For explorers, the question is thrilling and daunting at the same time: “What would you do with an elephant?”
Galp Energia tested its Mopane-2X confirmation well offshore Namibia this year and knew right away it had found an elephant. Initial flow tests hit a maximum limit of 14,000 barrels of oil equivalent per day, positioning the find as a major commercial discovery, Galp reported.
“In the Mopane complex alone, and before drilling additional exploration and appraisal wells, hydrocarbon in-place estimates are 10 billion barrels of oil equivalent, or higher,” the company announced.
To Galp, an integrated Portuguese energy company, one step looked obvious:
It needed to get out from under that elephant.
“Deepwater offshore Namibia has seen eight successful exploration wells out of ten, so that’s a phenomenal record. At least a couple of those look like they will be giant oil fields,” said Ian Thom, research director, upstream, for analytics and consulting firm Wood Mackenzie.
“There’s a lot to be excited about,” he noted.
Galp’s confirmation well was drilled about 5 miles east of its Mopane-1X discovery, in Namibia offshore Petroleum Exploration License 83. That success came on the heels of the large Venus-1 discovery in PEL56 by TotalEnergies and multiple oil discoveries by Shell in PEL39.
All those discoveries lie in the Orange Basin, the southernmost of four basins off Namibia. Galp’s Mopane complex is north of PEL56 and PEL39 and west of the large offshore Kudu Gas Field.
A Surprise Elephant
Informally, the definition of an “elephant” and a giant field are the same: at least 500 million barrels of known recoverable oil equivalent. Based on preliminary estimates, both the Venus and Mopane accumulations qualify as giant fields, or even potential supergiants.
At an estimated 10 billion barrels of oil in place, Mopane was sizable enough to send Galp in search of a partner, one with deep pockets and proven expertise in deepwater development.
“If you look at the list of companies that can operate a large offshore discovery, that’s a fairly short list,” Thom observed.
“You have a really pretty significant expenditure up front, particularly with Galp having an 80-percent interest. It’s unlikely for Galp to proceed on its own,” he said.
Galp CEO Filipe Silva noted that the company actually had a 100-percent financial exposure on the Mopane drilling, since it was carrying its partners, National Petroleum Corp. of Namibia and Custos Energy.
Silva said Galp will prioritize finding “a partner that is keen to develop quickly the prospects and that will fund the CapEx (capital expenditure). So more than a monetization, this would be a partner that would support the development as quickly as possible.”
Galp’s potential farm-in and partnership arrangement for Mopane is “of huge interest to the majors,” Thom observed.
“Mopane is looking like one of the best (assets) if not the best asset offshore Namibia. Venus is looking very good, as well. TotalEnergies has been quite positive,” he said.
“The reservoir properties, the fluids have tested really very favorably. It has got a few question marks around things, like the gas ratio, what happens to the gas,” he added.
Mopane reportedly encountered a high-quality oil reservoir in the Late Cretaceous Cenomanian-Turonian interval. The earlier Venus discovery found about 275 feet of net oil pay, also in a Cretaceous reservoir, according to reports.
Galp described Mopane’s logs as showing good porosity and permeability plus high pressure in at least two hydrocarbon zones, with little CO2 and
no H2S.
In an analysts’ meeting, Galp executives were asked if there were any surprises at Mopane versus pre-drill expectations. Adriano Bastos, the company’s head of upstream special projects, gave the response, “Any surprise versus pre-drill? Yes, we found a much more prolific profile than we expected. And the DST (drill stem test) results corroborate our findings.”
Possible translation: Who knew this thing was going to be so big?
FPSOs Needed
Galp announced plans to update its reservoir model for PEL83 and drill at least two more wells, but future production demands have more to do with its cry for “Help!” than drilling costs.
“What we haven’t seen as yet (offshore Namibia) is the first projects transitioning from exploration into development,” Thom noted.
“The solution of choice is the FPSO, floating production storage and offloading vessel. These vessels can be built elsewhere, often in Asia in large yards, and then mobilized. Thet’s become routine for the oil majors – not to say there’s not challenges,” he said.
Silva confirmed that Mopane, “is going to be a multiple FPSO development. So it is beyond the means, the financial means of Galp to keep 80 percent.”
First large-scale oil delivery from offshore Namibia isn’t expected for at least four years and might not come until the end of this decade. Right now, the industry is watching to see if FPSO plans at TotalEnergies’ Venus complex firm up, according to Thom.
“The first FPSO will be a big deal,” he said.
Oil from offshore Namibia could be shipped anywhere in the world, Thom observed, although routes north to European refineries or east past the Cape of Good Hope and Cape Agulhas make the most sense.
“It’s north to Europe, or you could go around Africa to the Asian market, anywhere there’s the right price,” he said.
Other Operations in the Area
In addition to Galp’s drilling program, multiple wells are planned for the Orange Basin in 2024. Chevron has entered a deal with NAMCOR to explore PEL90, just west of PEL83, with the first exploration well expected to spud later this year. Woodside Energy holds an interest in PEL87 north of PEL83, and is reportedly evaluating drilling possibilities.
“Among the majors, TotalEnergies has the best position. Chevron’s at an earlier stage. It’s looking to drill some wells. Shell has got discoveries, but it hasn’t signaled that it is moving quickly to development,” Thom said.
A BP-Eni joint venture company, Azule Energy, announced in May it had executed a farm-in agreement with Rhino Resources Namibia to drill two exploration wells in Orange Basin Block 2914A, PEL85, south of the Kudu field.
In South African waters further south of the Namibian Orange Basin activity, a few wells already have been drilled with generally the same companies active, including TotalEnergies, Shell and Africa Oil, Thom said.
“TotalEnergies has a well that it is looking to drill, maybe this year. Of course, basins don’t recognize international boundaries,” he noted.
Positive Outcomes
One unexpected benefit from the Namibia discoveries may be a positive energy transition effect. Long-lasting and lower-emissions offshore oil production can displace the need for high-emissions, “dirtier” output.
“Exploration has a role to play in the energy transition by putting lower-carbon barrels on the market than are coming from other parts of the world,” Thom explained.
“These (offshore Namibia discoveries) are the kinds of barrels that are going to help reduce the emissions intensity in a company portfolio,” he said.
Today, the flurry of deepwater discoveries off Namibia is drawing intense industry interest. Operators have hinted at releasing more data and geological details from their recent discoveries. As of mid-May, Galp had made no further announcement about finding an operating partner for Mopane, a company to take care of the elephant.
“It’s exciting when something new opens up. When Guyana opened up, there was a thought that it might be the last big offshore new oil play discovered. Then lo and behold, Namibia comes along,” Thom said.
Several seismic-defined structures remain to be drilled in the Orange Basin, where existing license areas cover an enormous area – PEL83 alone contains almost 10,000 square kilometers.
“If you look at the density of wells, it remains relatively underexplored,” Thom said. “I think there’s a long way to go.”