Oil production shoots up

Ghana’s Jubilee oil field has hit 83,000 barrels per day (bpd) this month following success with an acid stimulation exercise conducted by field operator Tullow Oil and partners, an ECOBANK Research report has stated.

US Kosmos Energy, one of the Jubilee field partners recently announced that production was now at 83,000 bpd due to the success achieved with an acid stimulation programme on one of the wells.

The Jubilee oil field may finally be on the path to reaching earlier production targets of 90,000 barrels per day (bpd) following an increase in production in August.

Since the start of 2012, Jubilee production had settled around 70,000 bpd; Kosmos reported an average production rate of 63,100 bpd in Q1 while Tullow reported 67,000 bpd in May.

However, average production in August is likely to be above 80,000 bpd. The partners plan to conduct acid stimulation on other wells; two new production wells are also expected to come on-stream before the end of 2012, which will boost production beyond 90,000 bpd.

The report by ECOBANK Research stated: “Success at the Jubilee field supports our optimistic outlook on Ghana’s crude oil potential. On base estimates, the Jubilee field is believed to hold about 800 million barrels, which at a peak production of 120,000 bpd would guarantee Ghana at least 18 years of production and revenue from export sales.”

“The potential is greater if the country is able to further de-risk Jubilee field reserves estimates of 1.5 billion barrels. Tullow has also estimated that the upcoming Tweneboa, Enyenra and Ntomme (TEN) fields hold an average recoverable reserves potential of 360 million barrels of crude oil.

“This boost to production will cost the Jubilee partners at least $1.1 billion at completion as the remediation program includes the drilling of eight new production wells, which could take another 14 months to complete. Furthermore, the acid stimulation exercises conducted on some of the wells were at an estimated cost of $30 million - Kosmos Energy reported its share of the costs to be $10 million.

“Success at the Jubilee field supports our optimistic outlook on Ghana’s crude oil potential,” it said.

At base estimates, the Jubilee field is believed to hold about 800 million barrels, which at peak production of 120,000 barrels per day will guarantee Ghana at least 18 years of production and revenue from export sales.

This could easily be more if the country is able to further de-risk Jubilee field reserve estimates of 1.5 billion barrels. Tullow has also estimated that the upcoming Tweneboa, Enyenra and Ntomme fields hold an average recoverable potential of 360 million barrels.

Furthermore, Ghana’s offshore oil exploration area is firmly situated in the West African Transform Margin in the Gulf of Guinea, which the United States Geological Survey (USGS) believes hold an estimated 33 billion barrels of crude oil.

This is continually been reaffirmed by discoveries offshore Ghana, Cote d’Ivoire, Liberia and Sierra Leone. Ghana’s oil reserve potential is largely still under-explored and could compete favourably with Nigeria’s offshore potential.

This notion has already attracted considerable investor interest, more recently from South Africa’s National Oil Company, PetroSA which has bid for local Ghanaian firm Sabre Oil & Gas’s stake in the Jubilee field.

Jubilee production should peak in 2013 at a rate just above 120,000 bpd. This would lift Ghana above older mid-tier producers such as Chad, Cameroon, Cote d’Ivoire and the Democratic Republic of Congo (DRC). 

Jubilee field partners are also fast-tracking plans to develop the Tweneboa, Enyenra and Ntomme (TEN) field. A plan of development (POD) for TEN will likely be submitted before the end of 2012. 

Production could start from those fields by 2015, further boosting Ghana’s production to 150,000 bpd or more. Within a full year of production, crude oil is now Ghana’s third largest export revenue earner after cocoa beans and products and gold, the highest revenue earner.

In spite of the good tidings, there are some challenges that need to be scaled.

The report said: “Ghana is yet to pass its new petroleum bill also, creating some uncertainty about new fiscal terms for oil operations. The country is likely to seek to increase its share of revenues from crude oil production. Already the government has announced its intention to include a clause in the new regulation compelling oil producers to set aside a portion of their production for local consumption.

“The major local consumer will be the Tema Oil Refinery (TOR), which has struggled to pay for crude oil imports in 2012 - it received a loan from a consortium of lenders in June. Oil producers are unlikely to find this favourable”.

Meanwhile, explorers operating offshore Ghana and in proximity to Cote d’Ivoire could face some loss of acreage in the on-going dispute between the two countries over maritime boundaries.

This situation particular affects parts of the Jubilee field where the TEN discoveries were made, along with the Owo and West Tano- facilities ahead of plans to access gas from these fields, generating concerns from operators such as Kosmos Energy and Tullow Oil.

Nevertheless, Ghana has taken several positive steps. The Public Interest and Accountability Commission (PIAC), established in 2011 has published its first report on the management of 2011 petroleum revenues.

The report provides comprehensive information on how funds were managed and identifies lapses that need to been adopted by several more companies in the upstream sector. Local content regulations are on the card to ensure Ghanaian interests are protected.

Further demarcation of blocks has been put off to enable the development of new regulations and positioning of the state-owned Ghana National Petroleum Corporation (GNPC) to participate as an operator in some oil blocks.