Trinity Spirit explosion exposes vulnerability of supply installations

THE EXPLOSION OF THE FLOAT ING PRODUC TION STORAGE AND OFFLOAD ING FPSO FACILITY, TRINITY SPIRIT, in Nigeria has again provided a stark reminder about the vulnerability of supply installations, especially in outage-prone countries such as Nigeria, Elliot Busby, an energy analyst at Rystard Energy has said.

He, however, stated that the explosion in Nigeria did not lead to any loss of oil production as the FPSO had not been producing since 2019 and was being used solely as a storage vessel.

The primary concern is the potential environmental implications of the situation, which will be hard to quantify until after the dust settles and the aftermath is assessed, he said.

There is also one concern surrounding the tragedy, and this is the potential loss of life.

The Trinity Spirit floating production, storage and offloading (FPSO) vessel was positioned in the Ukpokiti field off the coast of Nigeria, where it has operated since 1999.

The vessel is capable of producing liquids at the rate of 22,000 barrels per day (bpd), it is likely that the unit has not been producing oil since 2019, and has been used solely for storage purposes.

The maximum liquid production rate for this vessel – 22,000 bpd – represents less than 2% of the total Nigerian crude oil production based on 2021 levels of 1.3 million bpd.

The Trinity Spirit was capable of storing up to two million barrels of crude oil, but it is unlikely that it was operating at full capacity or had full storage at the time of the incident.

The impact of the Trinity Spirit leak in terms of leakage is likely to be considerably lower than the most recent large offshore oil spill, the Deepwater Horizon crisis which leaked around 4.9 million barrels into the Gulf of Mexico in 2010.

The hull of the Trinity Spirit was originally built in 1976 and the latest upgrade took place in 1997, highlighting the age of the vessel.

The Trinity Spirit was at the end of its lifespan, which is a cause for concern for other similar vessels and operations in Nigerian waters as they operate in a region with minimal regulations.

Since the company’s inception in May 2004, Shebah Exploration & Production Company Limited (SEPCOL) has rapidly driven its growth by acquiring oil assets and using its strong in-house technical and operational expertise to grow production in a cost effective manner.

Asides developing oil and gas business interests in other parts of Africa, within Nigeria, SEPCOL has a 40 percent interest in oil block OML 108.

The company is currently bidding on acquisition of new oil and gas assets in Nigeria, as well as reviewing interest in farm-in to certain assets in the country.

Shebah’s estimated production as at year-end 2019 was about 50,000 bpd and about 300mmscf/day dry gas.

OML 108: Background & field description

OML 108 (formerly OPL 74) was awarded to Express Petroleum and Gas Company in December 1990. Express assigned 40 percent interest to Conoco Energy Nigeria Limited as technical advisor. Conoco relinquished its 40 percent stake in the block in 2004 and transferred it to Shebah Exploration & Production Company Limited the same year.

OML 108 covers an area of 750sqkm in water depth of 88ft (30m) in the western edge of the Niger Delta in shallow water offshore Nigeria, six miles southwest of Chevron’s Meren field, but reaches water depth of 700ft (213m) on the southern portion of OML 108.

The block is composed of oil-producing Ukpokiti field, Kunza discovery and deeper pool prospects in the southern portion of the block.

The Ukpokiti field comprises five oil wells and one injector wells. Two exploration wells (Kunza-1 and Kunza-2) drilled in the Kunza discovery intersected commercial volumes of gas and condensate and will form the basis for coming appraisal, development and exploration effort. OML 108 holds significant leads towards the southern part of the block.

Meanwhile, oil prices soared higher at the weekend, climbing above sevenyear highs, as winter storms sweep across the US boosting demand for heating oil, supply concerns persist and financial players turn away from traditional tech stocks in favour of less volatile commodities.

Analysts say a spike towards $100 crude should not be ruled out in the short run, but downside risks are plentiful, including Omicron setbacks on demand, economic growth concerns and financial market corrections as the central banks fight inflation.

A tight supply environment is not helped by disappointing January production estimates from key producers, Iraq and Russia.

The situation is not as dramatic as feared though, as production capacity in Middle East powerhouses, Saudi Arabia, Kuwait and the UAE, is there to boost production by at least two million barrels a day.

The production capabilities of Middle East players are kept in check by the current OPEC+ agreement that caps supply increases voluntarily, despite the market screaming out for more oil production.

Ukraine-Russia tensions remain in Eastern Europe and an additional layer of risk to the global supply equation.

US troops moving to the region may add to the risk premium in oil prices as any risk of supply disruptions or sanctions on Russian flows are a critical factor in any trader’s mind.