Oil Review Africa 1 2014 by Alain Charles Publishing

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■ Geology - p48 ■ E&P - p50 ■ Gas - p56 ■ Technology - p60

Volume 9 Issue One 2014

www.oilreviewafrica.com

Africa

Covering Oil, Gas and Hydrocarbon Processing

Europe m10, Ghana CD18000, Kenya Ksh200, Nigeria N330, South Africa R25, UK £7, USA $12

Oil Review Africa - Issue One 2014

Nigeria’s gas promise key to industralisation Ghana integrates O&G into local economy Developing local talent in Africa Morocco’s oil - the next Ghana? Integrated suppliers for a simpler supply chain Industry perspective on subsea technology

Damen unveils its offshore series Free space optics drive growth in Egypt

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Breathing new life into Nigeria’s maturing fields and ageing infrastructure Wale Tinubu, Oando group ceo. See pages 8.

REGULAR FEATURES: ■ News ■ Contracts ■ Events Calendar ■ IT update ■ Company profiles ■ Products & Innovations

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Contents

■ Geology - p48 ■ E&P - p50 ■ Gas - p56 ■ Technology - p60

Volume 9 Issue One 2014

www.oilreviewafrica.com

Africa

Covering Oil, Gas and Hydrocarbon Processing

Europe m10, Ghana CD18000, Kenya Ksh200, Nigeria N330, South Africa R25, UK £7, USA $12

Nigeria’s gas promise key to industralisation Ghana integrates O&G into local economy

Columns

Developing local talent in Africa

Industry news and executives’ calendar

Morocco’s oil - the next Ghana? Integrated suppliers for a simpler supply chain Industry perspective on subsea technology

Country Focus

Damen unveils its offshore series

Nigeria

Free space optics drive growth in Egypt

Fulfilling ‘great gas promise’ is key to industrialisation Oil and gas producers in Nigeria are breathing new life into the country’s maturing fields and ageing infrastructure. Prime Atlantic: serving Nigeria’s oil and gas industry

Ghana

Breathing new life into Nigeria’s maturing fields and ageing infrastructure Wale Tinubu, Oando group ceo. See pages 8.

REGULAR FEATURES: ■ News ■ Contracts ■ Events Calendar ■ IT update ■ Company profiles ■ Products & Innovations

Pipeline repair is often essential in ageing oilfields. Saipem recently completed work on a critical crude pipeline replacement project on an undisclosed offshore field.

The Ghanaian government has taken a major step to ensure full participation of Ghanaians in the country’s oil industry with the passage by parliament of the Local Content Law. Continuous improvement is worth millions in deep water.

Morocco

Oil companies are descending upon Morocco in the hope of finding another Ghana, Atlantic Canada or Brazil hydrocarbon treasure trove.

Recruitment Developing local talent

A look at the increasing trend towards demand for hiring and developing local talent in the face of limited supply and how different companies and governments are approaching the challenge.

Human Resources Access to human resources is critical for future success of the industry 42 Education is fundamental to the construction of a knowledge economy and society.

Logistics Energy finds in Africa highlight shifts in sector

Technical Focus Buoyed by success

Editor’s note AHEAD OF DRIVES to start or expand oil and gas production, several African governments are crafting laws that give them more sway over the energy sector, part of a tide of resource nationalism on the continent - more than ever they are under pressure to safeguard this wealth. Ghana has taken a major step with the passage by parliament of the Local Content Law, which seeks to integrate Ghanaians into all aspects of the oil and gas industry. Mozambique, Kenya, Tanzania and South Africa are also bringing new legislation before government. We also look at how different companies and governments are hiring and developing local talent in the face of limited supply; many international oil companies’ business development programmes now include training and assistance to local firms - education is the key to unleash the potential in many countries. Nigeria is sitting on a huge gas bubble which could satisfy both domestic and export markets, but limited infrastructure has prevented the gas sector’s optimal development. Much depends on the success of the Nigerian Gas Master Plan to channel investments in pipeline infrastructure and new gas-fired power plants to help reduce gas flaring and boost electricity generation. Also in Nigeria, its oil industry is facing a new challenge; some fields are having to face up to the problem of old age. Here again, as well as preserving the oil fields, the ageing infrastructure also needs to be revitalised.

