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NIGERIA – The solution is about reducing costs

 

The long wait for decisions on Nigeria’s new Petroleum Industry Bill continues. Most of the planned development activities for offshore mining licence OML 145 are on hold. Reprocessing of 2003 seismic data may however lead to additional resources in deeper potential prospects..


2017 was again a year of low activity in the whole Nigerian oil sector. The reasons are twofold: investments are hampered by low oil prices and political unrest in Nigeria. This in turn makes it difficult for the authorities to finalize the long-needed new Petroleum Industry Governance Bill (PIB).


OML 145, UGE
The Uge Main discovery is located in the north-western part of the block in water depth of approximately 1,200 metres. It is 50 kilometres southeast of the large Shell-operated Bonga field complex in OML 118.

The OML 145 operator, ExxonMobil, has undertaken detailed value enhancement development studies to refine and optimize the development plan in order to increase recovery at lower costs. A recent estimate for an Uge field development base case has EUR (Estimated Ultimate Recoverable Reserves) of approximately 322 mmboe.

The licence also contains three potential tieback candidates in the Uge North, Nza and Orso discoveries..


UGE FIELD DEVELOPMENT

Efforts to enhance the probability of development are being investigated by the licence partners. A joint development with the adjacent Nsiko oil field and a shared FPSO was investigated with emphasis on the basis of design and cost estimates. Uge is located in OML 145 and operated by Esso Exploration & Production Nigeria (Deepwater West) Ltd while Nsiko is located in an adjacent undeveloped block (OML 140) operated by Star Ultra Deep Petroleum Ltd (a Chevron company) about 50 kilometres away; both with a resource size of approximately 300 mmboe. The conclusion of this study was that a joint development was technically feasible, but the economics remained marginal. Svenska and Oando, licence partner, have advocated a solution using a leased existing FPSO, which would require minimal refurbishment and would bring the start of production forward by a number of years. This would reduce the development cost and improve the economics of the project. To date this suggested solution has not been embraced by the other partners.

In 2017 an alternative development plan was investigated in which Uge became a tie-back to Nsiko, and was brought on production when ullage in the production system would allow. However, this solution also remained economically marginal, and the operator proposed to reprocess the 2003 3D seismic data using new and improved technology. Hopefully that will confirm expectations of additional oil reserves in other parts of the licensed area. Svenska believes there is potential south of the Uge Main discovery as well as in deeper formations in the block. There is also a multi-client survey being proposed. This would provide a brand new set of data over the block and could be more advantageous to the exploration efforts than the reprocessing. The decision on seismic reprocessing or acquisition will be made in early 2018. Another factor affecting the development of Uge Main is further delays in anticipation of the new PIB, which may have an impact on technical solutions as well as affect the project economics.

 

GUINEA-BISSAU – Exploration Targets Identified

 

In 2017 the decision was made to drill the Atum prospect, located in the deep-water western part of our Guinea-Bissau acreage.

 

During the year a number of geological and geophysical studies were completed – leading up to a full prospectivity review at the early June TCM meeting in Stockholm.

 

At this same meeting Svenska concluded that, as an operator, we have viable drillable prospects in the blocks. The recommendation was made to go ahead with a decision to drill pending government approval of licence extension and improved terms.

 

The government approval was gazetted on 4 August 2017 and we were informed of this decision shortly after by Petroguin, the Guinea-Bissau petroleum authority and our joint venture partner. At the November MCM/OCM licence meeting the joint venture made a resolution to drill in late 2018.

 

"The actual drilling schedule will be dependent on access to a drilling rig and base. It will be coordinated between the operators in the area in order to optimize the operations, and reduce costs", says Torgny Berglund, VP Exploration. "Costs related to drilling, mobilization and other services associated with drilling would be reduced. However, these coordination efforts may have an effect on the final timetable for drilling."

