign-owned vessels, with a cumulative value of US$1.8bn for the local economy.

Caverton Helicop[ters’ more advanced aircraft, the AW 139A.

our companies but also for service providers in the aviation sector and the wider economy.”

Caverton advances The AW139 is a new generation twin-engine helicopter that incorporates the latest technology for safer and more economical operations.

It seats 12 passengers with a state-of-the-art cockpit to reduce pilot workload and cabin airconditioning as well as more luggage capacity.

The other four aircraft will be used in the operations of the Shell Petroleum Development Company (SPDC), the nation’s largest joint venture oil producer.

Shell operates the joint venture with NNPC and other foreign partners, Total and ENI.

Caverton will repay the loan from the proceeds of the contract it executes for Shell.

In the two years since it signed the initial aviation contract with Shell, Caverton has grown from a company of 90 people to more than 500, reflecting its strong upward growth curve.

“The support we have enjoyed from Shell is a lasting testament to Nigerian content development,” said Caverton’s chairman Aderemi Makanjuola.

Ship ahoy It is not just in the air and on the ground that progress is being seen either, with international operating companies pledging to replace foreign vessels with local vessels in support of their offshore operations.

Offshore oil production has become increasingly

International operating companies are pledging to replace foreign vessels with local vessels in support of their offshore operations.

It means that extra value will find its way back into the Nigerian economy rather than flowing out overseas through international contracts.

The vessels include a mix of anchor handling tugs, dynamic positioning platform supply vessels and line handling tugs.

And the trend for further activity in Nigeria’s marine support industry looks positive too with plans to begin manufacturing 40 metre vessels at the Nigerdock facility from 2013.

Early days perhaps, but bit-by-bit, Nigeria’s local content rules are taking effect, with the NCDMB playing a decisive role in making sure things happen. ■

Twister wins contract from Shell to supply system in Nigeria HI-TECH COMPANY Twister has reached a milestone in the drive to promote its unique gas separation technology.

The company Twister - spun off by Shell Technology Ventures in May 2001 -technique exploits a swirling vortex flowing at supersonic velocities to remove water and heavy gas liquids from a raw gas mix.

Shell Petroleum Development Company of Nigeria (SPDC) has now awarded Fairshores Limited, the exclusive Nigerian partner, an order for a second Twister system for the Tunu processing facility in the Niger Delta's southern swamp area.

This system will be used for the dehydration and hydrocarbon dewpointing of 160 mmscfd of gas in Bayelsa State, as part of the governmental Domestic Gas initiative, to help reduce flaring and. also to increase power generation capacity. The Twister module incorporates six Twister supersonic separator tubes together with a chemical-free Twister hydrate separator. The Twister tube design provides higher availability and reliability compared to traditional technologies.

"Not only is Tunu our fifth commercial contract, but it will allow us to work with the most variable gas specification that we have yet handled," says Twister chief executive Mick The Twister® Supersonic Separator is a unique combination of physical processes producing a Longton.

"Meanwhile we have completely revolutionary gas conditioning system also been settling into a promising relationship with Honeywell subsidiary UOP," says Longton.

Five months ago the two companies formed

24 Oil Review Africa Issue Three 2012

an exclusive marketing alliance that UOP says "allows us to expand our current suite of natural gas processing technologies and equipment."

UOP also took a 20 per cent shareholding in Twister, in what Longton describes as an important endorsement of our technology. "Through UOP, Twister will get wider exposure, and gain from becoming part of a larger package offering," he says.

When Tunu goes on stream in mid-2014 it will be the second Twister system operating for Shell in Nigeria. The first is at the Okoloma gas plant which feeds the Afam power station, and has now been running for three years. Like Afam, the new Tunu order calls for six Twister tubes at a contract value likely to be similar to Afam's rumoured US$12mn.

Tunu will have a much greater local content than Afam, organised via Nigerian partner Fairshores. The complete module for Afam was built outside Nigeria.

For Tunu, the specialist elements, such as the tubes and vessel, are built outside Nigeria and then brought into the country for modularisation.

With a throughput capacity of 4.5mn cmpd (30,000boed), the Twister system for Tunu is slightly larger than Afam's and incorporates various refinements compared with its predecessor.

"We now have a smoother inner surface to the tube, which reduces internal resistance," says Vincent Groote, Twister's sales director for Europe, Middle East and Africa.

The proprietary Twister tubes will be manufactured in The Netherlands, but the processing module will be built in Nigeria and Twister BV, together with its local partner Fairshores, will work with Nigerian system integrators, meeting the requirements of NCD, the Nigerian Oil and Gas Industry Content Development Bill of 2010.

S06 ORA 3 2012 Nigeria_Layout 1 07/06/2012 11:48 Page 25

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S06 ORA 3 2012 Nigeria_Layout 1 07/06/2012 11:48 Page 26

Nigeria

Education, equal opportunities, training and career development: this is how Bourbon Interoil Nigeria provides the Nigerian maritime offshore oil and gas industry with the right competencies.

Developing local talents for

offshore excellence S

ERVING OIL AND gas companies for their offshore operations is a dedication to the level of excellence required by their tasks. Satisfying such clients requires dedication to four key issues: safety, vessel availability, cost optimisation and competencies. For Bourbon Interoil Nigeria, competencies represent a key challenge. It implies finding the right personnel locally, recruiting them so that it fits with the diversity inherent to the company and, most of all, developing these talents internally. It goes through various steps: 6 Partnership with schools 6 Equal opportunities 6 Training 6 Career development Regarding local schools, the company has launched a specific selection programme in partnership with the Maritime Academy of Nigeria, in Oron. Its purpose is to ensure the proper education of fresh and competent graduates, able to join the company as mate/engineer trainees.

This programme is a true partnership with the Academy: It was initiated by a test generated by the Academy, covering all the relevant and key areas of maritime qualifications, from nautical science to marine engineering. Bourbon Interoil Nigeria worked in the school to oversee the testing of these young talents. This test was such a success that it is still being used as a cadet pre-selection tool for the company’s own Human Resources Department. As such, it will be constantly updated and upgraded to fit both with the company’s needs and the topics taught at the Maritime Academy.

Encouraging female officers onboard The school is also taking a very specific and unusual initiative within the maritime offshore services industry: getting female officers onboard. In Nigeria, it is quite uncommon to find female officers onboard offshore vessels, both supply and personnel transport vessels. Thus, early in 2009, in a bid to promote equal opportunities and encourage female students from the Maritime Academy, Bourbon Interoil Nigeria added a selection of four female cadets as trainees onboard supply vessels. And this was just the beginning: the company currently have a total of 10 female cadets engaged in their seaterm training, with a bid to serve as officers as soon as their STCW (Standards of Training, Certification and Watchkeeping) Certificate of Competency is delivered.

This training system, combined with efforts to retain female officers, has proven to be successful :

26 Oil Review Africa Issue Three 2012

A young woman officer cadet in the simulator crewboat in Nigeria.

two female deck officers and two female engine officers are onboard personnel transport vessels, working as Surfer pilots and Surfer engineers; three others will join soon, once their certification exams are over. This innovative policy will allow the company to reach its target: a good level of gender diversity with a recordable increase of competent and properly trained female officers onboard.

Constant career development is a priority.

School selection is step one of this programme.

Getting the right person to do the right job also relies on the company’s training initiatives. The Bourbon Training Centre in the Nigeria Amado base, near Port Harcourt, is a key place for all Bourbon Interoil Nigeria seafarers. Inaugurated in 2009, the Centre relies on a very comprehensive set of training modules. After an initial session on a Surfer simulator, students (who have already been awarded with the required certifications) embark on practical operations under the supervision of a referent captain, who validates their training. Since the beginning of the programme, 184 Nigerian officers have been trained this way.

All these acquired skills are inserted into the crew matrixes. Each supply vessel is equipped with this document, ensuring the crew’s skills levels are respected. This means not only being compliant with local manning requirements, but also with Bourbon standards. A crew matrix can be used as a legal proof of compliance by the clients, even

though it was initially conceived as an internal tool to determine if additional training is required.

Constant career development is a priority. An iconic example is the career of Mr. Kunle Areogun.

Having joined Bourbon Interoil Nigeria in 2004, he has undergone management training courses and is now, since 2011, the company’s first Nigerian Managing Director. ■

Nigeria’s largest oil vessel inaugurated THE NIGERIAN LOCAL content got a boost when Petroleum Minister, Mrs. Diezani Alison-Madueke, inaugurated Africa's largest oil vessel in Warri, Delta State. The oil equipment, christened Akpevweoghene Offshore Pipelaying/Derrick Barge, is owned by an indigenous oil servicing company, FENOG Nigeria Limited.

The Petroleum Minister, at the ceremony, witnessed by Group Executive Director, NNPC, Mr. Andy Yakubu and his Gas Resources counterpart, Mr. David Ige, as well as Executive Secretary/Chief Executive Officer, Nigerian Content Development and Monitoring Board, Engr. Ernest Nwapa, assured that the Federal Government would continue to support and encourage indigenous companies operating in the oil industry in line with its local content policy.

Mrs. Alison-Madueke, who said she was impressed by the giant strides achieved by FENOG, especially with the company's acquisition of the HDD Technology and the Akpevweoghene barge, said that the local content policy would entrench indigenous operators in the nation's oil industry.

S07 ORA 3 2012 Liberia_Layout 1 07/06/2012 12:04 Page 27

S07 ORA 3 2012 Liberia_Layout 1 07/06/2012 12:04 Page 28

Liberia

Recent oil finds off West Africa have ignited interest in new frontier states such as Ghana, Sierra Leone and Liberia.

Liberia oil potential ignites interest

among upstream elite W

HILE GHANA HAS already gone on to join Africa’s oil exporter club, Sierra Leone and Liberia both former war-torn hotspots remain further behind.

But interest in Liberia has rocketed this year following the Narina-1 discovery by Australia’s African Petroleum, in offshore block LB-09.

The 2012 oil find - which struck a total of 32 metres of net pay across two zones - is the first commercial oil discovery to be made offshore Liberia.

It mirrors a number of other finds this year and last year in neighbouring Sierra Leone, whipping up excitement in this emerging and under-explored basin, that has benefited generally, following from the prolific successes of deepwater Ghana.

And sure enough, it is an area that is now bringing in investment from some of the world’s biggest oil companies.

Involvement of names such as Exxon would be a clear boost for Liberia’s nascent upstream hopes.

Enter Exxon The most telling sign of this came at the end of April when the government’s National Oil Company of Liberia (NOCAL) approved a proposal that could bring in super-major ExxonMobil, the world’s largest international oil company.

NOCAL has approved, in principle, a proposal by the current holder of Liberia’s block LB-13, Peppercoast Petroleum, to transfer its 100 per cent interest to a joint venture of ExxonMobil and Canadian Overseas Petroleum (COPL).

The US oil giant has not commented on the proposed transaction, with negotiations still very much in play.

The in-principle approval means that NOCAL accepts that ExxonMobil has the technical and financial prowess to serve as the block LB-13 operator.

Under the terms of the proposed deal, Exxon would land a 70 per cent operating interest in the offshore area, with COPL holding the remaining 30 per cent.

28 Oil Review Africa Issue Three 2012

The deepwater semi-submersible drilling rig, Eirik Raude, will complete the programme on the LB-08 and LB-09 Blocks.

But, should the deal go through, it is a clear boost for Liberia’s nascent upstream hopes.

NOCAL president and chief executive, Randolph McClain, said the involvement of names such as Exxon “brings the kind of credibility we welcome”.

Offshore block LB-13 sits south of the capital Monrovia, one of 17 demarcated blocks along the country’s shoreline.

COPL has had a gross prospective oil resource report completed by an independent reserves evaluator that reflects a mean of 2.5 bn barrels of recoverable oil combined from a number of seismic targets in the block.

The hope, of course, is that the real potential could be even greater.

Foreign investment Other major international companies are already active in Liberia’s offshore.

In 2010, Chevron acquired an interest in

three deepwater blocks, LB-11, LB-12 and LB14, located between 20 to 180 km south of Monrovia - split by LB-13 - and covering a combined area of 9,600 sq km.

The company that originally sparked interest in the whole Sierra Leone and Liberia offshore zone, Anadarko Petroleum, is at a more advanced stage in its exploration work, than either of its American peers.

It spun the drill bit at the end of last year on block LB-15, sinking the Montserrado exploration well last November but finding only non-commercial oil quantities.

In the end, the well, drilled to a depth of 5,400 metres, encountered good-quality, waterbearing sands in the main objective and eight metres of pay in a secondary objective.

The well was plugged and abandoned, with the results being incorporated into the company's geologic model for future exploration in the Liberian Basin.

S07 ORA 3 2012 Liberia_Layout 1 07/06/2012 12:04 Page 29

Liberia

S07 ORA 3 2012 Liberia_Layout 1 07/06/2012 12:04 Page 30

The LB-15 consortium also includes Repsol of Spain and the UK’s Tullow Oil, the prime mover in Ghana’s recent upstream success story.

And like Exxon and Chevon, other major companies are making a play for the area too, excited by the hope of gaining early entry into this emerging basin.

Last October, Mitsubishi took a 10 per cent stake in another Anadarko-operated block, LB10, the first Japanese exploration firm to enter Liberia’s offshore; Repsol holds the remaining equity in the block.

Narina joy Although Anadarko’s well last year ultimately disappointed, it did confirm the presence of oil in this little-known region.

For now, with little modern exploratory drilling to note, what is out there remains largely speculation, with the exception of the Narina-1 well, which gives grounds for optimism.

African Petroleum’s discovery found 32 metres of net oil pay in two zones: 21 metres in the Turonian and 11 metres in the Albian.

The Australian junior described the oil as good quality oil of 37° API and 44° API,

respectively, with hydrocarbon shows encountered over a 170 metres interval.

Crucially, this discovery confirms the prospectivity of both of these West African geological plays across the company’s two blocks, LB-8 and LB-09, in which it holds 100 per cent equity.

African Petroleum’s chief executive Karl Thompson said the find has “transformed the prospectivity of Blocks LB-08 and LB-09, and the surrounding open acreage”.

The company now plans to follow up its February success signing up a rig for up to three wells across its two blocks to commence in the third or fourth quarters of this year.

The programme will be completed using the a deepwater semi-submersible drilling rig, Eirik Raude.

The Narina-1 well was drilled by the Maersk Deliverer to a depth of 4,850 metres in water depths of 1,143 metres.

Early days Underlining the appetite for new investment, African Petroleum has applied for a third block, LB-03, to add to its portfolio in the area.

Only now, it is operating in an area in

The ultimate hope is that Liberia, and indeed Sierra Leone, can retrace Ghana’s success, and become Africa’s newest oil exporters. which the oil industry’s finest have been alerted.

The ultimate hope is that Liberia, and indeed Sierra Leone, can retrace Ghana’s success, and become Africa’s newest oil exporters.

But it is still only early days for both of these countries.

Liberia's top oil official, Randolph McClain, said in February that the Narina discovery was "good news for Liberia" but warned against unrealistic expectations.

"We urge everyone to be very patient," the NOCAL boss said at the time.

"It will take time to fully appraise this discovery and years, between five to seven years, before a drop of oil is produced from the well." ■

Would oil strengthen or weaken Liberia's peace and security?