The first of a new type of offshore platform for the oil and gas industry has begun operation off Peru, and its setup may well revolutionise exploration and production around the world.

Offshore vessels

Damen Shipyards Group is offering a fresh approach to offshore vessel customers.

An industry perspective on subsea technology

An interview with Clifford Neal Prescott, executive director Offshore Technology Fluor Corporation, USA, on the subject of subea technology.

No smoke without fire

Martyn MacDonnell, business development director, Paradigm Flow Services, discusses the need for a holistic approach to fire water systems.

Information Technology From the wellhead to the rooftop

BP chose free space optics to provide reliable high-speed connections between its various offices in Cairo.

The Pazflor development plan is strikingly innovative, based largely on the installation of separation and pumping units on the seabed.

Managing Editor: Zsa Tebbit - Zsa.Tebbit@alaincharles.com Editorial and Design team: Bob Adams, Hiriyti Bairu, Lizzie Carroll, David Clancy, Andrew Croft, Prashanth AP, Ranganath GS, Rhonita Patnaik, Genaro Santos, Nicky Valsamakis, and Ben Watts Publisher: Nick Fordham

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Africa

Covering Oil, Gas and Hydrocarbon Processing

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Oil Review Africa Issue One 2014 3

Industry News & Events

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Executives Calendar 2014 FEBRUARY 17-18 24-27 24 26-28

Floating LNG Nigeria Oil & Gas 2014 Nigeria Power Tanzania Local Content 2014

LONDON ABUJA ABUJA DAR ES SALAAM

www.smi-online.co.uk www.cwcnog.com www.nigeria-power.com www.tanzania-local-content.com

2nd Mozambique Gas Summit Power-Gen Africa 2014 Oil and Gas Telecommunications Angola Recruitment Summit Mozambique Recruitment Summit Unconventional Gas Aberdeen 2014 The East Africa Oil & Gas Summit 2014

MAPUTO CAPE TOWN LONDON LISBON LISBON ABERDEEN DAR ES SALAAM

www.mozambique-gas-summit.com www.powergenafrica.com www.smi-online.co.uk www.eliteic.net www.eliteic.net www.unconventionalgasaberdeen.com www.eastafrica-og.com

2014 Emerson Global Users Exchange, Europe, ME and Africa Africa LPG Trade Summit Ghana Oil & Gas Summit West Africa Oil & Gas & Pre-Salt Summit Nigeria Talent in Oil & Gas CIEHC-2nd Congo Intl Hydrocarbons, Conference & Exhibition 20th Western Africa Oil, Gas & Energy Well Integrity & Asset Digitalization Conference Oil & Gas Libya 2013 3rd East Africa Oil & Gas Expo 5th Eastern Africa Oil, Gas & Energy

STUTTGART ACCRA ACCRA LUANDA LAGOS BRAZZAVILLE WINDHOEK HOUSTON TRIPOLI NAIROBI NAIROBI

www.EmersonExchange.org www.cmtevents.com www.cwcghana.com www.westafricaoilgassummit.com www.cwcschool.com www.ciehc.com www.globalpacificpartners.com www.decomworld.com www.oilandgaslibya.com www.expogr.com www.globalpacificpartners.com

7th Annual Sub-Saharan Africa Oil & Gas Conference Offshore Technology Conference Oil & Gas Libya 2014

HOUSTON HOUSTON TRIPOLI

www.energycorporateafrica.com www.otcnet.org www.oilandgaslibya.com

MARCH 11-14 17-19 19-20 21-23 22-23 25-26 27-28

APRIL 1-3 8-9 8-10 13-15 14-15 14-16 14-16 15-16 22-25 27-29 28-30

MAY 1-2 5-8 12-15

Readers should verify dates and location with sponsoring organisations, as this information is sometimes subject to change.

