West Africa's Time to Shine Arrives

Deep Water Sparks Starring Role

The relatively small, relatively sparsely populated countries along the West African coast are poised to become major players in the world oil arena in the next five years.

Giant deep water discoveries found in the region are beginning to come on line, and new deep water finds all along the coast are as sure a bet as there is in this risky business.

In fact, many experts believe -- privately, but with a passion -- that West Africa will likely emerge as the world leader in offshore exploration and production activities in the coming years.

Of the world's 120 deep water field discoveries identified for development in 2000-2005, West Africa accounts for 17 of those finds -- just a fraction of the 75 found in North America, perhaps, but in terms of reserves West Africa tops the Gulf of Mexico and Brazil's Campos Basin.

Table 1:Deepwater Fields Off West Africa 2000-2005

Year Onstream No. Fields Field Name Operator Location Water
Depth (m)
Status
2000 1 La Ceiba Triton Energy Equatorial Guinea -- Block G 700 Under Development
2001 1 Girassol B TotalFinaElf Angola -- Block 17 1,360 Under Development
2002 0
2003 4 Bonga Shell Nigeria -- OPL 212 1,015 Under Development
Dalia I TotalFinaElf Angola -- Block 17 1,360 Planned
Agbami Texaco Nigeria -- OPL 216 1,433 Planned
Moho TotalFinaElf Congo -- Haute Mer 800 Possible
2004 3 Plutonio BP Angola -- Block 18 1,362 Possible
Hungo ExxonMobil Angola -- Block 15 1,202 Possible
Ukot TotalFinaElf Nigeria -- OPL 222 762 Possible
2005 8 Girassol C TotalFinaElf Angola -- Block 17 1,375 Planned
Xicomba ExxonMobil Angola -- Block 15 1,355 Planned
Lirio TotalFinaElf Angola -- Block 17 1,365 Possible
Rosa TotalFinaElf Angola -- Block 17 1,405 Possible
Chocalho ExxonMobil Angola -- Block 15 1,147 Possible
Erha ExxonMobil Nigeria -- OPL 209 1,350 Planned
Ikija Texaco Nigeria -- OPL 216 1,849 Possible
Nnwa Statoil Nigeria -- OPL 218 1,282 Possible

Source: Offshore West Africa Report 2000-2005; Douglas-Westwood/Infield Systems

The 17 fields, according to a report by Roger Knight with London-based Infield Systems and Dominic Harbinson with Douglas-Westwood in Canterbury, England, have combined reserves of over nine billion barrels of oil equivalent and an average field size of 535 million barrels of oil equivalent.

The only fields that come close to those numbers are found in the deep water Campos Basin, which geologically is a mirror image of West Africa.

"Liquids production of almost three million barrels a day could be achieved by fields coming on stream in the region over the period to 2005," according to the report.

Leading players are Angola and Nigeria, both with 1.2 million barrels a day of potential additions.

Image Caption

Figure 3: Operator share of reserves in West Africa deep water prospects due onstream 2000-2005. Source: The Offshore West Africa Report 2000-2005; Douglas-Westwood/Infield Systems

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The relatively small, relatively sparsely populated countries along the West African coast are poised to become major players in the world oil arena in the next five years.

Giant deep water discoveries found in the region are beginning to come on line, and new deep water finds all along the coast are as sure a bet as there is in this risky business.

In fact, many experts believe -- privately, but with a passion -- that West Africa will likely emerge as the world leader in offshore exploration and production activities in the coming years.

Of the world's 120 deep water field discoveries identified for development in 2000-2005, West Africa accounts for 17 of those finds -- just a fraction of the 75 found in North America, perhaps, but in terms of reserves West Africa tops the Gulf of Mexico and Brazil's Campos Basin.

Table 1:Deepwater Fields Off West Africa 2000-2005

Year Onstream No. Fields Field Name Operator Location Water
Depth (m)
Status
2000 1 La Ceiba Triton Energy Equatorial Guinea -- Block G 700 Under Development
2001 1 Girassol B TotalFinaElf Angola -- Block 17 1,360 Under Development
2002 0
2003 4 Bonga Shell Nigeria -- OPL 212 1,015 Under Development
Dalia I TotalFinaElf Angola -- Block 17 1,360 Planned
Agbami Texaco Nigeria -- OPL 216 1,433 Planned
Moho TotalFinaElf Congo -- Haute Mer 800 Possible
2004 3 Plutonio BP Angola -- Block 18 1,362 Possible
Hungo ExxonMobil Angola -- Block 15 1,202 Possible
Ukot TotalFinaElf Nigeria -- OPL 222 762 Possible
2005 8 Girassol C TotalFinaElf Angola -- Block 17 1,375 Planned
Xicomba ExxonMobil Angola -- Block 15 1,355 Planned
Lirio TotalFinaElf Angola -- Block 17 1,365 Possible
Rosa TotalFinaElf Angola -- Block 17 1,405 Possible
Chocalho ExxonMobil Angola -- Block 15 1,147 Possible
Erha ExxonMobil Nigeria -- OPL 209 1,350 Planned
Ikija Texaco Nigeria -- OPL 216 1,849 Possible
Nnwa Statoil Nigeria -- OPL 218 1,282 Possible

Source: Offshore West Africa Report 2000-2005; Douglas-Westwood/Infield Systems

The 17 fields, according to a report by Roger Knight with London-based Infield Systems and Dominic Harbinson with Douglas-Westwood in Canterbury, England, have combined reserves of over nine billion barrels of oil equivalent and an average field size of 535 million barrels of oil equivalent.