LIBERIA HAS MADE rapid progress in terms of foreign investment Responding to this advocacy, a Hydro Carbon Technical which now stands at US$16bn in foreign capital investment since Committee recently completed a four-day retreat where 2006. Investors are exploring opportunities in mining, representatives from various line-ministries including the agriculture, infrastructure development, renewable energies and Ministry of Justice, Lands, Mines and Energy, along with oil exploration international partners and a number of civil society organisations Buttressing the gains of the country, oil has created a new sense put forward outlines of a policy framework for the sector. of urgency in Liberia. Speaking at the inauguration of the Chevron Setting new and higher standards of transparency and Excellency in Energy Leadership Lecture Series in Houston, Texas accountability for oil and gas and advancing the cause of recently, President Sirleaf admitted that oil discovery in Liberia corporate social responsibility by which the local population has raised expectations that revenues will be managed to meet benefits from the exploitation of resources from their backyards such expectations. She said the oil policy which was first carved is a campaign being championed by several reputable civil in 2000 will be framed to adjust society organisations. Legislators and resolve a potential conflict of are being challenged by Liberia is gradually being transformed too interest in the local oil company communities to sustain and press NOCAL, which currently serves as from a war exporter to a development for sober reforms in the sector an industry regulator and an The act that created NOCAL was partner. Liberians are now asking equity partner. passed in 2000 under President whether the presence of hydrocarbon Charles Taylor but the pressure is “We seek to reform existing oil policies and legislation to bring on the Sirleaf government to will be a curse or a blessing. them in line with international repeal it against the background best practices, increased of the president's son, Robert accountability, transparency, fairness and equality in a manner Sirleaf, appointed as Chairman of the Board of Directors. The that includes, informs and educates our citizens,” President board has come under too much scrutiny.

Johnson Sirleaf stated.

Public interest has ballooned, increased public engagement and Liberia, the President said, is painfully aware that resources have public scrutiny unabated. Members of the public are expressing become a curse, rather than a blessing for the country, referring concern about astronomical salaries and benefits of NOCAL to iron ore, rubber, timber and diamonds. Another area of concern officials including the President's son. Advocates for reform to for the president is to improve indigenous capacities to enable a the act argue that too much power is vested in NOCAL, and the level playing field with overseas partners situation, if unchecked, could emerge as a typical Delta region of Meanwhile, persistent calls for a review of the petroleum law to Nigeria, where there is abject poverty in the face of so much oil establish a clear and reliable legal and regulatory framework, and wealth. to ensure a fair share of potential oil revenues for the country by Liberians continue to cite the case of Nigeria as a typical case opposition politicians, civil society, and rights groups has been where oil has become a curse rather than a blessing and they unrelenting. want to prevent such a situation from happening in Liberia.

30 Oil Review Africa Issue Three 2012

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Gabon

Oil output in this central state could soon be on the way down so economic diversification is top of the agenda. Unusually the complex ammonia/urea route is being taken, a handy way of commercialising some of that associated gas.

Grow-ahead

Gabon P

RESIDENT ALI BONGO Ondimba has no choice but to oversee a period in which national oil output – 245,000 bpd in 2010 – will likely begin a slow decline. Under the national Emerging Gabon programme (launched in 2009 with the objective of reducing dependence on oil) the decision was taken to support a commercial programme valorising much of the (mostly associated) gas by producing fertiliser-grade urea. Meanwhile several of the world’s key IOCs, including Shell, Perenco and Total, compete to gain the lucrative contracts to explore for and develop the probable new reserves thought to lie far offshore. And to put forward rival schemes to commercialise all that surplus gas, such as LNG. These are certainly going to be interesting times for sub-Saharan Africa’s fourth largest energy producer, ambitious holder of the largest reserves anywhere in Central Africa.

Maintaining output of 255,000 bpd (expected, 2012) is a real challenge given the maturity of on- and offshore fields such as Grande-Anguille, Rabi-Kounga, Tchatamba and the new onshore Koula resource. It relies on both the established techniques of enhanced oil recovery, such as infill drilling and water injection, and, crucially, developing potential new offshore finds on production-sharing contract (CEPP) terms under the delayed 10th Licensing Round, which covers no less than 42 unexplored blocks.

Nearly three-quarters of Gabon’s sweet-rich basin is believed to lie off the underdeveloped shore, and nearly half of this area is currently open for exploration. This year’s international price trends have certainly helped the quality of bidding.

Handily located onshore in lush Ngounie Province, the Koula field is now being operated

by Shell and Addax/Sinopec (40 per cent each).

It is estimated to hold more than 60mn barrels and could be ramped up to daily output of 25,000 bpd as long as the new Hydrocarbons Code works as it should.

Nearly three-quarters of Gabon’s sweet-rich basin is believed to lie off the underdeveloped shore, and nearly half of this area is currently open for exploration.

32 Oil Review Africa Issue Three 2012

Aerial view of Total’s Torpille platform offshore Port Gentil.

A need for skilled labour A possible constraint, one which will be even more critical in the new blocks offshore, is the availability of adequate skilled labour to develop existing and new resources like these; the Ozouri field started pumping way back in 1956. To this end the new Petroleum & Gas Training Institute in the busy oil port and processing centre of PortGentil, funded in part by the industry, will play a key role once it is completed.

Until recently Perenco Gabon occupied top spot as national producer, catapulted into that position by its tie-up with Marathon Oil. Shell Gabon, producing 70,000 bpd, now enjoys that status. Other operators such as Addax Petroleum, Anadarko, Tullow Oil and even Oil India are snapping at these majors’ heels. And a key development has been the acquisition of Canada’s Addax by China’s Sinopec back in 2009, just when the international petroleum industry was going through one of its toughest-ever times. Gabon is precisely the sort of stable, well-located African territory in which China has been actively seeking investment opportunities in oil.

Another constraint is the level of all-products output at the sole national refinery at Port-Gentil, operated by national products distributor SOGARA. Presently jointly-owned by the state, Total Gabon and various other interests, this ageing plant was originally participated in financially by neighbouring territories, which now of course have their own fishes to fry. Current capacity utilisation (over 1.2mn tpa if minimally debottlenecked) is understood to be below 80 per cent, but at least it’s on the way up at last. Current national demand

is of the order of only 600,000 tonnes, so there’s already plenty of spare capacity in hand.

Nevertheless South Korean interests have already registered their willingness to finance a feasibility study for the construction of a brandnew state-of-the-art refinery, probably in the oil port nearby.

Geological conditions similar to Brazil Gabon’s ultra-deepwater (2500m or more) prospects are now being investigated by overseas operators such as Harvest BP (in the Dussafu field) and Petrobras (Mbeli and Ntisa, working with Ophir Energy and already of course renowned for their pre-salt activities). Brazil’s own offshore geological conditions are remarkably similar to the deep waters off Gabon’s Mayumba Port.

So how to cope with the surplus gas that Gabon is now certain to produce? Given the turmoil in the international gas market right now key liquefied gas operator Shell is not saying much about its FLSO plans – announced only a couple of years ago. But coming from a completely different direction Singapore-based Olam International is fully committed to a brand-new world-scale ammonia/urea complex on the Ile Mandji Free Trade Zone.

Now under construction ready for completion in 2014, this US$1.5bn complex, designed to produce the most sought-after and economical source of fertiliser nitrogen available anywhere, with special applications in the tropics, surprised downstream operators just about everywhere.

Running these plants in sub-Saharan Africa is not easy.

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globe, some of which are located right here in Central and West Africa.

All in all the opted-for situation is a close parallel to the fertiliser plant successfully operated over many years by ICS/Industries Chimiques de Senegal (a complementary P205/phosphate producer) in association with the Indian farm-inputs co-operative IFFCO.

Participation by Tata Chemicals

Politically stable with a declining but still huge energy surplus, Gabon is a top target within West/Central Africa for incoming foreign direct investment from all sources.

The key redeeming feature of this huge investment is that the participation of Indian urea producer Tata Chemicals (via its farm inputs division based in Uttar Pradhesh) has been secured in the ownership. India normally buys all the urea it can – when the price is right – so the export market should be close to being guaranteed. Olam also uses a considerable amount of fertilisers of all types in its own extensive agricultural operations around the

Politically stable with a declining but still huge energy surplus, Gabon is a top target within West/Central Africa for incoming foreign direct investment from all sources, including new ones.

Like Ghana it has plenty of other primary resources such as timber and manganese to build its economy on, and possesses most of the resources to develop the necessary infrastructure, too. Indeed a good working rail transport system

Gabon

For one thing, international prices of this easily-shipped solid product, currently around US$500 a tonne (delivered in Egypt in March), fluctuate alarmingly and widely – and agricultural supply-chain management and processing specialist Olam has little or no experience as a business cycle-prone petrochemicals producer.

Announced capacity is 1.3mn tonnes of solid product a year, but the majority-stake investors have said they are already considering building another plant next door if they can get the necessary gas. That of course will be a government decision. Oil Review Africa understands a 25-year gas price has been agreed; the state has made sure it holds a minority stake in the plant now being built.

Olam International is fully committed to a brand-new world-scale ammonia/urea complex on the Ile Mandji Free Trade Zone, due for completion in 2014.

is already in place, and it would be relatively easy to extend this for the distribution of oil products, including those invaluable bags of highly concentrated fertiliser nitrogen that don’t get sold to hungry farmers across the ocean in India.

Meanwhile the search for more offshore oil goes on. ■

Aminex starts Nyuni shoot LONDON-LISTED INDEPENDENT Aminex has kicked off a 335 km 2D seismic survey in the Nyuni Area licence, off Tanzania.

The survey will target the transition zone of the licence between the coast and the deepwater section of the block.

“The transition zone seismic survey will provide significantly improved definition of existing structural leads and unprecedented imaging of the stratigraphic potential that has proven so successful in the deep-water,” said Aminex chief executive Stuard Detmer.

Aminex said a combination of ocean bottom cable and a marine seismic source would be used in the shallow-water, while a land-based seismic source would be used on the emergent reefs and islands.

The company is also planning to gather over 500 km of 2D marine

seismic in the deep-water portion of the Nyuni Area licence during the second half of the year.

“The combined results of the two Nyuni Area seismic surveys will be used to target future drilling in the transition zone and deep-water sections of the block,” Detmer added.

The two surveys will fulfil the seismic work required under the initial work period of the Nyuni Area production sharing agreemnt which extends through October 2013.

Aminex holds a 70 per cent operated interest in the Nyuni Area PSA with Rak Gas Commission holding a 25 per cent stake and Bounty Oil & Gas holding the remaining five per cent interest.

Aminex has previously estimated the contingent and prospective resource for the Nyuni PSA at 2.8 tcf.

Wessex steps up exploration plans for Mozambique Channel permit WESSEX EXPLORATION HAS completed reprocessing of around 1,000 km of 2D seismic data shot over the Mozambique Channel by TGS-Nopec in 2006.

The programme focused on the shallow water area of the 9,100-sq km Juan de Nova Est permit in the Northern Morondava basin in the Mozambique Channel, northwest of Madagascar. Wessex has a 70 per cent interest in the concession.

The company is negotiating terms for reinterpretation of the data. Upon completion, the next step would be either a detailed new

2D seismic survey or a more focused 3D survey later this year in preparation for delineation of a drilling prospect in 2013.

This activity is in addition to continuing farmin negotiations. Over recent months, interest in the permit has sharpened due to the giant deepwater gas discoveries off Mozambique, across the Mozambique Channel.

As a result, several large oil and gas companies have signed confidentiality agreements with Wessex and are evaluating the data, including the newly reprocessed seismic.

Oil Review Africa Issue Three 2012 33

Geology & Geophysics

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Deepwater seismic activity spreads through West, East Africa AFRICAN PETROLEUM HAS contracted Prospector Pte (BGP Marine) to acquire seismic surveys on two blocks offshore Côte d’Ivoire.

Work on the 3D survey over block CI 513 started at the end of April, and was due to be completed within six weeks. The next survey is scheduled for August over block CI 509.

African Petroleum acquired both permits earlier this year, in partnership with state-owned Petroci. It plans to target deepwater Upper Cretaceous submarine fans, which it hopes will have similar high-impact potential to discoveries off neighbouring Ghana and Sierra Leone. In the same region, the company has a 60 per cent operating interest in blocks A1 and A4 offshore Gambia, covering a total area of 2,668 sq km.

African Petroleum is interpreting processed 3D seismic data across the two blocks, where more than 30 exploration prospects and leads have been identified, including five different play types. It hopes to be in a position to start drilling during 4Q 2012.

On the other side of Africa, another Australian company, FAR, has commissioned Fugro-Geoteam to shoot 680 sq km of 3D seismic over the L6 license offshore Kenya. The Kifaru 3D survey will cost $13.7mn, according to partner Pancontinental Oil & Gas. The permit is in the Lamu basin and within the Tana River delta, north of the giant gas discoveries off Tanzania and Mozambique.

FAR Managing Director, Cath Norman, said: “Drilling in the Rovuma basin off the coast of Mozambique and Tanzania has so far achieved a near-perfect success rate. Much of that success has stemmed from the use of modern, high-quality, 3D seismic data which is able to provide quality images of potential structures deep beneath the surface. FAR has

mapped a total of seven prospects in the L6 permit.”

London-based Afren has completed acquisition of 1,207 km of additional 2D seismic data over the deepwater part of Kenya blocks L17 and L18.

Preliminary interpretation of deepwater 2D seismic over the blocks has identified four promising new prospects, in addition to previously mapped prospects in the shallow water. More importantly, the new leads could represent a major new play with lower risk and greater materiality than the shallow-water play.

Afren proposes to acquire a further 1,000 sq km of 3D seismic during the second half of this year to better understand the deepwater prospectivity and to identify a well location. The main objectives will be to optimally image the deepwater structures, define the reservoir distribution, potentially define fluid- or lithology-related amplitude anomalies, and to reduce risk. Late last year, Afren and partners acquired more than 900 km of deepwater 2D seismic on the Tanga block off Tanzania. The results were interpreted and integrated with existing data.

This year it intends to acquire 3D seismic over the deepwater areas ahead of exploration drilling on the Orpheus prospect from a shallowwater location. Afren is trying to secure a suitable jackup for the programme.

Kenya, Japan state firms join to survey for oil

Optimism from SouthWest Energy of Ethiopia

THE STATE OIL companies of Japan and Kenya have signed an agreement to survey the east African country, which has become a hot spot for exploration after the discovery of oil, and assess its petroleum reserves onshore.

National Oil Corporation of Kenya (NOCK) and Japan Oil, Gas and Metals National Corporation (JOGMEC) agreed to jointly conduct geophysical surveys to help evaluate whether there are commercially viable hydrocarbons in Kenya.

The deal, which will run for an initial year and a half, underlines the interest of international oil companies in East Africa and the Horn of Africa following several major oil and natural gas finds in the region.

In 2006 companies discovered oil reserves in neighbouring Uganda, and this year explorers found large natural gas deposits off the coast of Mozambique. At the end of March, Anglo-Irish explorer Tullow Oil and its partner Africa Oil Corp discovered oil in northern Kenya for the first time. Tullow and Africa Oil have yet to determine whether their find is commercially viable.

Tullow has said, however, that the thickness of the oil reservoir was greater than initially expected and that it had only drilled to the most shallow depths of the planned well - a significant sign for Kenya's potential as an oil producer.

About two dozen other companies are exploring for oil and gas onshore and offshore Kenya, including NOCK, which is actively exploring the 14T block in the southern part of the country's Magadi Basin. It acquired the block in November 2010.