Africa grapples with challenges from oil refining to subsidies AFRICAN NATIONS ARE grappling with old and new challenges in oil products supply ranging from price subsidies, import and distribution logistics, the maintenance of existing refineries and the construction of new ones, delegates at a recent joint Platts and Reuters forum held in Johannesburg said. Countries including Senegal, Côte d'Ivoire, Angola and Nigeria are considering either the modernisation of their existing refineries or the building of new ones to meet growing fuel consumption. Africa has experienced some of the largest oil demand gains globally in recent years. But the continent does not produce enough refined products to meet demand, resulting in imports. Nigeria and Angola, Africa's two largest crude producers, are both considering the construction of new refineries over the coming years. Nigeria's project for a new 400,000 bpd refinery has been driven by Aliko Dangote, Africa's richest man and owner of a large commodities business. The country currently operates four refineries, but these do not work at full capacity because of poor maintenance. In Angola, Sonangol has started work on a new 200,000 bpd refinery, the latest such project to be launched. But smaller modernisation and construction projects are also likely to go ahead in Senegal, Cameroon, Côte d’Ivoire and Gabon in the near future. Cameroon's Limbe is currently undergoing extensive improvement works that will enable it to double its capacity by 2016-17. There is a project to expand Senegal's 27,000 bpd Dakar plant owned by Société

4 Oil Review Africa Issue One 2014

Africaine de Raffinage, as well as the 64,000 bpd plant in Abidjan, and a new refinery could be built in Gabon. All three projects are subject to further discussions with investors and the government of each country, sources said. Many African countries have large subsidy programmes in place to insulate their populations from the effect of high global oil prices. Delegates said the subsidies create many unwanted effects, from increased smuggling between countries with lower retail prices (and larger subsidies) and those with higher ones, and higher-than-expected demand gains. A delegate said that the key was to phase subsidies out progressively over several years to ease the pain for consumers. Senegal has been seen as a model to follow in the region as it started getting rid of most of its subsidies in 2007. Delegates also said logistics remained a challenge in a continent that has not always had adequate investment in oil infrastructure. Ports in certain countries, such as Congo Brazzaville or the Democratic Republic of Congo, are not deep enough to accommodate large tankers. This means importers often have to pay a higher premium to attract imports. Delegates said African governments were closely watching the construction of further refining capacity over the world as this could make some projects in Africa unprofitable. Asia, in particular China and India, and the Middle East have had large refinery capacity additions in recent years. These are likely to continue over the next few years, even if in some other regions, such as Europe, capacity is falling due to low margins.

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African Inspiration Taking it further...

