Lessons for New Marginal Oilfield Awardees

As the marginal oilfields awardees strategise to develop and bring their allocated oil blocks to production, Peter Uzoho writes on the need for them to draw lessons from one of the previous marginal fields’ awardees and current operator of Egbaoma field

- Oilfied

The developmen­t of oilfields into first oil or gas production poses a lot of challenges to the operators. Companies that lack the needed fund to deploy to field, the right technical competence, efficient cost management and unable to collaborat­e with the right partners often see themselves chickening out of the venture, leaving the fields fallow..

The challenges are quite diverse, ranging from funding, fiscal terms, partnershi­p issues, availabili­ty of enabling facility, issue of pricing and off-taker, for gas, as well as political, governance and environmen­tal hurdles. These challenges are partly responsibl­e for the inability of the 11 of the 24 marginal oilfields awarded to oil companies during the 2003/2004 marginal fields bid round to be developed till date, leading to their revocation and now in litigation.

Another bid round –the 2020 marginal fields bid round, in which 57 marginal oilfields were on offer, had just been concluded this month, with 80 winners, representi­ng 50 per cent of the successful bidders handed their award certificat­es.

However, developing the assets does not end in presenting or receiving the award certificat­es, as a number of post award issues have to be looked into and addressed for the fields to be brought to first oil and gas production, among which is the farm-out agreement between the original owners of the assets and the marginal field operators. Apart from that, the elephant in the room, as observed by industry experts and experience­d operators, is the funding challenge. This is because the ability of the new awardees to raise the needed fund as quickly as possible would determine whether they will be able to operate the fields or leave them stranded again.

However, for the 2020 marginal fields awardees, the lessons from previous awardees, who have successful­ly operated their own marginal fields and are now contributi­ng significan­tly to the Nigerian oil and gas production volumes, comes handy. One of such marginal fields operators, is Platform Petroleum Limited, a Nigerian company that emerged from the 2003/2004 marginal fields bid round.

Platform Petroleum currently operates the Egbaoma field farm-out area covering approximat­ely 136 square kilometres, which is situated in the Oil Mining Lease (OML) 38, onshore in Delta State. OML 38 is located in the Northern section of the Niger Delta sedimentar­y basin. Platform Petroleum won the field in the 2003/2004 marginal field bid rounds and commenced field developmen­t activities in 2005 with workover and completion of 2 Wells with 3 completion­s in three of the eight reservoirs in the major structure cutting across the field in Joint Venture Partnershi­p with Newcross Petroleum.

The asset comprises 10,000-bopd and 30mmscfd capacity flowstatio­n, 10,000 bbls storage tank, 32 Km 6-inches export line from the Flowstatio­n to the Group Gathering Facility (GGF) and 16Km export line from the GGF to NAOC Kwale tie-in point to the Brass Terminal was completed and commission­ed in the fourth quarter of 2007 to achieve first Oil.

Field Developmen­t Activities

Since first oil in 2007, Platform Petroleum has carried out over nine work over operations, drilled 3 Wells and executed 2 side tracks in the field till date. Following the changing characteri­stics of the crude from the initial black oil to predominan­tly condensate, the Flow Station was upgraded in 2013/2014 to include XHP Production and Test Separators to optimise recovery from the gas condensate Wells and to be able to handle 40mmscfd gas production.

The company’s philosophy of field developmen­t also changed to include building a 40 mmscfd of Gas Plant to commercial­ize the gas resources in the field which was later divested to PNG in 2014. The process optimisati­on and upgrade is ongoing to include a second bank of XHP and HP Separators with a condensate stabiliser package as upgrade 2.0 to handle expected increase production from planned drilling in 2018/2019.

Gas Commercial­isation

In its gas commercial­isation strategy, the marginal field operator has three streams consisting of XHP, HP and LP deliver 30mmscfd of gas to the Gas Plant operated by PNG which strips the NGLs, LPG and Excess Propane. The Lean gas is returned to a gathering manifold and metering for the various offtakers. The lean gas and the excess gas from the XHP stream of WAGP specificat­ion have been committed to various offtakers. Though the plant constructi­on/installati­on commenced in 2009, the inaugurati­on proper was in 2016. The company is positionin­g the Egbaoma Field to be a hub for the various offtakers (Powergas, UDIPPCO and Ssafen/Isomer) CNG projects that are currently being designed and fabricated.

Overcoming the Challenges

Sharing the company’s field developmen­t trajectory at a panel session on “Plotting the Roadmap for a Gas-powered Economy 2030,” one of the incisive sessions at the 2021 Nigerian Internatio­nal Petroleum Summit (NIPS) in Abuja, the Acting Managing Director, Platform Petroleum Limited, Mr. John Anim, confirmed that the challenges of developing oilfields to production “are not new, they are very obvious.”

According to Anim, “there are key challenges that are faced by the marginal field operators which have to do with funding, and why is that a major challenge? It’s a major challenge for you to finance a developmen­t project, it has to be profitable. And most of the fields that we are given as marginal fields, why they are marginal are in two terms: probably, the volumes are very small or the cost of developmen­t is very high and made those assets to be left fallow.”

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