NOCK and JOGMEC's first survey on 14T, known as a full tensor gravity gradiometry, is planned for June 2012. NOCK also said the companies would complete 2D seismic surveys and electromagnetic studies. It does not have immediate plans to drill on the block.

SOUTH WEST ENERGY, AN Ethiopian oil exploration company, is optimistic about the results of a seismic survey in the Ogaden basin and has met oil majors to discuss a possible partnership in the Horn of Africa country.

The initial findings from the survey completed in February are “very encouraging,” said Chairman Tewodros Ashenafi. “Discovery could very well possibly happen next year.”

Infrastructure needed for production, which would start at least four years after any discovery, may cost as much as US$3bn, according to Tewodros. “That can only be done by the big boys,” he said.

No oil has been found in Ethiopia, which relies on exports of coffee and other agricultural commodities to generate most of its foreignexchange earnings. The Somalia-bordering Ogaden region, where PetroTrans Co of Hong Kong operates the Calub and Hilala fields, has 113 bcm of natural gas, said Tewodros.

SouthWest, based in Addis Ababa and registered in Hong Kong, is also prospecting in Ethiopia’s southwestern Gambella region. The 17,000 sq-km concession is “exactly the same” as South Sudan’s oilrich Muglad Basin, said Tewodros. Muglad contains an estimated six billion barrels of oil in place, according to a 2010 report by FirstEnergy Capital Corp. in Calgary, Canada.

“I think two to three billion barrels of proven reserves is not something that is unreasonable for the sites being prospected in the Ogaden, Omo and Gambella,” he said.

The company has invested about $50mn in Ogaden blocks 9, 9A and 13, which cover 29,000 sq km, and plans to commit a further $150mn over the next three years, Tewodros said. Drilling is expected to start in the first quarter of next year.

Oil produced in the Ogaden would probably be exported via a pipeline to the coast of Somaliland, an autonomous northern region of Somalia, which is as close as 120 km from the blocks, he said.

Ogaden oil may be light in sulfur and “easier to refine,” while Gambella’s could be “waxy” and need chemicals “to have it flow,” according to Tewodros.

34 Oil Review Africa Issue Three 2012

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S09 ORA 3 2012 Exploration_Layout 1 07/06/2012 12:08 Page 36

Offshore licencing round sparks interest

Tullow turns Ghana into hot spot

34 OIL COMPANIES HAVE submitted a total of 59 bids for open offshore acreage under the recently launched licensing round in Sierra Leone.

The round 'generated alot of interest from established companies, such as Chevron, with several proposing very aggressive seismic and drilling programmes, and we are now in the evaluation phase," said Raymond Kargbo, acting director of the Petroleum Resources Unit (PRU).

Sierra Leone wants to diversify its portfolio of upstream players and also the range of geophysical companies involved in data acquisition onshore and in the unallocated offshore, including recently relinquished blocks SL-1 & 2.

The PRU will acquire more offshore seismic and also conduct speculative aeromagnetic and density surveys onshore, despite the intensifying clamour among suitors determined to acquire acreage without data, he said.

Elsewhere, Canadian explorer Talisman Energy wants another farm-in partner ahead of drilling before the end of the year or early 2013 on SL-4A-10, where it acquired operatorship last year.

African Petroleum has completed processing recently-shot 3D seismic, and that data is being interpreted in collaboration with local geoscientists.

Also in the frame is Lukoil who plans to spend some US$100mn exploring block SL-5-11 in which it partners Vanco Energy and Oranto Petroleum.

TULLOW’S RENOWNED JUBILEE field has turned Ghana into a black gold hot spot, discussed the "Jubilee Project" panel at the Offshore Technology Conference 2012. Touted as Africa's biggest oil find in the last decade, Jubilee overcame several significant technical and commercial hurdles to commence production in a short amount of time.

Jubilee, situated on two licenses, Deepwater Tano and West Cape Three Points, is considered a very ambitious challenge for the first significant development ever offshore Ghana. The field was developed in three and a half years, with first oil commencing in December 2010.

"Jubilee’s unique circumstances justified a very aggressive appraisal development strategy and dictated an unconventional approach to organising and managing the project, which ultimately was highly successful," stated Dennis McLaughlin, senior vice president of development of Kosmos Energy.

With the Jubilee field project flowing at a production rate of 55,000 barrels of oil per day (bpd) during its first phase of development, the operator is now focusing on further developing the field.

In March 2012, Phase 1A development drilling commenced on the field.

The plan calls for eight new wells to be drilled comprising five producers and three water injectors. The first of these wells should come online in late June. This phase and the initial development phase should allow production to ramp up toward the FPSO's design capacity of 120,000 bpd.

Tullow Oil, a partner on the field, expects Jubilee's production to average between 70,000 and 90,000 bpd in 2012, depending on the well performance achieved from the Phase 1 recovery program and the execution schedule of the Phase 1A wells.

Pazflor moves Angola to new heights PAZFLOR IS AN innovative first, panel members remarked during an OTC session about the oil project in southern Africa.

The Pazflor oil project, located approximately 150 km offshore Angola in ultradeep waters, the Pazflor project incorporates four fields -- Perpetua, Zinia, Acacia and Hortensia -spanning 600 sq km on the eastern edge of Block 17.

Sonangol, Angola’s national oil company is the Block 17 title holder. Total's Angolan subsidiary, Total E&P Angola, is the operator of the with a 40 per cent interest. Partners in the license include Statoil with 23.33 per cent interest, Esso Exploration Angola with 20 per cent interest and BP Exploration Angola with 16.67 per cent interest.

Sebastião Gaspar Martins, chairman of Sonangol P&P (Pesquisa & Produção), Sonangol’s upstream wing, stated at the convention that Pazflor is considered a technological innovation because of the project’s three large scale oil subsea separation and pumping units installed at 800 m WD that connect to the world’s

36 Oil Review Africa Issue Three 2012

two prior fields, Girassol and Dalia, Sonangol, is continuing its exploration success in the country. Angola, Africa’s second-largest oil producer, intends to take advantage of its natural resources.

Sonangol and Total recently signed three production sharing agreements to explore for hydrocarbons offshore Angola. As per the agreement, Total will survey and carry out exploration and drilling on three blocks, 40, 25 and 39, in the Kwanza Basin.

The Kwanza Basin holds promise for the consortium as it is rumored to be geologically similar to the petroleum-rich Santos and Campos Basins in Brazil. With the hydrocarbon successes of the three oil fields currently producing, this geological feature increases the possibility of finding big reserves of oil and natural gas.

"In my opinion, the Kwanza Basin is a real opportunity for local companies with proven technical and financial capability brought in from abroad," said Martins. However, "we must be part of the development of our own resources to ensure that the know-how does not totally rest with international companies."

The Pazflor development plan is strikingly innovative.

largest FPSO ever built and the vessel’s ability to process two types of oil very different in nature.

"Such an achievement has been made possible thanks to a strong cooperation between Sonangol and Total," commented Martins. "It validates the strategy chosen by Angola so far to develop its reserves and proves, again, the ability of Sonangol in working with major oil companies like Total to build on each party’s know how and competences."

Due to the success of the Pazflor project and

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HRT inks Transocean Marianas deal E&P

BRAZIL'S HRT OIL & Gas nailed down the charter of a Transocean semisubmersible drilling rig for a drilling programme off Namibia.

The independent has Transocean Marianas vound for Namibia. chartered the Transocean Marianas to drill at least four wells off the southern African nation.

Founder Marcio Mello said: “We are currently in the middle of a licensing process in Namibia to have everything ready in the next few months.”

The first well is likely to be in the Orange basin, targeting the Meerkat turbidite prospect in Block 2815 which is located in about 150 m of water.

Assuming hydrocarbons are found, HRT expects the prospect to hold light oil and gas.

Other prospects earmarked to be drilled in the Orange basin include Shoebill in Block 2914A and the giant Moosehead structure in Block 2713A, which will not be included in the company’s ongoing farmout process. Also on the exploration radar is the Murombe prospect in Walvis basin Block 2212A. According to the latest DeGolyer & MacNaughton report, the vast HRT acreage may hold 6.9bn boe in risked prospective resources.

The Transocean Marianas recently drilled the Nunya-1 well in the Keta basin, off Ghana, for Italian company Eni, and despite encountering good quality sandstone reservoirs, the probe proved to be water-bearing.

Companies jostle for oil supply tender in Zambia THE ZAMBIAN GOVERNMENT has shortlisted six international companies for the supply contract of petroleum products and crude oil to the Southern African nation, a senior government official has said.

The government earlier this year invited tenders for the supply of 1.4mn tonnes of oil after the expiry of a two-year supply contract with Glencore. The six unnamed companies have been evaluated and submitted to the Zambia Public Procurement Authority (ZAPA) for final selection. Two successful bidders will be selected for the supply of finished petroleum products and crude oil, according to Energy, Mines and Water Development Permanent Secretary, George Zulu.

In a recent interview, Zulu explained that, “We have scrutinised and evaluated the capacity of these companies and have since submitted to ZPPA for final consideration before picking two successful bidders”.

Zambia seeks to import 1.4mn tonnes of commingled fuel, in addition to 216mn litres of diesel and 21mn litres of unleaded petroleum for the country’s consumption following the expiry of a contract with Glencore. The minister said the government is satisfied with the transparency of the evaluation process.

Under the current arrangement, successful bidders are expected to deliver the first consignment of feedstock and finished petroleum products to Zambia through the port of Dar es Salaam within 90 days and deliveries completed in 120 days. All bidding companies paid US$2mn as a bid guarantee with their respective banks acting as guarantors for the supply of the products.

Bidding companies include Mercury Energy Trading, Agipol Africa, Gunvor, Crown Hill Investments, KenolKobil, Trafigura PTE, Vitol SA, Independent Petroleum Group (Kuwait), Addax Energy, Independent Petroleum Group, Gapco Kenya, Oryx Supply and Storage, Dalbit Petroleum, Strauss Logistics, Agipol Africa, Mocoh SA, Trafigura, Galana Petroleum, Oilcom and Mogas International.

Oil Review Africa Issue Three 2012 37

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E&P

Kenya ‘runners in the blocks’ SEVERAL HEAVYWEIGHT PLAYERS are reported to be in contention for bidding on eight new deep-water blocks up for grabs off Kenya as recent finds off neighbouring Tanzania and Mozambique have fuelled exploration interest in the East African play.

The country’s Ministry of Energy has now published a gazette notice of the eight blocks, after indicating in March that it was demarcating the acreage, that bring the total number of exploration tracts in the country to 46.

French giant Total is said to be in talks with the government for a production sharing contract on one of the new blocks, L-22, while US players Apache, ExxonMobil and Anadarko Petroleum as well as Anglo-Dutch Shell and Norway’s Statoil are also said to be in vying for the acreage, with bids set to land in the coming weeks.

The exploration blocks on offer are in water depths of between 3,000 and 4,000 m with the ministry set to award acreage on a “first come, first served” basis, Kenya’s Petroleum Commissioner Martin Heya was quoted as saying.

“We want to award acreage to firms that have technical and financial capabilities,” he added.

Kenya has entered the radar screen of explorers after UK independent Tullow Oil last month recorded a major onshore discovery with its debut Ngamia-1 well – potentially the country’s first-ever commercial find – where it has now significantly expanded the pay zone with further drilling.

The country is now hoping for similar success in its underexplored offshore play as it seeks to replicate big gas discoveries by Anadarko and Italy’s Eni in the Rovuma basin off Mozambique, and by BG Group and Statoil off Tanzania.

Experts believe there is a high probability of a gas find off Kenya as the geology of its coastline is similar to some of the prospective blocks off Tanzania.

Apache is set to kick off drilling of its first well off Kenya at the Mbawa prospect in Lamu basin Block L-8 in July, while fellow US independent Anadarko plans to start a two-well back-to-back campaign in the fourth quarter.

Total is keen to further expand its acreage position off Kenya to add to its proposed acquisition from Anadarko of a 20 per cent stake in blocks L-5, L-7, L11a, L-11b and L-12 that is awaiting approval from the Nairobi authorities.

Kenya is looking to tap its latent hydrocarbon potential to reduce the cost of fuel imports.

Wentworth updates well test ops in Tanzania

Total named for Ocean Rig drillship

WENTWORTH RESOURCES HAVE announced an update on its assessment of the Ziwani-1 well test, located in the Mnazi Bay Concession, Tanzania. The Ziwani-1 well was spudded in February and drilled to a final total depth of 2,671 m. The gas bearing zone between 1,106 and 1,109 m has now been tested using drill stem equipment. The zone flowed gas at an unstable rate of up to 7.2 mmscfd at a well head pressure of up to 973 psi on a choke of 36/64".

The tested zone is a new reservoir interval, not previously encountered in the Mnazi Bay Block. The reservoir is a clean limestone of Pliocene age 3.5 m thick with 17 per cent porosity and 78 per cent hydrocarbon saturation.

However, analysis of the test data indicates that the potential resource volumes of the well are sub-commercial and the well has been plugged and abandoned.

Although several sandstone intervals of Oligocene/Eocene age were penetrated deeper in the well, logging proved these to be water bearing.

The rig will now be moved to the Mnazi Bay gas field, where it will commence a workover programme of three wells (MB-2, MB-3 and MS-1X). An extended well test is expected to be conducted on each of these wells in order to establish the long term producibility of the Mnazi Bay and Msimbati gas fields. The partners are planning on drilling a second exploration well on the Concession Area once the workovers have been completed.

Executive Chairman, Bob McBean, commented: "Although the results of Ziwani-1 did not meet our expectations, we remain committed to our exploration program on the block and to the second well, which is expected to be drilled later this year. We look forward to the forthcoming workover programme as the next step in development of the Mnazi Bay and Msimbati gas fields."

TOTAL HAS BEEN identified by Ocean Rig as the client in a charter deal for the drilling contractor’s ultra-deepwater drillship Ocean Rig Olympia off West Africa that was recently signed.

The vessel will be used by the Angola subsidiary of the French oil giant under the three-year contract, first revealed last month, which is in direct continuation of an existing charter off West Africa.

The US$625mn backlog on the deal equates to $595,433 a day, a sum which would almost certainly include bonuses and mobilisation.

Total has options for two one-year extensions of the contract.

Ocean Rig Olympia.

Deep Ngamia joy in Kenya TULLOW HAS STRUCK more oil with its ongoing Ngamia-1 exploration well onshore Kenya that has increased the size of the pay zone at the landmark discovery fivefold.

The probe being drilled in Tullow-operated Block 10BB in north-west Kenya has now encountered more than 100 m of total net oil pay after reaching an intermediate depth of 1515 m, compared with the 20 m reported in the initial find, Tullow said.

It is likely to further fuel expectations of major resource potential at the play adjacent to Lake Turkana, which would be Kenya’s first commercial hydrocarbon find, after Energy Minister Kiraitu Murungi said recently it could be even bigger than discoveries in neighbouring Uganda where Tullow

38 Oil Review Africa Issue Three 2012

has found a total of 2.5bn barrels.

Tullow said the bigger pay zone was found in a gross oil-bearing interval of 650 m after a sidetrack was drilled, yielding light waxy crude of more than 30° API similar to that found initially in the upper reservoir zone.

Ngamia-1 is the first prospect to be drilled in a multiwell campaign by the UK explorer in Kenya and Ethiopia.