Well Services

Marine Platforms Ltd

Subsea Solutions

Vessel Chartering

Industry News & Events

S02 ORA 1 2014 News B C_Layout 1 06/02/2014 13:35 Page 6

Former Tullow execs team up for new venture

WGPSN secures $250mn contact extensions

FIVE FORMER DIRECTORS from Tullow Oil plc have teamed up to float a new oil and gas venture in Senegal. Led by Pat Plunkett, who chaired Tullow for 12 years, T5 Oil & Gas plan to list on AIM in London this autumn. Lack of experience won’t be an issue for this management team Gerry Sheehan, Matt O’Donoghue, Andrew Windham and Steve McTiernan, all former directors at Tullow, have joined Plunkett at T5. The firm is already in the process of acquiring a license held by Blackstairs Energy, a company founded by Sheehan, and has plans to target other African exploration rights. Funding for an initial US$6.75mn investment targeting exploration in Senegal is being organised by Dublin finance house, Raglan Capital, a firm with considerable experience in the sector. Raglan previously formed and floated Fastnet Oil & Gas and is likely to take a sizable stake in T5 also. With such an experienced team on board, it’s not impossible to see T5 repeating the success Tullow Oil plc has had in Africa in the past. “The new company will focus initially on Africa where we will make use of our collective in-depth technical and commercial knowledge and extensive network of contacts throughout the continent,” said Gerry Sheehan, who was with Tullow Oil from the start of its operations in Senegal in 1987 until 2006. Indeed, T5 has already acquired a starter project – the 27,000 sq km onshore Louga Licence in northern Senegal. Sheehan said that Palaeozoic-age formations seen in this area are hugely similar to prolific oil and gas producing grounds in North Africa, but have been largely overlooked as an exploration target in sub-Saharan Africa.

WOOD GROUP PSN (WGPSN) has secured two major contract extensions in Africa, worth around US$250mn. WGPSN has secured a five year contract extension to provide operations, maintenance and construction management services for asset facilities in central Africa in a deal worth more than US$140mn. The contract employs about 580 people and marks the continuation of a contract first awarded in 2006. An additional contract extension to provide operations and maintenance services to assets in Equatorial Guinea boosts the company's success in Africa. This three year contract extension is worth more than US$110mn and secures employment for around 130 people both onshore and offshore. The contract was first awarded to WGPSN in 2003. Wood Group has also recently established a new joint venture (JV) in West Africa. Wood Group Ghana Limited is now a partnership with Kwaku Boafo Nyantekyi-Owusu, and enables the Group to bring integrated services and technical support services to the oil and gas sector in Ghana. Wood Group is a 49 per cent shareholder in the JV which will be jointly operated and led by Mr Nyanteki-Owusu, as president and majority shareholder. James Crawford, WGPSN managing director for Africa, said: "We are extremely proud of our performance in Africa. These contract renewals and our new joint venture are testament to the standards of the services we provide and our commitment to expansion and investment in Africa. Our focus centres on safety performance, consistent delivery, developing a competent and skilled local workforce and supporting the communities where we operate. "We are focused on the continued development of our people, especially our local management teams in Africa. Today, nearly 90 per cent of our maintenance contract personnel across the region are nationals."

Erratum

SRP wins multi-million contract on Moho Nord SUBSEA RISER PRODUCTS (SRP), an Acteon company, has won a multi-million dollar contract with Total to supply a 3,500-psi drilling riser and deployment tooling for the Moho Nord project in the Republic of the Congo. This is the first time that Total, an oil and gas super-major, has awarded SRP a direct contract. The scope of the contract includes 43 joints for drilling from a tension leg platform in a water depth of 780 m, located 75 km off the coast of Pointe Noire. Manufacturing and assembly work will take place in the UK and mainland Europe, and the equipment will be delivered by March 2015. The project will call on skills from a range of departments within SRP, including design, engineering, quality and procurement.

Johnny Shield, managing director, SRP, said, “This is a major project award that confirms our ability to engineer and provide complex turnkey riser projects directly to major oil and gas companies. This contract provides a solid base from which SRP will grow and provide its riser engineering and procurement capability offering to other companies. A key aspect of the contract win was our ability to deliver to the highest quality level against an aggressive schedule at a competitive price.”

IN OIL REVIEW Africa Issue 6, in the article “Building a gasfuelled economy”, it was an oversight of the writer to use 'incorrect' data published in "EMERGING EAST AFRICA ENERGY" May 2013 by US Energy Information Administration, the statistical arm of the US Energy Department. The table featured gas finds in Mozambique, not Tanzania. We apologise for any confusion this may have caused.

