-By Fred Ojiegbe
There are fears that Nigeria may not achieve its projected four million barrels per day (mbpd) in the near future.
The Chief Executive Officer (CEO) of HD Drilling Services, Hope Okwa, echoed this fear, while analysing the challenges confronting the oil and gas industry in Nigeria.
He explained that achieving the four million barrels projection will remain a pipedream, unless well cost is reduced drastically.
“If we reduce well cost from $25 million to just $5 million, hypothetically speaking, requiring only 20 per cent of the previous investment demands, even local banks may be able to fund field development campaigns,” Okwa said.
According to him, the Federal Government targets four million barrels of oil per day (4mbopd).
The country, however, is barely achieving 1.5mbopd due to high well cost.
“A 10,000 feet well, producing only 3,000bopd, costs up to $25 million to construct. To move from current 1.5m to 4m bopd requires massive well construction activities, in the order of over 800 wells per year. The associated investment is $21 billion per annum. Where will this investment come from, especially in an era where top global financiers are moving their investments to renewables? The only way is to rethink well construction efficiency, with a view to drastically reducing well costs from current levels.
“The sources of inefficiencies in well construction, is very much within our expertise, as demonstrated through the several SPE papers we have authored.
“It is very urgent to implement these solutions. In nine years’ time, by 2030, the first world will pivot away from fossil fuel. What will then happen to Nigeria’s reserves of 37 billion boe?
“We believe we have the solutions to reduce well costs in Nigeria by as much as 70 per cent. I have a track record of this achievement from my employment with Shell, BG-Group, BP, Saudi Aramco, as well as many local operators. HD Drilling Services is collaborating with operators and service companies to deliver wells that are only 30 per cent of the standard cost,” Okwa said.
Speaking on the outlook of Nigeria’s upstream sector for 2021, Okwa stated that the environment was very challenging.
“There is demand for Nigerian oil with the ongoing commissioning of Dangote’s 650,000 bopd refinery, and several modular refineries. These refineries will help reduce dependence on imported fuel, and not only satisfy local consumption, but (also) fulfill demand across Africa and many of the developing (countries), who would still be dependent on oil consumption for the foreseeable future.
“As our contribution to the preparation, we are developing local manpower by running courses like the well design masterclass, re-entry and workover engineering masterclass, abandonment and decommissioning planning masterclass. We are also extending our collaborations to experts overseas, who we are bringing to run specialist training in Nigeria for Nigerians, at very low price. We are also developing ourselves in readiness for the future challenges,” he revealed.
He also spoke on Nigeria’s declining rig count.
“We may ascribe the direct cause of rig activity collapse to the COVID-19 outbreak. However, I suspect the underlying cause of this sharp decrease in drilling activity may not be far from the high cost of wells, as I highlighted earlier, and the challenge of obtaining investment cash in an environment where everyone is going renewables. We believe that, if we reduce well costs drastically, through our activities, we will be able to stimulate activities,” he added.