“This ongoing wildcat is an excellent start to our exploration campaign. The net pay encountered so far in Ngamia-1 is more than double that encountered in any of our East African exploration wells to date,” said exploration director Angus McCoss. He said the company now intends to step up the pace of drilling, as well as 2D seismic

acquisition, and has applied to the government to procure an additional rig for the campaign.

“Many leads and prospects similar to Ngamia have been identified and following this discovery the outlook for further success has significantly improved,”he read.

Tullow now intends to drill Ngamia-1 to planned total depth of 2,700 m to explore for deeper resource potential, with plans for a subsequent drill stem test. The explorer then plans to move the Weatherford 804 rig rig to drill the Twiga-1 wildcat in Tullow-operated Block 13T about 31 km away in the second half, while an additional rig would be used to drill the Paipai prospect in its operated Block 10A in Marsabit County.

S09 ORA 3 2012 Exploration_Layout 1 07/06/2012 12:08 Page 39

E&P

S09 ORA 3 2012 Exploration_Layout 1 07/06/2012 12:08 Page 40

Africa Oil drills 2nd well in Somalia

Libya currently producing nearly 1.5mn bpd

AFRICA OIL HAS begun drilling operations on the Shabeel North well in Somalia's semi-autonomous Puntland, the second well in the current drilling campaign.

The well is being operated by Horn Petroleum in which Africa Oil holds an interest of approximately 51 per cent.

Horn holds a 60 per cent working interest in the Dharoor and Nugaal Valley Production Sharing Agreements along with working interest partners Range Resources and Red Emperor.

The Shabeel North well, the second drilled in Somalia in more than 20 years, is targeting Upper Cretaceous Jesomma sands which had good oil and gas shows in the Shabeel well 3.5 km to the south, Africa Oil said.

Source: Horn Petroleum.

Petrophysical analysis of downhole electrical logs in the Shabeel well indicated a potential pay zone of up to 12 to 20 m with an average porosity of 18-20 per cent.

It is planned to bring the rig back to the Shabeel location to test these sands once the drilling of the Shabeel North well is completed. The well will be drilled to depth of 2,400 m and drilling is expected to take 45 to 60 days to complete.

"The Shabeel North well will test the same reservoirs that appear to be oil bearing in the nearby Shabeel well," Horn President and CEO David Grellman said.

LIBYA IS CURRENTLY pumping nearly 1.5 mn bpd of crude and expects to achieve "normal" pre-war production levels of 1.6mn bpd by mid-2012, according to Abdulbaset Abadi, a member of the oil committee at the National Transitional Council.

Speaking at the MEED Libya Focus Day in Dubai, he said Libya was seeking foreign assistance to raise the country's oil production capacity to 2.2mn bpd in 2015 and 3 mn bpd in 2020. The country's current production capacity is estimated at about 1.6mn bpd.

International oil companies with production sharing contracts signed with the regime of the late Libyan dictator Moammar Gaddafi that are due to expire in 2012 will get contract extensions on account of Libya's 2011 revolution, Abadi said.

Libya plans to announce the structure of new enhanced production sharing agreements to replace the Gaddafi-era contracts in 2015, he said.

Separately, NTC deputy chairman Mustafa el-Huni said at the same event that Libya's 2012 budget assumes crude oil production of 1.5mn bpd and exports of 1.3mn bpd.

The NTC projects government revenues from the petroleum sector of about US$45mn in 2012. The remainder of the budget will be funded from Libyan assets that were frozen in overseas accounts during the country's 2011 revolution, he said.

Huni reaffirmed Libya's intention to honour all agreements with foreign investors signed by the Qadhafi regime. "We have no intention to nationalise or do something radical," he said. "Libya is in essence a moderate country that will look at implementing moderate policies."

The biggest short-term bottleneck was the communications infrastructure, which would take some time to extend to remote oil and gas facilities.

Nigeria oil bill waters down its reforms NIGERIA’S LONG-AWAITED oil law, when it finally comes, looks likely to be a botched job that gives favourable tax terms to foreign oil firms while doing little to satisfy calls for transparency and reform of a corrupt and wasteful sector.

A new draft of the long-awaited Petroleum Industry Bill (PIB) is close to being finalised, potentially ending years of uncertainty that has blocked billions of dollars of investment.

Licensing rounds, contract renewals and investment have been put on hold for five years pending the new bill to regulate Africa's top oil and gas industry. Passing the bill will allow such work to resume.

But provisions that would have forced the government to publish how much oil it pumps and all the payments it receives from

oil firms - in an industry where secrecy is blamed for corruption - have been stripped from the bill.

"I expect the petroleum industry to be happy.

I expect many Nigerians to be upset," said Pedro Van Meurs, an oil and gas expert who has consulted with the government on the PIB. "Transparency provisions related to corporate income tax, hydrocarbon tax and production sharing were deleted. This should be a source of concern."

The PIB is meant to change everything from fiscal terms to overhauling the Nigerian National Petroleum Corporation (NNPC). Its comprehensive nature caused years of disputes between lawmakers, ministers and oil majors.

The latest copy proposes some changes that will improve transparency: keeping royalty payments secret will not be allowed, for instance. Oil company profit taxes proposed in the bill are also in the public domain for the first time.

But it does not require disclosure of oil sales, of other taxes like income and hydrocarbon tax, nor of payments to the government, including signature bonuses. Openness on such subjects is vital to clean up the energy sector, say campaigners.

President Goodluck Jonathan commissioned a task force in January to fast-track a new copy of the PIB, which makes the passage of this condensed version more likely, even if the national assembly debate on it takes a while.

CAMAC gets deepwater blocks in Gambia THE GAMB IA HAS formalised two previously awarded petroleum exploration, development, and production licenses to offshore Blocks A2 and A5 to CAMAC Energy Inc. The blocks cover a combined 2,666 sq km in 600-1,000 m of water east of deepwater Blocks A1 and A4 operated by African Petroleum Corp.

CAMAC Energy is the operator with a 100 per cent interest in each block.

The Gambia National Petroleum Co has the right to elect to participate up to a 15 per cent interest following approval of a development and production plan.

CAMAC is responsible for all expenditures prior to such approval even if GNPC elects to participate.

During the initial four-year exploration phase, CAMAC Energy will conduct

40 Oil Review Africa Issue Three 2012

surveys, acquire and interpret 2D and 3D seismic data, identify prospects, and drill one exploration well on each block.

Segun Omidele, Senior Vice President, Exploration and Production, commented, "With these two blocks in Gambia, the four blocks in Kenya announced earlier this month, and our position in deep water Nigeria, CAMAC Energy is now a significant participant in highly prospective oil and gas basins in both East and West Africa. Our exploration and development programs in these areas have the potential to create substantial value for our investors, our host countries and other stakeholders. In addition, we will continue to strategically pursue opportunities to add to our exploration portfolio in both East and West Africa."

S10 ORA 3 2012 Gas & Downstream_Layout 1 07/06/2012 14:20 Page 41

The Baker Hughes Rig Count tracks industry-wide rigs engaged in drilling and related operations, which include drilling, logging, cementing, coring, well testing, waiting on weather, running casing and blowout preventer (BOP) testing.

MAY 2012 - LAND & OFFSHORE THIS MONTH Country ALGERIA ANGOLA CAMEROON CHAD CONGO DRC EQUATORIAL GUINEA ETHIOPIA GABON GHANA IVORY COAST KENYA LIBYA MAURITANIA MOROCCO MOZAMBIQUE NIGERIA SENEGAL SOUTH AFRICA TANZANIA TUNISIA UGANDA Total

Land OffShore Total 26 0 26 2 11 13 0 0 0 2 0 2 0 2 2 0 0 0 0 2 2 0 0 0 3 1 4 0 4 4 0 0 0 2 0 2 7 0 7 0 0 0 0 0 0 0 2 2 5 10 15 0 0 0 0 0 0 0 2 2 1 0 1 0 0 0 48 35 83

VARIANCE

LAST MONTH

From Last Month -1 2 0 0 0 0 0 0 1 1 0 0 1 0 0 1 0 0 0 0 -2 0 3

Land OffShore Total 27 0 27 2 9 11 0 0 0 2 0 2 1 1 2 0 0 0 0 2 2 0 0 0 2 1 3 0 3 3 0 0 0 2 0 2 6 0 6 0 0 0 0 0 0 0 1 1 4 11 15 0 0 0 0 0 0 0 2 2 3 0 3 0 0 0 49 31 80

LAST YEAR Land OffShore Total 35 0 35 0 6 6 1 3 4 2 0 2 1 1 2 0 0 0 0 1 1 0 0 0 6 2 8 0 3 3 0 0 0 1 0 1 0 0 0 0 0 0 0 1 1 0 1 1 3 10 13 0 0 0 0 0 0 0 0 0 2 1 3 2 0 2 53 29 82 Source: Baker Hughes

Tullow hits oil off West Africa TULLOW OIL HAS struck a sizeable column of "good quality light oil" at a deep-water exploration well off West Africa.

The explorer hit 31 m of net oil at the Paon-1X well on the CI-103 licence off the Côte d’Ivoire. The find was made in a Turonian fan system with a 74-m gross interval in Tubidite sands.

Ocean Rig's semi-submersible drilling rig Eirik Raude drilled the well to a total depth of 5,090 m in water depth of 2,193 m.

493 - Oil & Gas with Ad Adapt.ai 1 11/30/11 4:46 PM in for Tullow operates the block a 45 per cent stake with Anadarko

40 per cent and Ivorian company Petroci holding the balance.

Tullow's exploration director Angus McCoss commented: "The discovery of light oil in our first well in CI-103 extends the proven play for oil westwards from our successes in Ghana and is encouraging for our future exploration efforts elsewhere in this licence. We look forward to further drilling in CI-103 during 2013."

On the nearby CI-105 block, Anadarko had found oil shows at the Kosrou1 exploration well, also drilled by the Eirik Raude.

Oil Review Africa Issue Three 2012 41

S10 ORA 3 2012 Gas & Downstream_Layout 1 07/06/2012 14:20 Page 42

Gas

New gas find for Eni off Mozambique ITALIAN ENERGY FIRM Eni has announced a new giant natural gas discovery in Area 4, offshore Mozambique, at the Coral 1 exploration prospect.

The results for this well, drilled in the southern part of Area 4, are of particular significance. The Coral discovery is estimated to contain between 7 and 10 tcf of gas in place, exclusively located in Area 4. With these new results at Coral 1, Eni estimates that the resources exclusively located in Area 4 range between 15 and 20 tcf of gas in place. The new discovery further increases the total potential of the Mamba complex discovered so far in Area 4 offshore Rovuma, which is now estimated to hold between 47 and 52 tcf of gas in place.

Coral 1 is located 65 km off the Capo Delgado coast in a water depth of 2,261 m and reaches a total depth of 4,869 m. The well was drilled approximately 26 km south east of the Mamba South 1 discovery.

The discovery well encountered a total of 75 m of gas pay in single high-quality Eocene sand. This discovery is particularly significant since it confirms a new exploration play, which is independent of those drilled so far in previous Mamba wells. Eni will run a production test on the Coral 1 discovery.

Eni plans to drill at least another five wells to fully establish the upside potential of Area 4.

Eni is the operator of Area 4 with a 70-per cent participating interest. Co-owners in the area are Galp Energia (10 per cent), KOGAS (10 per cent) and ENH (10 per cent).

Nigeria to ‘ban natural gas flaring by end of 2012’ OIL COMPANIES MUST stop flaring gas by the end of this year or face a fine according to a draft of Nigeria’s new oil bill.

The Petroleum Industry Bill (PIB), which is close to being finalised, says, “Natural gas shall not be flared or vented after December 31, 2012, in any oil and gas production operation, block or field, onshore or offshore, or gas facility.”

"Any licensee who flares or vents gas without the permission of the Minister in (special) circumstances [...] shall be liable to pay a fine which shall not be less than the value of gas."

Many industry experts and environmental campaigners believe that the current deadline is too tight and therefore unlikely to be met.

Companies in Nigeria flared 30bn standard cubic feet (scf) of gas in January this year alone, with ExxonMobile responsible for flaring 9.85bn scf, according to figures released by the country’s state oil firm.

Many believe that the deadline to end gas flaring will not be met.

42 Oil Review Africa Issue Three 2012

...and also for Anadarko MOZAMBIQUE'S AMBITIONS OF becoming a major exporter of liquefed natural gas have been lifted by the announcement of another large find off its coast by a consortium led by Anadarko Petroleum.

The Golfinho exploration well found 7-20 tcf of The Deepwater Millennium drill ship is in the recoverable gas, foreground, with the Belford Dolphin drill ship is in the according to the background. Both are working in the Rovuma Basin company. The discovery was separate to the existing Prosperidade find, which holds as much as 30 tcf. The minimum recoverable resource commanded by the consortium in the block has risen from 17 tcf to 24 tcf.

“The well results are indicative of the upside that the potential acquirers of Cove Energy have priced into their offers,” FirstEnergy Capital Corp wrote in an e-mailed report. “We anticipate further consolidation in the region as the size of the discoveries becomes even more attractive to super majors.”

Bob Daniels, vice president of worldwide exploration at Anadarko, said the latest test well "significantly expands the tremendous resource potential of the offshore area 1 in the deepwater Rovuma basin, with additional opportunities yet to test."

BG hits for 5th time offshore Tanzania BG GROUP AND explorer Ophir Energy have made a big find at their Mzia well in Tanzanian waters.

Mzia-1 is BG Group’s first discovery within the deeper Cretaceous section and opens an extensive new play fairway within the Group’s offshore acreage in Blocks 1, 3 and 4, to complement the now proven Tertiary fairway.

Preliminary evaluation of the results indicates 55 m of natural gas pay in good quality sands.

An extensive logging programme has been completed, including the acquisition of pressure data and gas samples.

Significantly, the well has de-risked a number of 5th Discovery in a Row for BG Group Offshore Tanzania. adjacent Cretaceous prospects, which could form part of a future Mzia hub. These prospects are expected to be tested in a future appraisal programme to be defined following incorporation of data from this new well and 3D seismic.

The new resources proven by Mzia and the potential of adjacent prospects are currently under evaluation. Prior to drilling Mzia-1, BG Group had estimated mean total gross recoverable resources approaching 7 tcf of gas from the four previous discoveries drilled in Tanzania.

Mzia-1 is approximately 45 km offshore southern Tanzania in a water depth of 1,639 m. It is some 23 km from the Jodari-1 discovery and is part of the 2012 three-to-four well exploration programme.

Following the imminent completion of operations at Mzia, the Deepsea Metro-1 will relocate to Block 3 for the drilling of the next exploration prospect, Papa-1.

BG Group, as operator, has a 60 per cent interest in Blocks 1, 3 and 4 offshore Tanzania, with Ophir Energy holding 40 per cent.

S10 ORA 3 2012 Gas & Downstream_Layout 1 07/06/2012 14:20 Page 43

Ghana signs $1bn loan with China

ANGOLA LNG IS to start regular exports of LNG in late June after shipping tests and will target nonUS buyers in Europe and Asia where prices are higher, according to oil minister Jose Botelho de Vasconcelos.

De Vasconcelos also said plans by French oil major Total to cut output at its Girassol platform in June for works do not threaten the government's target to produce an average of 1.8mn bpd of crude this year, Reuters reported.