Bentec wins major contract in Algeria GERMAN-BASED MANUFACTURER of drilling rigs and equipment, Bentec has won the largest single contract in its 20 year history. The multi-million dollar contract was awarded by Algerian state owned drilling contractor, Enafor and will see Bentec deliver seven desert drilling rigs within the next 17 months. All drilling rigs will be fully equipped with Bentec equipment, including top drives, pumps, drawworks, power control rooms and electrical controls, all of which are manufactured at Bentec’s Bad Bentheim site. Bentec previously sold and successfully delivered four drilling rigs to Enafor in 2013. Bentec’s unique combination of technical solutions, industry knowledge and expertise were the decisive factors that Enafor

6 Oil Review Africa Issue One 2014

needed when selecting a drilling rig and equipment manufacturer to significantly modernise its drilling rig fleet. Dirk Schulze, Bentec chief executive officer said: “We are extremely proud to have secured our largest deal since the company was established in 1994. We work hard to maintain the highest quality standards across our drilling rig systems and this success is testament to that, the services we provide and our continued commitment to developing additional business in Algeria.” Bentec is one of the world’s leading manufacturers of drilling rigs and oilfield equipment with a long history and vast experience. Bentec manufactures and delivers high-quality, cost-effective and durable drilling and oilfield systems for harsh and hostile environments to serve the needs of the international oil and gas drilling industry. www.oilreviewafrica.com

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Industry News & Events

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JDR to supply equipment to west Africa

GE, Chevron in technology tie up

JDR, A LEADING provider of technology connecting the global offshore energy industry, has won a contract with FMC Technologies in Kongsberg to design and supply umbilicals and reels for Intervention Workover Control System (IWOCS) for a West African field development. The project calls upon JDR’s field-proven experience across the whole spectrum of IWOCS componentry - from hydraulics to fibre optics - with 20km of specially designed JDR IWOCs umbilicals that will be deployed across nine JDR-designed reelers. JDR’s ability to provide the full range of umbilicals and reelers, combined with the pre-qualification of its designs, will enable delivery against short lead times and can reduce project risk. The project, with a delivery time in mid-2014, will be designed by JDR’s in-house engineering teams and manufactured at its facility in Littleport. JDR will also test and pre-qualify the reeler packages in advance of deployment. Andrew Norman, ceo of JDR, stated: “This contract demonstrates both the growing demand for umbilicals and reels and JDR’s technical ability to deliver for FMC Technologies in a limited timeframe. We’ve had a long and fruitful relationship with FMC Technologies and I’m delighted we could partner once again on what will be JDR’s largest-ever umbilical and reeler order. We are the global leader in umbilicals and reels and are committed to remaining the technical leader in this growing field of business.” Integrated umbilicals and reels are used by oil and gas operators to monitor and control subsea trees during installation and for intervention activities. JDR has been at the forefront of this technology for over a decade and is now leading the development of new ‘open water’ umbilical technology that significantly reduces offshore operating costs.

GE OIL & GAS and Chevron Energy Technology have joined forces to codevelop and commercialise technology for the oil and gas industry. The companies are working on flow analysis technology for wells and will leverage research and development from GE’s newest global research centre. “GE brings its leading manufacturing capabilities, worldwide marketing, distribution, and extensive R&D capabilities not only for oil and gas, but also other business sectors to this alliance,” said Paul Siegele, president of Chevron Energy Technology Company and chief technology officer. “Together, we hope to bring impactful new technologies to the industry.” “Chevron’s deep understanding of the oil and gas industry, combined with GE’s long tradition of technology development and close collaboration with strategic partners, will uniquely position this new alliance to address the industry’s technology needs,” said Lorenzo Simonelli, president and ceo, GE Oil & Gas.“The solutions developed by this alliance will take on even more industry significance given Chevron’s proven leadership in being first to field-test and deploy new technology breakthroughs.” This partnership builds upon an ongoing collaboration between Chevron and GE developing the GE Safire flow meter, now being tested and deployed on Chevron land-based well production lines in the western United States. In addition to the flow metering collaboration, which is being conducted with the measurement & control business within GE Oil & Gas, the Alliance also is managing a coatings project and will be taking on additional highvalue projects in the near future. The Alliance provides a mechanism for commercialising early stage technologies from Chevron, GE or other technology partnerships.

