Yemisi Izuora
The forth-coming marginal field workshop will aggregate sources of – technical advice/services, sources of finance, talents/workforce, legal services and tools for regulatory compliance (local content and others), – for stakeholders in the Nigerian marginal field space to use.
The resource aggregation format will be physical (at the workshop) and virtual after the workshop (in an online community known as Upstream Deal Room). The physical and virtual platform will continue to provide business opportunities and services to members on ongoing bases.
The workshop convened by Businessday West Africa Energy & Meiracopp Nigeria Limited (MNL) will hold on Thursday 19th October, 2017 at the Civic Center in Lagos and is geared to support the next marginal field bid round – through learning and facilitated business matchmaking.
Frank Uzuegbunam, Editor, Business Day West Africa Energy said “this is also an excellent platform that service providers (law firms, banks, insurance firms, oil field service firms, and technology firms) can leverage to meet and engage potential promoters/ current asset owners and showcase their offerings”.
In Nigeria, an estimated 2.3 billion barrels is held in over 183 marginal fields. In 2008, former CEO of Shell Jeroen Van de Veer said that “the era of easy to find oil was coming to an end”.
There are evidences to support the view that the worlds conventional oil is fast disappearing – 70 percent of oil fields in the world are now mature, so available fields and new finds are either marginal or in deep waters; both with an outlier economics.
It is necessary to create and aggregate such a support forum since the approach required for developing big onshore fields, deep water asset (above 1000ft) and ultra-deep water asset (above 5000ft) is markedly different from that of small finds with small reserves.
For example, if a small field is highly constrained by the absence of existing product export infrastructure that alters the development economics extensively. The issues implicated in acquiring a small field and the unconventional approaches needed for them to come on-stream could be complex. For example, Farm out Agreements (FA) have to factor the impacts of multiple interests /Joint Operating Agreements (JOA); pursuant to which a field was discovered; It has to accommodate lease holder’s interests, tax regimes and the prevailing royalty regimes.
MNL CEO, Chijioke Mama explained that “it’s necessary to provide structured support for marginal field developers, so we are commencing elaborate discussion/expert presentations on the risks and opportunities that should guide asset selection.”
Furthermore, bid application and development plans have to factor the cost of product transport using third party infrastructure in a product “comingling” scenario, as well as other hydrocarbon accounting challenges. Developers also have to match the geology and geography of an asset to an appropriate production method such as Improved Oil Recovery (IOR) methods for operational efficiency/prudence.
Evidently, the performance of the licenses awarded in 2003 by DPR makes it exigent that present and future investors and service providers should utilize the structured tools and knowledge base which this workshop and online forum will provide.