The 5.2mn-tonnes-per-annum Angola LNG project is led by Sonangol, which has a 22.8 per cent stake and Chevron, which holds 36.4 per cent.

Eni, Total and BP each hold a 13.6 per cent stake.

The plant, built in Soyo in northern Angola at an estimated cost of US$10bn, was initially set to start exporting in the first quarter.

"The project is practically in its final phase and we now see the forecast date (for regular shipments) in the third quarter, towards the end of June," De Vasconcelos said.

Angola LNG's plans to turn its focus away from US buyers occurs in the wake of a rapid increase in US shale gas production brought about by new drilling and extraction technologies, De Vasconcelos said.

GHANA HAS SIGNED a US$1bn lending agreement with China Development Bank Corp as part of the biggest loan in the country’s history that Vice President John Dramani Mahama said would provide hundreds of thousands of jobs and develop natural gas.

Ghana signed an $850mn agreement for a gas project between the Ghana National Gas Co and China Petroleum & Chemical Corp in Beijing and the rest for information technology projects, Mahama said. The total amount of the loan will eventually be $3bn and Ghana will send China 13,000 bopd that will be sold at market price on the day, he said.

The Ghanaian oil is not being used as collateral for the loan, Mahama said. The money will not be paid off using the country’s natural resources, he said.

“China has emerged as a significant source of credit to Africa.

Traditionally our partners have been the World Bank and the IMF,” he said in an interview, referring to the International Monetary Fund.

“The process for accessing World Bank and IMF credit has been unfortunately quite tiresome and comes with a lot of strings.”

The deal would help complete another 45-km pipeline to bring natural gas to the shore, officials said. A plant to process gas for power generation that would be piped to the Western region will be built, with Sinopec as the contractor, Mahama said.

Ghana’s rising debt levels are a concern as the government risks overspending before this year’s elections, restricting the West African nation’s credit rating, Fitch said in November. Ghana’s borrowing comes eight years after Ghana won $3.5bn in debt relief from the IMF and the World Bank.

Oil Review Africa Issue Three 2012 43

Gas

Angola LNG exports to start in June

Downstream

S10 ORA 3 2012 Gas & Downstream_Layout 1 07/06/2012 14:20 Page 44

Kenya moves to improve sole refinery’s efficiency KENYA HAS UNDERTAKEN steps to transform its sole oil refinery from a heavily-subsidised operation to improve its efficiency and bring down costs of its products, the energy ministry has said.

In response to criticism, the high cost of fuel in east Africa's biggest economy is partly due to the refiner's inefficiency. The government said last year that it would remove special deals that require local oil marketers to buy fuel products from the facility.

The government, which owns 50 per cent of the plant, will cut back on subsidies to the Kenya Petroleum Refineries Ltd (KPRL), forcing it to compete in sourcing crude oil directly, processing it and selling to marketers who now have an option to buy such products from other refineries worldwide.

The refinery does not now buy its own crude, and only refines oil purchased by marketers, a business risk it will have to take in future as it will be forced to strive for profits.

"By publishing the new laws we have shifted the burden of importation of crude oil from marketers to the refinery," energy Permanent Secretary Patrick Nyoike told Reuters.

"We now expect the refinery to assume merchant status by July 1 and bring in its own products for processing and selling it to marketers," he said.

The discovery of oil in Kenya recently announced has put the country under pressure to hasten the upgrade of key infrastructure such as storage facilities, transport pipelines and a rail system to move oil and natural gas products.

There are plans to upgrade the refinery, also half-owned by refiner and power generator Essar Energy, to process four million tonnes of crude per annum from 2.6mn tonnes now.

Officials say the refinery, crippled by breakdowns due to lack of investment

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44 Oil Review Africa Issue Three 2012

The ageing Mombasa oil refinery.

over the years, was last upgraded in 1994 and has not had any substantial investment since. It has been unable to meet its full production capacity of six million metric tonnes.

Kenya is seeking more than US$1bn to raise the capacity of the refinery, and has hired Standard Chartered Plc to seek funds for the expansion, which is expected to be 70 per cent debt and 30 per cent equity.

Gabon refinery project to increase exports GABON'S PLAN TO build a new 50,000 bpd refinery to replace the ageing 24,000 bpd Port Gentil plant is a necessity if the country wants to avoid becoming a net fuels importer. The plant would actually see the country's exports expand significantly. This would also be Samsung Engineering's first project in Sub-Sahara giving it the opportunity to acquire knowledge about the local terrain and establish its reputation on the continent.

Gabon's Energy and Environment adviser Gin Park announced that the Gabonese government had signed a memorandum of understanding (MoU) with South Korea's Samsung for the construction of a 50,000 bpd refinery in the country. The US$1bn project will be built in Port Gentil, the country's oil hub.

Construction is scheduled to be completed before the end of 2016 and South Korean experts are, according to Park, already in Gabon to begin the feasibility The Port Gentil oil refinery. study.

In terms of the MoU, construction will be done by Samsung while maintenance will be shared between the South Korean firm and the Gabonese government. Negotiations for a final deal are still under way though the project is one of the public and private partnerships (PPPs) embraced by the government in its 'Emerging Gabon Initiative'. Although no precise breakdown of the facility's product slate has been given, Park said that “the main product of the refinery will be diesel for domestic market and the other products will be for other markets, and the heavy fuel oil will be for the European market.”

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CITAC, A UK-based consulting firm specialising in Africa’s downstream industry, expects robust investment in supply logistics throughout the continent to 2020. Any concentration of infrastructure investment in high-volume entry points, such as Dar es Salaam and Lagos, is expected to have a significant impact on the broader African products market.

"We often think that oil growth comes from gross domestic product [GDP] growth, but in fact we must remember that GDP growth depends on energy supply, so an expensive supply chain - and worse, bottlenecks in the supply chain - will eventually constrain growth in comparison to competing countries," said Elitsa Georgieva, manager of Consulting Services with CITAC Africa Ltd. Africa's economies, which are becoming more liberalised and more regionally integrated, are projected to grow by an average of five per cent annually through the end of this decade. Georgieva pointed out that three factors are driving this growth: high oil prices, minerals demand from Asia and strong population growth.

Sustaining an impressive economic growth rate in Africa hinges on ready access to fuel supplies. Delegates at a recent series of CITACorganised industry workshops in Marrakech, Morocco concluded that investments in tank farms, ports, pipelines, railways and distribution networks are essential. According to CITAC, several African countries are particularly ripe for downstream logistics

investment. The specific countries, and the high-volume entry points that should continue to receive much attention from investors, include: Kenya and Tanzania - The ports of Mombasa and Dar es Salaam boast ports that serve as key supply points for most of East Africa.

Morocco - Horizon Terminals has built a major terminal in Tangier that enables it to target the Gibraltar Straits bunker market and attract container traffic from Southern Spain.

Nigeria - Despite its abundant oil and gas resources, Nigeria accounts for 35 per cent of Sub-Saharan Africa's clean product imports and is thus a good candidate for supply logistics investment. CITAC points out the refineries in Africa's most populous country tend to be inefficient, and government fuel subsidies will likely continue to limit the incentive to upgrade refineries. Lagos is a particularly strong candidate for infrastructure spending.

South Africa - CITAC reports that 29 per cent of Sub-Saharan Africa's clean products demand stems from South Africa. This major market should continue to attract infrastructure investment as the gap between demand and refinery output continues to grow.

Earlier this year, the government-owned transport and logistics company, Transnet, commissioned a 555-km stretch of its New MultiProduct Pipeline (NMPP) from Durban to Jameson Park near Johannesburg.

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Oil Review Africa Issue Three 2012 45

Downstream

CITAC sees robust investment in Africa’s downstream

S10 ORA 3 2012 Gas & Downstream_Layout 1 07/06/2012 14:20 Page 46

Interview

Reflex Marine excels in reducing risks and improving efficiency in offshore installation access, providing safe and efficient solutions for the offshore industry.

Oil Review Africa talks to Kate Hallowes, Sales Manager.

Offshore personnel

transfer solutions W

HAT IS THE background to your marine operation? What were its main functions at the outset and how has it developed?

Reflex Marine has been providing innovative and risk-focused access solutions for offshore operators for 20 years. We aim to continue raising standards in the safe transfer of personnel for the next 20.

Reflex Marine excels in reducing risks and improving efficiency in offshore installation access, and providing safe and efficient solutions for the offshore industry. Launched in 2001, the FROG is now well-established in the offshore industry with a track record spanning over a decade and is used to carry out over a million passenger transfers a year.

What are the major differences between your FROG and TORO Crew Safety Devices?

With a proven track record, and millions of safe transfers performed around the world, the FROG crew transfer device has changed the way we think about marine personnel transfer. The FROG offers ultimate passenger protection, uncompromised stretcher protection, highly effective support & training, and an unrivalled verification & testing regime.

The TORO represents a new affordable excellence for everyone involved in safe marine personnel transfer. Already employed around the world, the TORO is an exciting and revolutionary new product. It offers moderate passenger safety and ergonomics, cost effective transfers, fast and efficient transfers, and logistical convenience.

Our targeted training aims to increase risk awareness and competency, and improve the quality of incident data records.

Can you tell us a little about your training programmes...do any take place offshore?

At Reflex Marine we are committed to helping our customers manage their risks and achieve efficient ´best in class´ marine access operations. We achieve this through a complete range of services which include our training programmes and provide a holistic approach to risk management. We believe that no other company provides such a comprehensive solution to meet the needs of marine transfer operations. Our targeted training

46 Oil Review Africa Issue Three 2012

aims to increase risk awareness and competency, and improve the quality of incident data records.

We also provide service support to help operators ensure the equipment is ‘fit for purpose’, and operational reviews and audits to help them deal with challenging operational requirements. We aim to help our customers achieve and maintain a highly reliable and weather capable service, with a very favourable risk profile, in comparison to helicopter-based alternatives. We provide onshore training, either at Reflex Marine facilities or at the client, as well as offshore.

Has demand for your products grown as more exploration and production has gone offshore?

Reflex Marine has seen a steady rise in the numbers of units sold offshore, as well as the numbers of transfers performed by FROG & TORO. There are now more than 600 FROG & TORO units in operation across the globe, carrying out millions of transfers each year. We continue to see strong demand for our safety products.

Have requirements for your products changed as the oil and gas industry has evolved? For example, technology has enabled oil and gas recovery from deeper, more difficult to reach and more dangerous offshore areas. Do you constantly upgrade and adapt your services to meet these challenges?

Yes, we have definitely seen an evolution in the industry requirements for safer alternatives to personnel baskets, and indeed helicopter alternatives. In the 20 years that Reflex Marine has been trading, we have introduced four new personnel transfer capsules. We developed the FROG-6 in conjunction with a harsh weather operator who required larger capacity, bigger operating envelopes and better suspension systems.

The FROG-9 was developed with a high capacity vessel operator in the States, for an operator who needed to perform large volume crew transfers on a regular basis. TORO was developed in response to client feedback – they wanted smaller footprints and more cost effective transfers.

One would expect offshore support services in West Africa to differ radically from those in, say, the Middle East, where there are fewer deepwater projects. How will your services in Nigeria - I see you recently exhibited at NOG in Abuja - differ from those you offer in other parts of the world?

Reflex Marine consults with its client based on the

Platform to vessel crane transfer of personnel by Frog.

types of operations that they perform. We look at everything from wave and tidal types, to frequency of transfers and reasons for transfers, as well as environmental influences. We aim to offer the most suitable equipment for the operation in hand.

In Nigeria, we have a distributor who performs inspection & maintenance offshore services, as well as in-country parts and unit replacements.

FROG-6 is generally adopted in this region – it is our most capable unit. Regions such as the Caspian are performing extremely high levels of passenger transfers so have opted for FROG-9. We have a global network of distributors and ASCs (accredited service centres) to help our clients on this consultation in-country.

With new discoveries in Ghana, and now in East Africa, as well as existing production in Angola and Equatorial Guinea, for example, do you see potential in the sub-Saharan African market as a whole?

We have a good and long-standing history within Africa, a sixth of our units are in Africa.

There is definitely potential for business in subSaharan Africa.

And what do you see as the main challenges for your business in the coming year – or years?

Continuing to develop our product range and keeping up-to-date with the changing trends and requirements of the industry. We have big plans for moving in to all areas of personnel access, NUI, WE, rescue etc. Watch this space. ■

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Technology

How tough protective coating systems are keeping West Africa’s deepwater oil infrastructure working.

Built to

last W

HEN THE HELICOPTERS land on the floating rigs off Angola, many miles from the west African country’s shoreline, the remoteness of this prolific oil producing region becomes quite clear.

The floating production storage and offloading (FPSO) vessels that work in this area, with all their associated subsea infrastructure below, are designed to be self sufficient, at least as much as possible.

And that means all facilities are built to last, designed to operate in such tough offshore conditions, with maintenance requirements reduced to a minimum, where possible.

These state-of-the-art facilities need to be kept operational at all costs, given the huge sums of money at stake for operators, investors and host governments.

Lost production through downtime and maintenance can cost millions of dollars per day.

Corrosion is the primary factor affecting the longevity and reliability of subsea and buried oil and gas pipelines throughout the world.

As a result, these underwater pipelines are designed and constructed with an external corrosion resistant coating.

And it is not just pipelines either but all equipment and facilities that go into making these complex deepwater projects function.

The shift to deepwater and other hostile environments is demanding better solutions to improve the performance and life cycle of all underwater extraction equipment.

Painting the hull of drill ship GSF Jack Ryan, ofshore Angola.

Photo: Southey Holdings.

48 Oil Review Africa Issue Three 2012

The FPSOs that work off Angola, with all their associated subsea infrastructure below, are designed to be self sufficient, at least as much as possible.

Corrosion is the primary factor affecting the longevity and reliability of subsea and buried oil and gas pipelines throughout the world.

Long history The use of advanced coatings on upstream facilities working the offshore, including rigs, ships and pipelines, has long been practised by the oil and gas industry as a means of protecting these key strategic assets.

Major industry names such as 3M have, for more than 50 years, supplied oil and gas companies around the world with coatings for corrosion protection on their pipeline systems.

Today, 3M’s Scotchkote fusion bonded epoxy coating is reliable‚ tough‚ durable and field-proven.

But it is just one of a large number of companies supplying durable protection coatings for pipelines and other upstream oil and gas facilities.

During this 50-year timeframe, oil and gas pipelines have been coated with a wide variety of different coatings, such as coal tar or asphalt enamels, polyolefin tapes, two layer extruded polyethylene coatings, single or dual layer fusion bonded epoxy coatings, heavy three or multi-layer polyolefin (polyethylene or polypropylene) coatings.

Another well-known player, Bredero Shaw, provided compression coat to one of the continent’s most famous energy projects, the West Africa Gas Pipeline.

This entailed the application of coating on 598 km of 20” pipeline to carry natural gas from Nigeria through to Ghana, via neighbouring states Togo and Benin.

The company also supplied compression coat on PetroSA’s South Coast Gas Project in South Africa, a smaller venture that entailed 104 km of pipeline.

Tech evolution These and other major players have evolved with the industry, as it has faced up to new and greater upstream exploration and production challenges.

The task of deeper drilling, for instance, with increased safety emphasis, greater regulatory control and in more challenging regions illustrates the obstacles oil and gas companies now face - and will continue to face in the future - as they seek to discover new ways to meet global energy needs.