The only fields that come close to those numbers are found in the deep water Campos Basin, which geologically is a mirror image of West Africa.

"Liquids production of almost three million barrels a day could be achieved by fields coming on stream in the region over the period to 2005," according to the report.

Leading players are Angola and Nigeria, both with 1.2 million barrels a day of potential additions.

"Placing this in a global context," the report continues, "over the next five years West Africa could account for 21 percent of global offshore liquids reserves brought on stream, second only to the Europe/Mediterranean region."

The world's deep water fields identified for development over the 2000-2005 period will have average production rates of over 34,000 barrels a day of liquids, but West Africa's fields will far exceed that average with approximately 93,000 barrels daily -- over five times the average expected productivity of deep water fields in the Gulf of Mexico identified for development during the same period.

Table 2: Productivity of deep water fields identified for development 2000-2005 (b/d liquids)

  No. Fields Total Expected
Production
Average
Production
Asia Pacific 4 137,800 34,450
Europe 7 110,000 15,714
Latin America 16 887,800 55,488
Middle East 1 (all gas) N/A
North America 75 1,390,850 18,545
West Africa 17 1,582,000 93,059
Total 120 4,108,450 34,237

Source: The Offshore West Africa Report 2000-2005; Douglas-Westwood/Infield Systems

The 17 deepwater fields could boost regional liquids production by almost 1.6 billion barrels a day, or about 40 percent of the deep water additions to global liquids production.

Growing Expenditures

TotalFinaElf is the dominant player in the fields slated to come on line through 2005. The French operator holds over a third of the reserve base set for development in that period.

Four other majors, namely ExxonMobil, Texaco, Chevron and Shell, also have substantial positions. Their combined holdings amount to almost 50 percent of deep water reserves identified for development.

Since 1997, Infield Systems and Douglas-Westwood estimates indicate that West African offshore field development expenditures have been reasonably steady, averaging $2.4 billion yearly.

But that will all change in the next five years.

The companies forecast field development expenditures to increase to $3.8 billion this year and grow to potentially $10.4 billion by 2005.

The bulk of these expenditures -- 78 percent -- will be offshore Angola and Nigeria.

The major components in these capital outlays are floating production systems, which, when added to costs of shallow water platforms, will result in surface or platform-based facilities accounting for 70 percent of the expenditures.

The report forecasts installation of 33 floating production systems in the next five years -- some being extremely costly. Elf's Girasol unit offshore Angola, for example, is expected to exceed $900 million.

Large deep water fields also will require considerable numbers of subsea well completions -- 297 are likely to be installed by 2005, at costs that are estimated to exceed $4.8 billion.

When the associated templates, control lines and systems are added that figure jumps to over $6.9 billion.

A Few Concerns

While the reserve figures for West Africa's deep water province are impressive and headline-grabbing, some serious issues remain to be addressed.

Those, according to the report, include:

  • Political and commercial corruption and instability.
  • Unfamiliar and often inefficient commercial practices.
  • A dearth of adequate local service and supply facilities.
  • Occasionally hostile local communities.

In Nigeria's Niger Delta, for example, popular agitation over the perceived inequities in the distribution of oil wealth has led to violence that may have cost Nigeria up to $1 billion in lost oil revenues in 1999, according to the report.

Deep water discoveries, of course, should be less susceptible to local problems since they are too far from the coast to be easily disturbed.

Still, an issue companies must face is West African governments' demands for greater levels of involvement in the decision-making process toward field development.

Proving the Potential

The first giant deep water fields discovered offshore West Africa were Shell's Bonga on Nigerian block OPL 212 and Elf's Girassol in block 17 off Angola in the spring of 1996.

Since then, 44 fields have been discovered in water depths of 500 meters or more, with the deepest discovery to date being Elf's Andromede Marine field, found in early 2000 off the Congo in 1,893 meters of water.

According to the report, ExxonMobil's Topacio satellite off Equatorial Guinea in 579 meters of water is the only deep water field on production in the offshore West African deep water region.

Topacio, which is part of the firm's Zafiro project, came on line in 1997 and is currently flowing 6,000 barrels of oil a day to the Zafiro Producer floating production system.

Triton's La Ceiba Field in 700 meters of water offshore Equatorial Guinea's Rio Muni province was expected to come on-stream by early 2001.

These two fields make the small nation of Equatorial Guinea (population -- less than half a million) the current leader in the region's coming deep water production.

By 2005 Nigeria, Angola and the Congo will join their neighbor among the world's important oil and gas producing nations.

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