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Thursday, July 18, 2024

3 Years After Crude Oil Discovery In North, Buhari Flags Off Drilling Tomorrow

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Three years after the Nigerian National Petroleum Company (NNPC) Ltd discovered crude oil in commercial quantity in Northern Nigeria, President Muhammadu Buhari will tomorrow officially flag off the ground-breaking ceremony of the Kolmani OPLs 809 and 810 at the Kolmani field site in Bauchi and Gombe states.

The NNPC Ltd had in October 2019 announced the discovery of crude oil, gas and condensate in the Kolmani River region at the border community between Bauchi and Gombe states.

This oil field is to be developed by Sterling Global Oil, New Nigeria Development Company and NNPC Limited.

This is as stakeholders in the oil and gas industry have submitted that Nigeria is now more forward looking in efforts to develop her natural resources.

The ceremony will be attended by the president who also doubles as the minister of Petroleum Resources.

Buhari will be joined in the flag-off by his cabinet members, including the minister of state for Petroleum Resources, Timipre Sylva.

Other dignitaries expected at the event are the chairman of the NNPC Board, Mrs Margary Okadigbo; the NNPC group chief executive officer, Mallam Mele Kyari; the executive vice president, Upstream, NNPC Limited, Mr Adokiye Tombomieye; and chief investment officer of the NNPC Upstream Investment Management Services Ltd, Mr Bala Wunti, among others.

The flag-off of the crude oil drilling is a major boost to the efforts by the federal government to ensure that the region produces crude oil in commercial quantity.

OPLs 809 and 810 lie in the Gongola Basin of the Upper Benue trough in the straddle area between Bauchi and Gombe states. It is part of the Upper Benue Trough is a North-South trending arm of the 1000km long Benue Trough.

Findings revealed that it is a major geological structure underlying a large part of Nigeria, extending about 1,000 km northeast from the Bight of Benin to Lake Chad. It is part of the broader Central African Rift System.

The New Nigeria Development Company participated in the Nigerian License Round of August 2005 and won four blocks, including OPLs 809 and 810.

These acreages were first awarded by the Nigerian government under Production Sharing Contracts (PSC) in 1993, to SNEPCo, Chevron and ELF.

These companies drilled a well each in their respective blocs. Kolmani River-1 was drilled on OPL 809 by SNEPCo, Nasara-1 on OPL 810 by CHEVRON and Kuzari- 1 on OPL 813 by ELF.

Both reported no commercial finds and abandoned the field.

It was learnt that as part of the current administration’s drive to explore hydrocarbon from the frontier areas, in 2019, the NNPC through its subsidiary, the Frontier Exploration Services (FES) obtained approval of the president and the contractor, the New Nigeria Development Company (NNDC) drilled Kolmani River-2 exploration well.

Findings revealed that this was followed by another exploration Well, Kolmani-River 3, and Kolmani River-4 as an appraisal to Kolmani River 3.

The explorations led to the successful discovery of two fields in the area with discovered 2P reserve of over one billion barrels of oil and 500bcf of gas in place.

Consequently, in 2021, NNPC through its subsidiary NNPC Exploration and Production Company Limited (NEPL), formally known as Nigerian Petroleum Development Company Limited (NPDC) farmed-in 51 per cent into OPLs 809 and 810.

In May 2021, the NNPC Tender Board considered and approved a Three-Tier Open Competitive Bidding Process for selecting a Strategic Partner (Financial and Technical Service Provider) for Integrated Development of Oil Prospecting Licences (OPLs) 809/810.

An integrated development approach through the establishment of in-situ hydrocarbon monetisation facilities (a refinery and power plant) was assessed as the best monetisation option for the crude oil and gas to be produced from the blocks.

This was due to the peculiar challenge of the landlocked nature of the assets (over 700km from the shore) and numerous problems associated with evacuation by pipeline required for alternative monetisation options.

Upon conclusion of the three–tier and all related extant due processes, finishings revealed that Messrs Sterling Oil Exploration Energy Production Company (SEEPCO) and Africa Oilfield Movers Limited (AOML) emerged as the Financial and Technical Service partner for the integrated development of OPLs 809 and 810 assets.

Being an integrated project, it entails upstream oil and gas production in-situ oil refinery with a minimum of 40,000bopd that could rise up to 120,000bopd processing capacity, a gas processing plant with a feed capacity of 150mmscf/day, a power generation plant of 150MW, and fertiliser plant with capacity of 2,500 tonne/day.

These will ultimately emplace a downstream oil terminal/depot with the capacity to offtake up to 250 trucks of products/day.

It was gathered that the commencement of this project is expected to create an opportunity to monetise over one-billion-barrel crude oil deposits in the area, which hitherto would not have been able to be monetised due to the absence of an evacuation route.

With the drilling of crude oil from these two oil wells, the hope for an increase in crude oil production has been rekindled for Nigeria .

The move will also help to create employment opportunities, ease product distribution and increase fiscal earnings for the government.

The NNPC has over the years expended monies on frontier exploration, but the spending has now been statutorily provided for in the new Petroleum Industry Act (PIA) 2021.

The PIA has now raised funding for frontier exploration to 30 per cent, which implies that the NNPC Limited would have more funds to develop oil fields around the country.

Reacting to the development, Emmanuel Iheanacho, chairman/CEO of Integrated Oil and Gas, said the country stands to benefit from this as it will help the country to meet its OPEC quota and restore its position as top oil producer in the continent.

Iheanacho, who spoke with LEADERSHIP on the issue, said the president had taken the right decision to further deepen investment in the sector.

On his part, chief executive officer, Centre for the Promotion of Private Enterprises, Muda Yusuf, said the political will of the president to commence oil drilling in the north should be applauded.

Yusuf, who is the former director general of the Lagos Chamber of Commerce and Industry, LCCI, said the move will create more job opportunities in the country because it will drive new investments and also generate more foreign exchange.

He urged the federal government to initiate fresh moves to address insecurity which could be seen as a threat to the investment.

“I think one thing this will bring about is a new security initiative as widening insecurity is threatening investment across the entire energy sector. So, I want to challenge the government to draw a new security plan to safeguard expected investment from this initiative” he said.

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