In West Africa, this means pushing new deepwater depths, and in new frontiers too, with eastern Africa fast emerging as a significant offshore gas play.

Technology is continuing to advance and more oil and gas will be extracted from these challenging regions in the future, analysts predict.

It means service providers will need to provide coating solutions that meet these evolving and demanding operating requirements.

No pipeline too deep Bradero Shaw says that no pipeline is too deep for its award-winning Thermotite ULTRA thermal insulation system.

This is an innovative subsea insulation system with unlimited water depth capability, comprising a specially engineered blend of polymeric materials with unique mechanical and thermal properties.

The company says the performance of the technology assures complete system integrity

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Technology

Over the past 50 years, oil and gas pipelines have been coated with a wide variety of different coatings.

during service, and reduced energy loss in steady state and transient conditions.

It gives the pipeline a multi-layered make-up to protect it from the elements, lined - from the outside in - with Fusion Bonded Epoxy; ULTRABond Adhesive; ULTRA Solid; ULTRA Foam; and ULTRAShield.

The typical characteristics of deepwater pipelines are that they are beyond the reach of divers.

According to another industry leader, Sigma Coatings, another implication for suppliers working in these increasingly challenging conditions is that there will be a growing need to get products to remote locations in countries that may lack dependable support infrastructure.

A robust worldwide network and experience will be essential to deliver the products and supply chain reliability and consistency that customers will need, it says.

Increasing complexity For modern energy projects it’s an incredibly complex task.

The typical characteristics of deepwater pipelines are that they are beyond the reach of divers, so all maintenance activity is remote, while water temperatures are very cold.

Wall thickness is typically high and high levels of insulation are typically required, as evidenced on the Medgaz pipeline project, which aims to transport gas from Algeria to southern Europe.

The pipeline used, specifically designed to be laid at depths of over 2,000 metres, was manufactured in Japan and coated in Malaysia, at the world’s largest pipe coating facility.

This coating consisted of three layers of propylene and one layer of concrete for protection against external corrosion and related factors.

It is a huge undertaking: with a planned initial capacity of eight billion cubic metres per year, Medgaz will transport gas from Beni Saf on the Algerian coast up to landfall in Almeria, Spain.

The total offshore distance of the pipeline is 210 km across the Mediterranean seabed.

With gas delivery reliability integral on both sides, the coatings applied will help to ensure that the pipeline does not fail, as a result of corrosion on the sea floor. ■

Oil Review Africa Issue Three 2012 49

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Technology

A major battle faced by asset owners and operators within the oil and gas industry is to maintain the asset integrity of pipework.

Improving online pipework repair with compliant

composite technologies A

S MAIN CONDUITS of processed fluids, pipework is susceptible to suffer corrosion, erosion or mechanical damage. If these problems are not addressed on time, there is a high probability that environmental and safety hazards, incidents and high costs can take place. Therefore, the question of how to reduce the likelihood of these events in the long term represents a major challenge for the industry, especially with the different alternatives to repair pipework available in the market.

For years, damaged pipework was repaired by cutting out the affected section and replacing it with a new welded section, usually stopping production.

Additionally, welding involves hot work which can lead to metallurgical problems and hazards to the safety of applicators, not to mention that it is forbidden in some sensitive environments. Hence, coating and composites manufacturers worldwide have been developing new repair technologies to avoid shutdowns, improve safety and protect assets against corrosion for the long term. Amongst these, composite repairs have gained greater acceptance because they provide an engineered, durable and affordable solution which is easy to apply, saving time.

Recognising these issues, Belzona Polymerics, a manufacturer of high performance composites and industrial coatings based in the UK, has developed a composite repair technology which is compliant to international standards.

This repair system avoids the need to replace pipework and offers an increased versatility compared to the use of mechanical clamps.

Compliant composite technologies Compliant composite repairs differ from other traditional non-compliant repair systems mainly as they rely on pre-qualified material, pre-defined mathematical design and require competent application craftsmanship. These technologies experienced growth and acceptance of use in the industrial sector after the publication of two international standards in 2007. These are: 6 ISO/TS 24817 –Composite repairs for pipework – qualification and design, installation, testing and inspection; and, 6 ASME PCC-2 Article 4.1 –Non-metallic composite repair systems for pipelines and pipework: high risk applications.

These govern all aspects related to composite repairs, from the prequalification of materials and repair systems, to the design of a repair specific and ‘fit for purpose’ for the individual pipe defect that it is to repair, including the training and validation of applicators by the manufacturer of the composite.

Three-component composite repair after completion.

Composite repairs have gained greater acceptance because they provide an engineered, durable and affordable solution, which is easy to apply, saving time.

Composite repair systems are typically composed of three elements: pastegrade material, resin and reinforcement sheet. The adhesive quality of the base material or resin is very important as it will level the substrate to be repaired which can be uneven or pitted due to external corrosion. In addition, the base material allows the reinforcement sheet to achieve an optimum bond with the substrate.

Paste-grade epoxies are convenient materials to be used as a base as they have excellent adhesion and excellent mechanical properties compared to other non-metallic systems such as polyurethane, methacrylate, alkyd, vinyl and polyester-based polymers.

On the other hand, the reinforcement sheet provides strength to the repair after being wetted out with the resin. The main function of the resin is to eliminate wicking/capillary failure modes along the fibre strands of the reinforcement sheet which usually are made out of carbon or glass fibres. It is important to point out that glass fibres are less rigid, less costly and easier to cut, design and apply compared to carbon fibres.

A typical application finalised of a three-component compliant system will look like the picture 1.

Benefits of compliant repair systems

Composite repair being applied

50 Oil Review Africa Issue Three 2012

In the market there are many options available to repair pipework. Compared to welding, composite compliant systems cost less and are easy to apply avoiding shutdown.

Normally, welding repair requires a shutdown in production for several days.

In addition, the application needs to be carried out in a more controlled environment ensuring that the atmosphere is free from hydrocarbons due to the explosion risk associated with hot work. As stated in the guideline API 510 in section 7.2.6, which is related to the repair of stainless steel weld and overlay

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Technology

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cladding, the repair procedure to restore removed, corroded, or missing clad or overlay, should take into consideration factors that may increase the repair sequence. These are ‘stress level, P number of base material, service environment, possible North Sea application. previously dissolved hydrogen, type of lining, deterioration of base metal properties (by SuperWrap may be temper embrittlement of considered as a permanent chromium-molybdenum alloys), minimum solution. pressurisation temperatures, and a need for future periodic examination'.

Compared to that, a composite compliant repair does not require hot work as it uses base materials, a resin and a reinforcement sheet that can be applied in situ, they are cold curing and do not require stress relieving. In addition, a typical repair takes only two or three hours to complete.

Finally, composite compliant repairs can be considered as a permanent type of repair because they can last in excess of 20 years given that there is no natural degradation mechanism to reduce its work in life.

As aforementioned, Belzona Polymerics has developed a composite repair system which is compliant with ISO/TS 24817 and ASME PCC-2 standards.

Application in Brazil.

Belzona SuperWrap is specifically engineered and designed for conditions that the repair in the pipework will encounter throughout its 20 plus year design life for it may be considered as a permanent solution.

The versatile system provides customers with a downtime-saving alternative to welding. Furthermore, the cold-curing ability enables corrosion-damaged components to be repaired online within 24 hours.

This composite technology can be applied in situ to pipes and vessels, even in cases where operating pressures exceed 250 bar. Additionally, the system allows applications to any geometry of pipework, including bends, tees and complex geometry and resists a wide range of chemicals, oils and process fluids. Further impact and accelerated weathering testing has ensured that Belzona SuperWrap is a robust fit for purpose repair with a wide range of potential applications.

Belzona SuperWrap has been used by many oil and gas clients worldwide and has been in service for in excess of 1900 hours.

In line with the high level of requirements of the international standards that Belzona SuperWrap has been designed to, Belzona has trained and validated applicators and designers to provide a consistent and unparalleled level of service to customers around the world. The company has trained applicators in Egypt, Argentina, Colombia, Brazil, Mexico, USA, Norway, UK, France, Italy, India, Malaysia and Australia.

Applications Two different applications demonstrate the versatility of Belzona SuperWrap.

The first application was performed in 2009 on a six-inch diameter pipe which carried produced water on an offshore platform located in the North Sea. The water line operating at 30-55°C and 1.5-2 bar pressure had a 10mm through wall defect and was suffering localised wall thinning due to bacterial corrosion. This water line needed immediately to be repaired and returned to service in the quickest possible time. Therefore, the steel pipe was grit blasted to obtain a surface profile of 3 mils (75 micron) to gain optimum adhesion.

Afterwards, the Belzona SuperWrap system was applied by a validated trained applicator. This application took just two hours and the produced water line was put back into service within two days. An inspection report carried out in 2012 demonstrates that the application did not show signs of deterioration or damage.

Another Belzona SuperWrap application took place on corroded pipework from offshore platforms located in the coast of Macaé (Brazil), that was operating at temperature levels up to 800°C. The oil and gas client tendered a bid in 2011 to carry out composite material repairs on pipework and Belzona SuperWrap was chosen for being applied onto 300 sq m of pipework area at the platform.

The repairs started in January 2012 following the client’s specifications.

Initially, the client stated in the contract that composites repairs shall be engineered compliant solutions with total thicknesses ranging from 6 mm minimum up to 24 mm maximum. The design, applications and inspections of the composite repairs should be carried out by personnel validated by the product’s manufacturer. The repairs should also be carried out within six months.

A total of 81 projects were designed to cover 300 sq m pipework of various diameters and personnel assigned to this project consisted of nine installers and two validated designers. Of the 23 repairs completed to date, 16 have been applied to arrest external corrosion and seven applied to return required strength to thin walled defects. In addition, another two repairs were carried out at a second platform in sections of the pipework suffering through-wall defects. More projects are expected to be completed by June 2012 covering 230 sq m. ■

Adriana García, Marketing Executive-Oil & Gas, Petrochemical and Bulk Chemicals, Belzona Polymerics Ltd

52 Oil Review Africa Issue Three 2012

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Technology

Chikezie Nwaoha* interviewed Mr. Sherwin Damdar who has been working in the fluid sealing industry for the last four years. His current role is project leader for Garlock Sealing Technologies’ elastomer expansion joint division.

Pipeline expansion

joints E

XPANSION JOINTS ARE flexible connectors used to reduce vibration, dampen sound, and compensate for movement in piping systems handling pressurised fluids. They are used in HVAC and power generation systems, sewage and water treatment plants, pulp and paper mills, chemical processing, primary metals production and petroleum refining plants. Pipe movement (face-to-face, angular, compression, lateral, elongation and vibration) can be caused by a number of factors, including system pressure or vacuum, temperature gradients, equipment vibration, system weight and structural settlement. Expansion joints are typically located at the suction or discharge side of pumps, and at directional changes and long runs of piping. They offer a number of advantages compared with pipe loops and bends, which are less expensive, but have hidden costs in terms of space requirements, installation labour and pipe supports.

It is important to understand how process conditions will affect expansion joints.

Safety and emissions compliance are essential to hydrocarbon refineries. Garlock companies offer ideal sealing solutions to meet these stringent requirements. Oil rig near Port Harcourt.

temperatures of up to 982°C and pressures up to 1,000 psi, both of which are beyond the capabilities of elastomer joints.

Selection strategies Recent technologies “Many of our customers are moving beyond operational excellence to focus on safety and sustainability as important business objectives,” said Sherwin Damdar Manufacturers of expansion joints are working on developing next-generation products and services to help customers achieve these goals.

The two primary types of expansion joints are elastomer and metal. Elastomer expansion joints are usually fabricated from natural or synthetic rubber and reinforced with fabric. In some cases, metal body rings are added for reinforcement.

Elastomer expansion joints accommodate greater pipe movement than metal units, offer a wider range of spring rates and have higher abrasion resistance. They also provide acoustical impedance and visible signs of fatigue, alerting users to potential failure.

Metal expansion joints are usually constructed in a bellows-like configuration from relatively thingauge material designed to absorb mechanical and thermal movements. They can withstand

54 Oil Review Africa Issue Three 2012

It is important to understand how process conditions will affect expansion joints. In selecting the proper expansion joint for a particular application, the following factors should be taken into account: 6 Pipe size 6 Fluid medium 6 Medium temperature 6 System pressure/vacuum 6 Expansion joint environment 6 Face-to-face dimensions 6 Pipe misalignment 6 Drilling pattern (i.e. bolt holes, bolt-hole diameters, etc.)

6 Retaining rings 6 Control units

Expansion joint accessories Retainer rings should be used for all elastomer expansion joints to distribute bolting pressure evenly and prevent flange damage during tightening. The rings are installed directly against the back of the expansion joint flanges

and bolted through to the mating pipe flanges.

This helps to ensure that a seal is created between these flanges.

Control units are recommended for most applications to prevent damage due to excessive pipe movement. These units consist of two or more control rod assemblies to minimise potential damage from excessive axial movement. They also prevent over-elongation and excessive compression if compression nuts are used.

Flow liners extend service life by protecting elastomer expansion joints from abrasive materials, particularly in high-velocity applications. These liners prevent fast-flowing fluids or highly abrasive slurries from prematurely degrading the expansion joint tubes.

Best practices The service life of an elastomer expansion joint is subject primarily to service conditions and pipe misalignment. With proper storage and installation, this type of expansion joint can be expected to last approximately five years under moderate service conditions and minimal misalignment.

It is critically important to work with an expansion joint manufacturer that offers a complete package of products and technical support. A full-service supplier that can

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Technology

applications engineers. This type of innovation, which sometimes involves direct collaboration between the manufacturer and customer, focuses on the latter’s need to improve not only operational performance, but also sustainability and plant safety.

The future

Garlock is the acknowledged global leader in high-performance fluid sealing products

recommend the correct expansion joint for a given application will help improve plant safety, the mechanical integrity of the system in which it is installed, and ultimately the user’s competitive position in the marketplace.

Common pitfalls The biggest pitfall is subjecting expansion joints to conditions beyond their specified capabilities. Expansion joints are designed to operate within certain ranges of temperature, pressure and movement.

When operating conditions exceed these parameters, premature failures occur. It is

r r r

56 Oil Review Africa Issue Three 2012

therefore recommended to work with your supplier to assure the correct expansion joint is specified for a particular application.

Expectations and recent technologies Many industries such as power generation and chemical processing have associations and user groups that meet regularly to review members’ concerns. These meetings cover technical issues and provide an opportunity for members with similar problems to compare their experiences and pursue corrective action.

The best innovations are customer-driven through continuous feedback via sales and

An area of particular focus is providing customers technical support training seminars for installation and maintenance personnel to address topics such as expansion joint removal, visual inspection, proper bolting, lifting and lugging, trouble-shooting, dimensional verification and others.

It is also important to instruct customers in preventative maintenance through routine on-site inspection of all the expansion joints in their facilities. This enables timely replacement of worn joints to avoid catastrophic failures.

Also provided are failure analysis reports, offering insights into the root causes of expansion joint failures. These reports help improve the mechanical integrity of plant equipment, and can be used to create and maintain a data file for future reference. ■ * Chikezie Nwaoha (AMIMechE) is a graduate of Petroleum Engineering (with speciality in process engineering, covering flow systems design) from Federal University of Technology, Owerri, Nigeria.

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Technology

Remote Open Close Technology is allowing operators to work differently and approach interventions and completions in a new way by cutting rig time while improving health and safety standards.