Oando wins battle for ConocoPhillips assets NIGERIAN INDIGENOUS ENERGY group, Oando plc has won the battle for the acquisition of ConocoPhillips’s Nigerian assets in a deal worth US$1.79bn. The proposed deal is the biggest acquisition by an indigenous company in the history of Nigeria’s oil and gas industry. Oando intends to fund the US$1.79bn acquisition through a sale of debt and shares. They will pay a deposit of US$435mn in cash, following which Oando expects to raise the rest through a mixture of private placements, a rights issue and a loan of US$800mn from foreign and local lenders. “This will be a transformational transaction,” Wale Tinubu, chief executive officer of the Lagos-based company, said. Oando is seeking to become one of Nigeria’s top oil explorers and producers, he added. The onshore business to be acquired by Oando includes Phillips Oil Company Nigeria Limited (POCNL), which holds a 20 per cent non-operating interest in OMLs 60, 61, 62, and 63 as well as related infrastructure and facilities in the Nigerian Agip Oil Company Limited (NAOC) Joint Venture (NAOC JV). Nigerian National Petroleum Corporation (NNPC) holds a 60 per cent interest in the joint venture, while NAOC, which operates the assets holds 20 per cent. The second onshore business is Phillips Brass Limited (PBL), which holds a 17 per cent shareholding interest in Brass LNG Limited, which is developing the Brass LNG project. Brass LNG is a Greenfield project to develop a two-train of 10mn tonnes per year LNG facility in Bayelsa State. The other partners are NNPC, 49 per cent; Eni 17 per cent and Total 17 per cent. By the terms of the agreement, Oando will also acquire ConocoPhillips offshore business, which includes Conoco Exploration and Production Nigeria Limited (CEPNL). The company holds a 95 per cent operating interest in OML 131, with other partners as Medal Oil, five per cent; and Phillips Deepwater Exploration Nigeria Limited (PDENL), which holds a 20 per cent non-operating interest in OPL 214. The other partners include ExxonMobil which is the operator with a 20 per cent stake; Chevron, 20 per cent; Svenska, 20 per cent and the Nigerian Petroleum Development Company, 15 per cent, as well as and Sasol, five per cent. Pursuant to the proposed acquisition, Oando will indirectly purchase all of the issued share capital of POCNL, PBL, CEPNL and PDENL. Group chief executive officer of Oando Plc, Wale Tinubu, said it was expected that the closing of this transaction would position OER as a leading,

8 Oil Review Africa Issue One 2014

Wale Tinubu with the ceo of Oando Energy Services.

indigenous independent exploration and production (E&P) player in Nigeria “Upon closing, we expect that this will be a transformational transaction for OER, as the company has only been listed on the Toronto Stock Exchange (TSX) for about five months and now has an opportunity to execute its strategy and materially increase its production and reserves base. In our view, the combination of the right timing, right assets and the right company can lead to significant value creation in the Gulf of Guinea. We expect that the closing of this transaction will position OER as a leading, indigenous independent E&P player in Nigeria,” he said. Also commenting, chief executive officer of Oando Energy Resources, Pade Durotoye, said: “This potential transaction represents a transformational step forward for our company and is in keeping with our overall strategy to grow our portfolio of Nigerian-based assets by focusing on those opportunities that deliver high quality growth in reserves and production. Our management team is familiar with the assets contained in this proposed transaction and, we believe, possess the regional experience and technical expertise necessary to capture and unlock their future value for our shareholders.” The total oil and gas production from the onshore assets for the period from 1 January 2012 until 31 October 2012 averaged approximately 43,000 boed gross to OER.

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Our business success is not only measured in barrels of oil and gas, but includes the socio-economic impact our activities have on people in our countries of operation. This is why we provide support for sustainable educational and health development programmes for citizens of our host communities. At SAPETRO, we do not only explore hydrocarbons, we care for the people.