 

 

SENEGAL’S DISCOVERIES INCREASED ACTIVITY

The significant oil discoveries made by operator Cairn in Senegal, some 220 kilometres due north of Svenska’s licence, pushed Svenska’s activities in Guinea-Bissau into a new phase. Two oil and gas discovery wells were drilled in 2014, named SNE and FAN. Five appraisal wells have since been drilled on the SNE discovery that is located on the Senegal shelf margin. The geological setting in the western part of Svenska’s blocks in Guinea-Bissau is similar to that of the SNE discovery. This fact has significantly increased the interest in Svenska’s acreage as well as for Guinea-Bissau in general.

EXTENDED LICENSING PERIOD

Svenska applied for, and received a three year extension from November 2017 to November 2020. This gives us the ability to wait and drill later, but we have chosen to move on. If we make a discovery we need the time to do further drilling. The licence extension came with a larger equity for Svenska, as well as improved fiscal terms for water depths greater than 200 metres. “We have already recruited a drilling manager and an HSE manager to plan and prepare for drilling. The area has received a lot of attention from the oil industry during the last year due to the discoveries in Senegal. There is a clear increase in activity in the area and a significantly growing interest specifically in our area and in our plans in Guinea-Bissau,” Torgny continues.

 

DRILLABLE PROSPECTS IN GUINEA-BISSAU
The Atum and the Anchova prospects in the deep waters of the western part of the licensed area have been further evaluated and we have decided to start drilling in Atum in the fourth quarter of 2018. “As a follow-up, we may farm into or look for new blocks in the region. We are continually looking for new options to expand our footprint in this active region,” Torgny concludes.

 

OPERATED BY SVENSKA

Svenska farmed in to the Guinea-Bissau licences in 2007. When the previous operator, Premier Oil, decided to withdraw from the licences, Svenska assumed the operator role with an increased equity. The operator role involves responsibility for licence management, drilling activities and other technical work, as well as continuous liaison with the Guinea-Bissau authorities. Despite the unstable political situation, long-term Swedish support for this country has facilitated Svenska’s discussion with the authorities. The current, as well as the previous, regime has shown serious commitment to this project.

THE IVORY COAST – Preparing for the future – a year of maintenance


The most important event this year has been the completion of a revised set of agreements between the Joint Venture partnership and the owner and operator of the Baobab FPSO, which motivates for long-term investments and contributes to successful co-operation. These agreements pave the way for the Baobab Life Extension Project which aims to keep the FPSO on station without dry docking until the licence expires in 2038.

 

A conclusion was reached towards the end of 2015 that a life of field agreement with Modec International Inc. providing a leased FPSO for Baobab until licence expiry was the commercially most favourable option for the Joint Venture.

 

LIFE OF FIELD AMBITION

"A lot of work went into establishing a set of agreements, which would meet this objective resulting in a bare boat charter and operating & maintenance agreements being signed in February this year", says Jan Hagen, Executive Vice President responsible for development and production. The new contracts comprise an incentive scheme and are based on KPIs covering HSE, asset integrity and production.

 

MAINTENANCE IN FOCUS

With the Phase 4 drilling campaign being postponed, the operational focus has been on maintenance and riser replacement. A comprehensive refurbishment programme for the gas compressors has also been carried out. All planned work during the summer shutdown, including the changing out of the flare tip, was completed in record time, and a subsea choke replacement was carried out in August. The two risers due for replacement, one production and one water injection, were installed satisfactorily by the Technip vessel Deep Explorer in November. Finally, the steel renewal programme is progressing pleasingly with estimated completion by mid-March 2018. All these activities have been completed within the allocated budget and timeframe, which is a tribute to the cooperation between all licence stakeholders.

 

RETURN TO DRILLING ACTIVITIES

The Phase 4 drilling campaign was aborted in the spring of 2016 with three production wells and one water injector suspended at the 20” shoe. However, preparations for restarting the drilling activities have been progressing throughout this year including locking in contracts with service companies and identifying a suitable drilling unit. Towards the end of the year the partnership sanctioned the re-mobilization of a drilling complete the wells and issued a letter of award to the rig owner. In addition to the completion of the four suspended wells, the campaign will also comprise a firm additional water injector and options to drill another production well as well as potentially an exploration well. Mobilization is currently expected to take place on 1 March 2018.

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