Well control and

intervention R

EMOTE OPEN CLOSE Technology is allowing Operators to work differently and approach interventions and completions in a new way by cutting rig time while improving health and safety standards.

UK-headquartered Red Spider has invested heavily in R&D and has also worked closely with industry bodies and major operators to develop a range of solutions – initially with an eye to well interventions but increasingly with a focus on completion work.

Every hour saved during a well operation results in significant cash savings and a reduction in risk.

Red Spider’s range of Remote Open Close Technology (ROCT) products are designed to simplify well operations by removing wireline runs making the operation more efficient. The product line consists of eRED®, eRED-FB™ and PowerBall®.

Each tool has an integrated power supply and electronic control module so it can carry out preprogrammed instructions either autonomously or by reacting to a command from surface.

Further work involving eRED-FB, one of Red Spider’s latest products, is scheduled with an operator in Equatorial Guinea by the middle of 2012. The eRED-FB USB Connection

Expansion in West Africa This year the company appointed an agent in West Africa to support its expansion in the region. The agreement is with Nigerian agent AOS Orwell to promote Red Spider’s suite of ROCT and provide a permanent presence for customers in the region from operational facilities in Port Harcourt and a sales office in Lagos. The company’s unique ROCT products will help operators cope better within the ever-increasing challenges and complexities associated with drilling smarter wells, particularly offshore Gulf of Guinea.

Following the agent agreement, Red Spider then went on to complete its first work in West Africa and recently secured additional contracts in the region. Work involving eRED, Red Spider’s breakthrough ROCT product, was completed in Equatorial Guinea. The success is expected to lead to further runs of the tool in a number of West African countries, with significant interest expressed by operators in Gabon, Ghana, Angola and Nigeria.

Further work involving eRED-FB, one of Red Spider’s latest products, is scheduled with an operator in Equatorial Guinea by the middle of 2012. Deals completed for work so far in West Africa have a value of US$600,000.

Red Spider Chief Executive Steve Nicol said: “There has been a great deal of interest in our technology in West Africa because of the particular benefits it delivers for deepwater operations. Having an agent in place gives us the capability to make

58 Oil Review Africa Issue Three 2012

Significant interest [has been] expressed by operators in Gabon, Ghana, Angola and Nigeria. an impact and achieve successful results with a rapid turnaround. We are a small company but have proved our technology delivers for many operators.

Now we have the logistics in place to sustain operations in a key target location for us.”

Huge untapped market Barry Killoh, Red Spider’s sales manager for Africa, said: “We see a huge untapped market for ROCT technology in West Africa, and partnering with a prominent and successful indigenous company like AOS Orwell allows us to work together to replicate our success in other regions in Nigeria as well as the wider region. We knew the West African market had huge opportunities for our technology and to have had this level of interest from the outset is very encouraging. Our tools are proven to help operators reduce risk and deliver major cost savings, particularly during deepwater operations, so they are ideal for the market.

“Appointing our agent AOS Orwell in Nigeria

has given us an excellent operational and sales presence on the ground and we can offer a rapid turnaround for operators looking for the benefits our tools offer.’’ eRED is a downhole computer-controlled valve that can be opened and closed by remote control, without the need for intervention or control lines, saving time, money and removing risk.

The valve has allowed 20 operators globally, to save up to $900,000 during a single subsea completion operation, typically reducing slickline runs from 8 to 1. In deepwater workover operations, savings of up to 36 hours and $750,000 have been recorded in a single job.

It is a battery-powered through-tubing device which is pre-installed or deployed below a carrier such as a wireline lock. In practice it works exactly like a wireline plug, but without requiring any intervention to deploy or retrieve the plug when a barrier needs to be put in place or removed. Any application where a wireline lock and plug is used can be replaced by an eRED, thus achieving exactly the same results without repeated intervention jobs, which in turn removes the risk of multiple slickline runs.

An eRED action, such as opening or closing, is initiated only when a specific well condition (known as a trigger) is detected. Upon successful completion of that action, the eRED can look for another trigger which in turn initiates the next

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essential. www.marellimotori.com

Technology

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action. Using a series of different trigger and action combinations, the eRED can be used in complex well programs, opening and closing as many times as required without any intervention.

As an example of its flexibility the eRED, which was originally developed to be used in intervention type plugging operations, began to be used for a variety of other applications. These applications include shallow set for tree testing and change out, deep set for completion deployment, packer setting and tubing testing, annulus short string plug in vertical subsea trees, liner deployment with external swellable elastomers and zonal isolation during TCP gun firing. The company continues to add to this list as the operators, enjoying the significant risk reduction and cost savings made by the tool, suggest more and more practical applications for the eRED tool.

Further customer requests followed by investment in extensive research and development work, resulted in two further products, eRED-FB and PowerBall. eRED-FB is the tubing mounted version of the field proven eRED. It consists of a remotely actuated full-bore ball valve which can be opened and closed multiple times, controlling flow through the tubing without the need for any well intervention or an umbilical control line.

Eliminates need for wireline The use of eRED-FB completely eliminates the requirement for any wireline runs during a completion placement operation, resulting in savings of between 32-38 hours and $650,000 to $800,000 in subsea scenarios. Moreover a mechanical downhole barrier is present at any time during operations, to be activated upon request to take control of the well.

Eliminating the requirement to deploy traditional wireline equipment speeds up the completion process, bringing wells on-stream

AOS Orwell has established operations in three countries - Nigeria, Ghana and Uganda - and is expanding rapidly.

sooner and reducing the risk of exposure to bad weather. While removing the need to rig-up and rig-down, wireline and PCE equipment reduces the risk to personnel, equipment and the operation.

Eliminating the requirement to deploy traditional wireline equipment speeds up the completion process.

When closed, the eRED-FB provides a bidirectional downhole barrier, capable of holding up to 5,000 psi from above or below. When open, the large internal diameter maximises production or injection and allows easy access to the well and equipment below the valve.

PowerBall is a reservoir isolation barrier precisely designed for reliability. It is intended to be run open, then subsequently closed during lower completion deployment and finally to be permanently re-opened by remote command for production or injection to commence. It can operate in any type of well, including cased and open-hole wells.

Well completion technology challenges include optimising lower completions, which PowerBall

successfully achieves by using electronic logic in its primary opening mechanism. Remote opening of PowerBall happens with no pressure cycles, but on detecting a specific trigger much as with the eRED, thus resulting in a much more flexible and efficient operation. Savings of up to 12 hours and $250,000 can be achieved thanks to the quick activation method of PowerBall.

Both new technologies received funding through ITF, the oil and gas Industry technology facilitator. Operator members, including BG Group, Chevron and Maersk Oil invested in the development of the technology.

ITF involvement was crucial to delivering the products in a relatively short time frame as the body secured commitment from the Operator sponsors.

Through the ITF process, Red Spider was able to pool the knowledge from the project sponsors, which allowed the drawing upon of their industry experience to close-out potential problems that may have delayed development of the technology. eRED and its Remote Open Close Technology product group are particularly suited for deepwater and subsea applications where the rig time savings are most valuable. They have been very successful in both the UK and Norwegian sectors of the North Sea and are making an impact globally in regions such as Brazil, Gulf of Mexico, Australia and AsiaPacific and now West Africa. â–

TD Williamson system offers diverless hot tapping TD WILLIAMSON HAS announced the successful development and field deployment of the Subsea 1200RC tapping machine, the company’s new compact remote-controlled subsea hot tapping machine. The lightweight system allows hot tapping to be carried out from the safety of a diving support vessel (DSV) or platform, resulting in significant safety benefits and improvement in operational control.

The demands of deep water and the risks in shallow water have necessitated development of a completely diverless, remote-controlled system. TD Williamson (TDW) has therefore developed the Subsea 1200RC tapping machine, a remote-controlled hot tap machine.

While the installation of the hot tap assembly and subsequent removal of the machine will still require diver assistance when a pre-installed tee is not present, the performance of the tap itself is remotely-controlled by a TDW technician onboard the DSV or platform.

The system is a topside-driven hot tap machine with passive RemotelyOperated Vehicle (ROV) interface, which means that it is a stationary ROV with its hydraulics and control system attached to the Subsea 1200RC tapping machine, and operated from an on-board laptop. The new subsea system has demonstrated the feasibility of conducting the critical tapping

60 Oil Review Africa Issue Three 2012

operation entirely by remote control. But the system offers more than just reduction in diver activity, the safety benefits of which are obvious. The further benefits of the new technology are that it offers total control and visibility of the tapping operation where there was none before.

Built-in sensors allow continuous recording of actual pressures, temperatures, rotation and movement of the pilot drill and cutter. They shed light on what is going on inside the enclosed space right at the heart of the cutting operation. The laptop-based programme facilitates control remotely, rather than relying on the divers’ manual handling of the cutting process. This results in a level of accuracy and quality that is not possible in diver-based operations.

Benefits demonstrated in first field operation The Subsea 1200RC tapping machine was tested and successfully deployed in 2011 on a tapping operation for a project in water depths of 91 meters. The tap size was 16-inch on an existing 28-inch gas pipeline. TDW performed the operation from a DSV. The cutting operation itself lasted approximately two hours. The entire operation was conducted safely, while flow through the gas pipeline continued uninterrupted.

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MidEast MidEa ast - North Africa A

Tel: T el: el Fax:

Mediterranean Medite erranean Upstream Ups stream

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Sponsors Sonkia Greyvenstein sonika@glopac-partners.com

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Babette b van Gessel

tanya@glopac-partners.com

Tanya T anya Beddall dd

babette@glopac-partners.com

10th - 11th September 2012 Four Seasons des Buerges Geneva, Switzerland

9th MidEast-North Africa Mediterranean Upstream Conference 10th - 11th September 2012

46th PetroArabian-PetroAfricanus Dinner 10th September 2012

Speakers Pascal Laroche, Business Development Manager, Total Yasser Tousson, Managing Director, Finance, Apache Egypt Companies Neri Askland, Vice President Middle East, Statoil ASA Luay Al-Khatteb, Executive Director, Iraq Energy Institute Dr Duncan Clarke, Chairman & CEO, Global Pacific & Partners Mustafa Cihangir Akbaba, Head of Department, Botas Petroleum Pipeline Corp, Turkey Daniel Gerber, Chief Executive, PetroLogistics Gary Lakes, East Mediterranean Editor, Middle East Economic Survey Roger Carvalho, Managing Partner, SPTEC Advisory Rob Jones, Head of Mediterranean Assets, Cairn Energy John Tomich, Cyprus Country Manager, Noble Energy Dr Anwar Al Kharusi, New Ventures Manager, Oman Oil Company E&P Mohamed Akrout, Director General, ETAP, Tunisia Bernard Cociancig, Chief Executive International, MND Petroleum Jean-Denis Bouvier, Chief Executive Officer, PetroGas E&P Gabor Zelei, Head of Upstream Business Development, MOL Group Gary King, Chief Executive Officer, Dutco Natural Resources Investments Ltd Solon Kassinis, Director, Ministry of Commerce, Industry & Tourism, Republic of Cyprus Albert Stromquist, Snr. Vice President, Mubadala Development Company Daniel Freifeld, Founder, Permian International Bijan Khajehpour, Director, Atieh Group Nick Dancer, Managing Director & Country Manager, Egypt, Dana Petroleum Mathios Rigas, Chief Executive Officer, Energean Oil & Gas Haddou Jabour, Promotion & Partnership Manager, ONHYM Mike Wood, Director, Oyster Oil & Gas David Rowlands, Executive Vice President, Multiclient EAME, Spectrum ASA Ali Abdallah, Business Development Deputy Manager, GazTransport & Technigaz Mac Beggs, Vice President & General Manager Exploration, New Zealand Oil & Gas

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Innovations

S14 ORA 3 2012 Innovations_Layout 1 07/06/2012 12:34 Page 62

GE’s deepwater drilling breakthrough IN A MILESTONE for the global oil and gas industry, GE showcased its new MaxLift 1800 pump system at the 2012 OTC. This product will pave the way for the use of dual gradient drilling (DGD) technology in challenging deepwater applications. DGD significantly lessens the impact of the water column on deepwater drilling. In addition, drillers can reach reservoirs that are impractical to access using conventional single gradient drilling. The net effect of DGD will help optimise the productivity, safety and efficiency of deepwater wells.

Sam Aquillano, VP drilling and surface for GE Oil & Gas said, “For years, deepwater operators and equipment providers worldwide have investigated ways to explore reservoirs previously thought unreachable.

Following rigorous prototype testing and successful field trials since 2001, GE’s MaxLift 1800 will make dual gradient drilling a reality for the industry, helping optimise the safe and efficient future drilling of deepwater wells.”

To achieve a dual gradient, flow from a well being drilled is diverted to the MaxLift 1800 pump. The riser is then filled with seawater density fluid, so the reservoir ‘feels’ as if the rig is located on the seabed since the MaxLift pumps prevent the hydrostatic pressure of the mud from being transmitted back to the wellbore. The new GE pump can deliver up to 1,800 gpm at discharge pressures up to 6,600 psi and can handle solids up to 1.5 inches in diameter.

Deepwater wells in parts of the world including West Africa are challenging due to the narrow pore pressure/fracture gradient environment. The DGD system increases drilling efficiency while lowering mechanical risk and well costs.

A game changer for offshore dry docking DOCKWISE HAS ENGINEERED the most innovative semi-submersible heavy-lift vessel in history and redefined the limits of heavy marine transport with the design of the Dockwise Vanguard. Additionally, the Dockwise Vanguard has opened a new market for offshore dry-docking.

A 2012 recipient of the OTC Spotlight on New Technology Award and the Royal Association of Dutch Shipowners (KNVR) Shipping Award; the Dockwise Vanguard is 274 m long and 70 m wide making it the largest semisubmersible vessel ever built. The vessel has a carrying capacity of 117,000 deadweight tonnage (DWT) - and travels across oceans at 14 knots.

Additionally, the Dockwise Vanguard has a 50 per cent greater lifting capacity and 70 per cent larger deck area than the current largest active heavy lift ship, the Blue Marlin, also owned by Dockwise.

The Dockwise Vanguard was designed for both dry-transport and offshore dry-docking markets. Dry-docking capabilities enable inspection, maintenance and repair service opportunities while keeping the FPSO unit on location. The vessel opens a new market for future reliable mega transports allowing the dry-transport of large FPSOs, Spars, Tension Leg Platforms (TLPs) and fully integrated floating production units up to a carrying capacity of 117,000 DWT in a safe, fast and well known way.

The Dockwise Vanguard is the first bowless vessel built with a starboard steering room and accommodation; its design was intended to maximise cargo space; a benefit of its unconventional composition. DeltaMarin, a specialised shipbuilding engineering agency, designed the vessel in detail and extensive model tests were performed in a water basin to confirm vessel behaviour.

Offshore transport opportunities, once considered impossible such as offshore loading and discharge of mega structures and FPSOs are now attainable.

Rigless intervention system from B Hughes BAKER HUGHES’ NEW mechanised, self-pinning rigless intervention system, Mastiff, provides operators an alternative method for carrying out pipe installation and retrieval operations, which typically require a costly offshore rig. By eliminating the need for a rig, the Mastiff Rigless Intervention System (RIS) can reduce the cost of abandonment, workover and drive pipe pre-installation operations.

