-By Gideon Osaka
The world is said to be moving in the direction of alternative and clean energy and there are already predictions that with current trends in technology and environmental concerns, over the next 20 to 30 years, crude oil would become a fading, if not a faded, product.
But it appears that most countries (or the world generally) are unruffled by this seeming ‘calamity’ that is just around the corner even with the recent outbreak of the coronavirus pandemic.
Amidst these doomsday predictions, countries have continued to find more and more oil and gas lying beneath the ground.
The trend in oil discovery continued into the year 2020, after 2019 proved to be banner year for hydrocarbon discoveries.
According to independent energy research and business intelligence company, Rystad Energy, oil and gas firms discovered a four-year high 12.2 billion barrels of oil or the equivalent last year.
In-depth research by Valuechain of recent hydrocarbon discoveries across the world showed that discoveries in Northern Nigeria alone totaled approximately one billion barrels.
Nigeria became the latest country to announce hydrocarbon discoveries after a year of intense drilling, with discovery of one billion barrels of crude oil in the northeast region of the country announced recently by the federal government.
Nigeria, the largest producer of oil in Africa had been producing crude from the Southern part of the country, most especially the Niger Delta region.
The notice of the new discovery was disclosed on 12 February 2020 by Chief Timipre Sylva, Nigeria’s Minister of State for Petroleum Resources, at the closing ceremony of the 3rd International Petroleum Summit in Abuja.
“The figure is not totally out yet but from the evaluation results we are getting, the reserve that has been discovered is about a billion barrels. Those are the kinds of figures we are seeing and we are beginning to understand the geological structure of the region. If there is a lot of exploration, we believe that a lot of oil still remains to be found in Nigeria. Nigeria is not yet a mature territory; it is still very prolific,” Sylva said.
In October 2019, the Nigerian National Petroleum Corporation (NNPC), the national oil company which is in the forefront of the drilling in the Northern part of the country, announced that it discovered crude oil and gas in the Kolmani River II Well on the Upper Benue Trough, Gongola Basin.
The corporation said then that the commercial viability of the discovery coming from the drilling of a total depth of 13,701 feet before hitting oil and gas in several levels.
Elsewhere in Africa, off the coast of Mauritania, BP’s Orca gas field was not only the largest single discovery, but also the deepest-water find of 2019, estimated by Rystad Energy to hold about 1.3 billion barrel of oil equivalent (boe) of recoverable resources. Recent gas discoveries in the region now support plans to build an additional Liquefied Natural Gas (LNG) hub in the Bir Allah area in Mauritania.
Also, Ghana-based oil company Springfield, announced an estimated oil-in-place volume of up to 1.5 billion barrels of crude and 0.7 trillion cubic feet of gas from its latest drilling programme.
French firm Total’s Brulpadda offshore South Africa field could hold 1.5 to 3 billion barrels of natural gas, with more likely to be found. If the gas is converted into power, it could provide an affordable and reliable source of cheap energy for the power-hungry country and boost its hard-pressed economy. Even better, the Mossel Bay PetroSA refinery is located conveniently nearby for processing the output of this discovery.
In Europe, Russia’s Gazprom recently made two important natural gas discoveries in the Kara Sea near the Yama Peninsula. Around 390.7 billion cubic metres (bcm) of recoverable gas reserves was discovered in the Dinkov field and the 120.8 bcm Nyarmeyskoye field. Together these finds should help boost Russia’s ability to become a world-leading LNG exporter to customers in Asia.
Western Europe was the source of three important discoveries. In 2019, ExxonMobil added to recent finds in the eastern Mediterranean with its discovery of a gas-bearing reservoir off Cyprus. However, infrastructure challenges and the ongoing failure of Turkey to recognise the Cypriot exclusive economic zone under the United Nations Law of the Sea, means that exploitation of this new discovery is likely to be delayed.
Elsewhere in Europe, Chinese state-owned CNOOC and partner Total have announced the largest discovery made in UK waters in a decade – the mighty Glengorm gas field in the Central North Sea. Glengorm’s recoverable resources are estimated at around 250 million barrels of oil equivalent. Further north in the Norwegian sector of the Barents Sea, Equinor’s Sputnik exploration well indicates a recoverable resource of between 20 to 65 million barrels of oil.
In Latin America, newcomer Guyana has already announced a series of finds totalling some 1.8 billion barrels of crude. But this is just the start. The U.S. Geological Survey estimates recoverable reserves at over 13.6 billion barrels of oil and 32 trillion cubic feet of gas – the second highest resource potential among unexplored oil basins in the world. It is not surprising therefore that oil companies, both big and small, including Exxon, Tullow and Repsol are actively leading drilling campaigns in this frontier oil province.
According to Rystad Energy the top five exploring companies in 2019 were Exxon, Hess, CNOOC and Total whilst the top five hydrocarbon discoveries were made in Guyana, Russia, Mauritania, Iran and Cyprus. Nigeria’s discovery could not have been factored in since the announcement was only recently made.
Accounting firm PricewaterhouseCooper estimates that global upstream capital expenditure rose modestly during 2019 and anticipates a recovery of exploration spend in the coming years.
In 2020, Rystad Energy expects the global discovered volumes to continue the rising trend of recent years, with the list of upcoming wildcats including several high-impact wells along with some promising probes delayed from 2019.
With global oil discoveries at some 1.73 trillion barrels, according to BP’s Statistical Review of World Energy and annual oil production running at 94.7 million barrels per day, the world has enough oil for at least another half century.
But at the same time new discoveries and new oil producers are further weakening OPEC’s ability to influence the global oil market.
The World Health Organisation has declared the Covid-19 coronavirus outbreak a pandemic, and many companies are taking precautions against the impact and spread of the virus.
The virus has forced companies to slow or halt physical operations, impacting production in the upstream sector. Many companies are taking precautions against the spread of the Covid-19 coronavirus pandemic.
For instance, U.S. oil company Hess Corporation has cut its capital and exploratory program in response to the sharp drop in oil prices, affecting both onshore and offshore drilling programs. The company said recently it would reduce its capital expenditure (capex) to $2.2 billion from previously proposed $3 billion.
“Most discretionary exploration and offshore drilling activities, excluding Guyana, will also be deferred,” Hess said.
In Nigeria stakeholders in the energy sector have expressed divided opinion over the discovery of one billion barrels of oil in the North East. While some are satisfied that the development would drastically improve the nation’s revenue, increase employment opportunities, diversify hydrocarbon base, create industrial hub, as well as enable the country to increase its reserve to 40 billion barrels, and daily oil production to three million barrels, others are cynical, noting that the discovery could be counterproductive in the face of looming decline in crude oil prices.