The Mastiff RIS’ modular design and light weight make it ideal for operations on platforms with limited load capacity and is easily deployed worldwide. With a Mastiff rigless intervention system maximum weight of 10886 kg, each RIS module can from Baker Hughes. be transported in a standard 12-m open-top container.

The Mastiff RIS has a self-pinning mast erection system that improves safety and enables the unit to be rigged up or rigged down in 24 to 48 hours. Hydraulics built into the system enable the modular components to be assembled and disassembled using a hydraulic, self-pinning design, eliminating the need for riding belt operations, and dramatically reducing risks associated with working at height and manual handling of components. The system’s sturdy mast enables safe operation at wind speeds of up to 43.5 knots.

The system has a 352-ton pulling capacity. While performing conductor pipe removal, the Mastiff RIS can support cutting and pulling lifts of 15-m sections of 91-cm conductor pipe, inner casing and cement, a significant improvement over casing jack systems, which work with 1.5-m sections.

As an alternative to well abandonment, the Mastiff RIS can be used to initiate a slot recovery programme for continued field development prior to the arrival of the drilling rig. Once the pipe is removed, the well slot can be prepared for a new, full-sized wellbore using a full-range of equipment from drive-pipe whipstocks to hammer services, saving valuable rig time and offering the operator the option to further redevelop assets.

62 Oil Review Africa Issue Three 2012

Halliburton launches low ECD solution HALLIBURTON HAS LAUNCHED a comprehensive solution to help operators access reservoirs previously inaccessible due to low equivalent circulating density (ECD) margins. This solution comprises new and existing technologies that enable operators to achieve operational efficiencies and increased safety while managing cost.

ECD occurs when friction in the well from circulating drilling mud and fluids during cementing operations results in increased bottomhole pressure, which can cause challenges in well integrity and safety. Halliburton’s Low ECD Solution addresses these challenges by: 6 Maintaining hydrostatic pressure of the fluid column below the fracture gradient while maintaining well control 6 Reducing overall fluid viscosity to reduce frictional forces 6 Allowing drilling fluids, spacer and cement to flow freely into the casing and up the annulus to avoid lost circulation, while also providing excellent hole cleaning 6 Minimising surge in the formation while running the liner so pressure drop across the hanger is reduced 6 Increasing bypass circulation rate while not exceeding the fracture gradient of the formation due to pressure build-up New technologies included in the solution are the low ECD fluid enhancement package, VersaFlex low ECD system, Commander 1000 topdrive cementing head, and the high-pressure shearing unit.

S14 ORA 3 2012 Innovations_Layout 1 07/06/2012 12:34 Page 63

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Emerging technologies

S15 ORA 3 2012 IT 1_Layout 1 07/06/2012 12:36 Page 64

The next generation of volume visualisation has arrived, says Philip Neri of Paradigm.

Emerging

technologies 3

D VOLUME VISUALISATION has been around for 20 years, and many improvements have been made to the early technologies that enabled geoscientists and engineers to see inside the massive data volumes emanating from modern 3D seismic acquisition and processing methods. Over time, the solutions evolved from expensive, highlyspecialised computer systems to mainstream desk-side (and even laptop) architectures, thanks to the advances in chip designs, cheaper and more abundant memory and improved standards for data transfer within the computer. Credit has to be given to the requirements of video game applications, which drove many of these developments, and which happen to match the needs of industrial applications addressing 3D seismic, as well as medical and other market segments.

Visualisation solutions for 3D seismic have been tracking these developments in an evolutionary manner, leveraging the technical improvements to allow for larger datasets, higher display resolutions and new processes such as automatic fault extraction, sub-volume detection and sculpting, true spatial event auto-tracking and multi-attribute quantitative interpretation. Performance improvements were made possible for some years by the availability of multi-cpu and multi-core cpu architectures, allowing for the parallelisation of some tasks in order to accelerate intensive computations.

If we look at a typical high-end multi-core computer, it is clear that there are significant bottlenecks when dealing with large volumes: reading data from disk

Figure 2 (a) - Comparison of rendering quality. Above is the older CPU-based process

64 Oil Review Africa Issue Three 2012

to RAM is done at about 1 GB/second in optimal circumstances. This is not too much of a concern because this operation is done only once at the beginning of a work session. The CPU cores interact with RAM at transfer rates of 32 GB / second. The handing over of rendered images (or any other data) from CPU RAM to the graphic card is however limited to some 5 GB / second, which will slow down the transfer of information to the display.

The fundamental architecture of a visualisation solution has remained remarkably similar to the very first solutions launched in the early 1990s: seismic data was loaded from disk into the computer’s main memory (RAM), and the rendering of the 3D views was performed using the compute power of the CPU. Rendered images were then passed on to the graphic card and from there projected onto the computer’s display. For the user, this entailed a lag between the change of a viewing or rendering parameter and the actual update of the image on screen. Since seismic visualisation entails data volumes ranging from a gigabyte to tens of gigabytes, i.e. an order of magnitude larger than typical gaming applications, the computer’s resources were pushed to their limits. To avoid an unacceptably long lag, rendering algorithms were kept simple, and parameters were constrained to value ranges that did not entail excessive calculation loads. As a result, users had to settle for renderings that were visually acceptable but not as detailed or realistic as technically feasible.

Graphic cards have evolved significantly over the past ten years, mostly to address the needs of video gaming software. These games require an instant

S15 ORA 3 2012 IT 1_Layout 1 07/06/2012 12:36 Page 65

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Emerging technologies

S15 ORA 3 2012 IT 1_Layout 1 07/06/2012 12:36 Page 66

Figure 2 (b) - The new GPU-based rendering

response to user inputs and the rapid update of scenes and renderings to bandwidth (144 GB / second) and a direct access to the display screen, it would generate a more realistic virtual experience. This led to the development of be possible to develop uncompromising, very high resolution rendering increasingly powerful processing capabilities on the video card itself, as well as algorithms as well as allowing for display parameters that would make full use increased memory on the card to avoid bottlenecks shuttling data to and from of every detail in the data, with instant response times. the CPU. This revolution has now gone from concept to reality. The volume The seismic processing industry was the first segment of geosciences to visualisation rendering code and display management have been entirely retake note of these developments, and to adapt some of its compute-intensive written in nVIDIA’s CUDA C++ language, implementing for the first time a processes to run on graphic cards, repatriating the results to the CPU on completely re-engineered, compute-intensive rendering process that avoids completion. With hundreds of cores packed on one card, the overheads of many of the weaknesses and inaccuracies of past solutions. The result is a transferring the data from RAM to graphic card and back were more than offset display with a much-improved amount of detail in complex situations, a better by the phenomenal computing power at hand. There were additional incentives visual perception of depth and relative positioning of objects, and the ability for to pursue this architecture because graphic cards are not only powerful, they the user to tweak at will the rendering parameters to achieve an optimal result have a lower electrical consumption and lesser cooling requirements compared [Figure 2]. The latter is made both easy and comfortable because there is no to multi-core / multi-CPU setups for an equivalent or better productivity. perceptible lag between a parameter change and the update of the view. Many Because seismic processing code is already built for parallelisation to operate “what if?” trials can be made to adjust parameters at will. on clusters and make the most of multi-core systems, such applications were In practical day-to-day usage, the amount of seismic that can be handled on well suited to leverage the full capabilities of a modern high-end graphic card. the graphic card is about one third of the available memory, since there is a For the gaming developers, and now for the emerging computational uses of need to store locally intermediate computation results and other data. Still, for the Graphic Processing Unit (GPU), standardised as well as proprietary most applications in exploration and production, this is an acceptable amount of programming languages emerged to make it easier to harness the resources of information to handle at one time. graphic cards. Currently, these languages are the open standard OpenCL and nVIDIA’s proprietary CUDA [Compute Unified Device Architecture] C++. These languages allow the programmer to execute code on the graphic card as an extension to the resources of the conventional CPU. The graphic card is eminently suited to manage parallelism using Single Instruction Multiple Data [SIMD] commands.

For 3D volume visualisation applications, the opportunity to look at leveraging an architecture that would solve the issues of lag and of rendering compromises came when new graphic cards dramatically increased the size of their memory. With 6 gigabytes of memory, it became realistic to work with seismic data volumes directly on the graphic card. With this breakthrough, and the ability to leverage massive parallel computing power (over 400 Figure 3 - Discriminating karst intrusions originating in the Ellenberger formation that impact the Barnet Shale formation cores on a single card) with impressive internal

66 Oil Review Africa Issue Three 2012

S15 ORA 3 2012 IT 1_Layout 1 07/06/2012 12:36 Page 67

Emerging technologies

S15 ORA 3 2012 IT 1_Layout 1 07/06/2012 12:36 Page 68

Once the CUDA-based volume visualisation application was operational, new possibilities emerged to further improve project turn-around and offer novel functionality to the end user. As mentioned earlier in this article, modern visualisation workflows often include multi-attribute processes. In order for these workflows to be practical, it was necessary to compute any and all desirable attributes and to store the resulting data volumes on disk. Then and only then could the user initiate a visualisation session, read from disk to RAM the attributes he or she deemed to be the most likely to address the session’s objectives, and then proceed to manipulate co-rendering parameters and other display processes to perform multi-attribute visualisation. There are two weaknesses to this approach: first, the need to know before starting a session exactly which attributes will be required, and second the time lag that will affect the adjustment of multi-attribute rendering during the session.

In the new volume visualisation paradigm based on the powerful graphic card, the availability of massively-parallel computation resources makes it possible to calculate most attribute volumes on demand, making it superfluous to pre-calculate and store on disk these attributes. This not only dramatically shortens the turn-around time for a visualisation project, since it is no longer a requirement to pre-compute, store and then retrieves attribute volumes. It also makes the multi-attribute workflow more interactive and flexible, since the user can call up any of the attributes in real time. In addition, the adjustment of corendering parameters is done instantly, allowing the user to fine-tune more meaningful displays with no time penalty. It was previously a common practice to pre-compute many attributes ahead of a visualisation session in order to be able to call on them rapidly. This resulted in significant disk space usage as well as a lot of compute and management time for the users. In practice, not all of these pre-calculated attribute volumes were found to be relevant or suitable, and data management overheads become commonplace to keep track of large amounts of attribute volumes related to visualisation projects.

A practical application of new volume visualisation capabilities The shale gas plays in North America are very active with tight, intense drilling programs and a need for a fast turnaround for interpretation and modeling activity in order to generate accurate, fully-informed and low-risk drilling plans to guide the horizontal drilling and the hydraulic formation fracturing that together ensure productive wells. Our example is in the Barnett Shale formation in East Texas. The Barnett Shale lies on top of a limestone formation, either the Viola Limestone and Simpson Group, or the porous Ellenberger limestone.

Above the Barnett Shale, another limestone formation is found, the Marble Falls formation. While these Marble Falls and Viola formations are an integral part of the success of the Barnett Shale field development towards the North, as they help contain induced fractures, the Ellenberger however is more porous and affected by dissolution features called karsts, which results in places in the formation of chimneys that intrude into the Barnett Shale and present a significant drilling hazard. These chimneys are also a concern as they degrade the mechanical properties of the shale, making it undesirable to perform hydraulic fracturing in the proximity of such a feature.

Volume visualisation is the quickest way to locate, identify and qualify unpredictable, localised anomalies. Because the shale has very little seismic character, it is difficult to identify easily any disruptions or anomalies. The best approach is to fine-tune the rendering parameters using a multi-attribute view involving conventional amplitude data and Coherence Cube®, to single out unconforming events [Figure 3]. Assigning a specific coloration to these events allows them to stand out in the 3D view, making them easier to locate [Figure 3]. Seismic surveys in the area of the Barnett Shale are of average size and because the overburden well understood and relatively uncomplicated, seismic interpretation ahead of well planning typically focuses on the area immediately surrounding the Barnett Shale, at depths of some 2,300 meters. The limit of two gigabytes of seismic to make use of the memory of the graphic card is more than enough to accommodate Barnett Shale datasets. As can be seen in the illustration, the karst features colored in light blue are easy to identify. Subvolume detection algorithms can then delineate the actual chimney features [Figure 4]. Since the well planning tool operates within the same window, the borehole can be accurately located away from the risk of karst intrusions. The improved quality of the rendering is clear, as can be seen when shown alongside the same data rendered using older processes and algorithms.

Conclusion The gaming industry has driven the development of very powerful graphic cards that are now being used as computing devices for highly-parallelised processes.

With the advent of mature programming languages and larger on-board memory, it has been possible to completely re-engineer seismic volume visualisation solutions to deliver a quantum leap in performance, better responsiveness, more accurate rendering algorithms and the real-time computation of attributes. Together, these benefits cut dramatically the time needed to perform a complete visualisation workflow, with better user comfort and an improved quality and level of detail of the displays. Because the solution uses standard 64 bit computers and commercial graphic cards, it is available both on Microsoft® Windows 7 and on Red Hat® Enterprise Linux®.

Acknowledgments: The author would like to thank Marathon Oil for the right to utilise their data for the purpose of illustrating this article, and Paradigm colleagues Evgeny Ragoza for his insights into new computer architectures, and Bruno de Ribet for his help in collating the Barnett Shale case study materials. ■

Figure 4 - Sub-volume detection delineates the karst ‘chimney’ within the Barnett Shale (Left: map view, right perspective view).

68 Oil Review Africa Issue Three 2012

S16 ORA 3 2012 IT 2_Layout 1 07/06/2012 12:38 Page 69

Information Technology

S16 ORA 3 2012 IT 2_Layout 1 07/06/2012 14:52 Page 70

Seatronics underwater metrology OVER THE LAST 18 months, Seatronics, an Acteon company, Technip, Star Net Geomantics and BlueView Technologies have been involved in developing the BlueView 3D system for underwater metrology. This work has included several onshore dry dock trials. Seatronics, along with Star Net, is now a recommended execution contractor for BlueView BV5000 multibeam surveys for inspection and metrology projects, as it understands the system’s capabilities and clients’ subsea measurement requirements.

The BlueView 3D system combines terrestrial laser and underwater 3D multibeam sonar scanning technology to provide a unique and innovative solution to complex subsea metrology operations.

Seatronics has recently supplied a complete BlueView BV5000-1350 system and personnel for subsea metrology on Talisman Energy’s Auk North project in the North Sea: the third successful use of this technology. Coupled with Star Net’s extensive experience in advanced data processing techniques, the technology provided very precise measurements between the subsea connection flanges on two manifolds in the Auk North field development.

A new manifold was to be integrated into a field with an existing manifold. The spool piece required between the new and the existing manifold was required to be accurate to 70 mm and have an alignment error of less than 1°. All the metrology aids had been removed from the existing structure, which caused design issues. However, Star Net had laser surveyed the existing manifold before its deployment as part of a previous onshore dimensional control survey. This dataset became critical in the project execution, as the subcontractor was able to generate temporary metrology aids from the survey data. The location of

the flanges within the structures caused additional issues from the access point of view.

The BlueView BV5000-1350 system supplied by Seatronics was successfully deployed by its offshore personnel to perform multiple scans around the subsea structures. Data quality control was overseen by Star Net operatives onboard the vessel. Traditional laser scan data augmented this survey data to position the flanges accurately relative to each other and provide precise measurement information to aid the fabrication of the adjoining spool piece.

Following the metrology survey, the spool piece was designed and fabricated. As part of the project’s completion, Star Net surveyed the two-piece pipe section and brought the sections together to confirm the fabrication tolerances.

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