South Atlantic Petroleum NIGERIA BENIN

MADAGASCAR

JUAN DE NOVA CAR

S03 ORA 1 2014 Analysis_Layout 1 06/02/2014 13:40 Page 10

Analysis

Ahead of drives to start or expand oil and gas production, several African governments are crafting laws that give them more sway over the energy sector, part of a tide of resource nationalism on the continent.

African nations seek to control their

oil, gas developments S

OUTH AFRICA, MOZAMBIQUE, Mozambique wants to explore this year how it can increase its Kenya and Tanzania and other stakes in gas fields. Photo: Anadarko Petroleum. countries are due to either bring new legislation before government for approval this year or start the drafting process. Laws they are considering could raise tax rates, give state-backed oil companies automatic equity stakes in new projects and require companies to meet jobcreation targets. The stakes for all involved are huge. The accountancy company Pricewaterhouse Coopers LLP (PwC) estimates that Africa receives US$30bn a year in foreign direct investment as a result of oil and gas exploration and production. Africa currently accounts for seven per cent of global gas reserves and eight per cent of oil reserves. More than ever, African More than ever, African governments are under governments are under public pressure to safeguard that wealth.

Calls for nationalisation in South Africa In South Africa and elsewhere, calls for nationalising the country's mines have grown louder, reflecting frustration among the young and poor that foreign investment in the sector doesn't spread far beyond politically connected elites. "The days of mining and oil companies walking into Africa dictating their own terms are over," said Mark Rosenberg, an analyst at consultancy Eurasia Group. "There's more competition now and governments are more accountable to their people. There's a heightened sensitivity to getting more out of the resource sector for the country itself." In October, South Africa's Minister of Mineral Resources Susan Shabangu said the state wants to take a 20 per cent stake at no cost in new energy projects, with the option to purchase at fair market price an additional 30 per cent. Talks between government and companies continue and the final regulations should go before parliament by the second half of next year, a spokesman for the mineral department said. South Africa could have the world's eighth largest technically recoverable shale-gas reserves, according to US Energy Information Administration data. Mozambique's state oil company Empresa Nacional de Hidrocarbonetos already has a 15 per cent stake in key projects. This year the company wants to explore ways it can increase its stakes in gas fields, even though its finances are tight. Amid the push for gas development, Mozambique this year will also decide whether or not to increase its capital gains tax on mergers

10 Oil Review Africa Issue One 2014

public pressure to safeguard that wealth.

and acquisitions to 32 per cent. Currently, there is no uniform rate. Mozambique has the potential to become the world's second-largest liquefied natural gas exporter by 2025, PwC said.

Tanzania to amend legislation Tanzania is set to begin amending its natural-gas legislation, potentially adjusting tax rates and the government's stake in projects. The country passed a natural-gas policy in November that puts meeting domestic energy needs ahead of exports. Impressed by the performance of state-owned oil and gas conglomerate Sonatrach in Algeria, energy and minerals minister, Prof Sospeter Muhongo is touting Tanzania Petroleum Development Corporation (TPDC)'s domination of the country's oil and gas subsector. He said time for talking was up and it was now time for action by learning from the Algerians where, since independence in 1962, 98 per cent of the people now have access to power. "This [Algeria] is a huge country of 2.3mn sq km and 38mn people but has managed to connect so many people to the national grid; let's stop the debate and move on with implementation of development work," Prof Muhongo said. Meanwhile in Uganda, “If the laws are there it’s possible to estimate and make investment decisions … you need institutions,” said Gerald Banaga-Baingi, head of the Ugandan ministry of

energy and mineral development’s midstream petroleum unit. Uganda’s petroleum discoveries were made before those in Kenya and Tanzania, so it has more experience in dealing with such matters. One lesson is that without clarity on which bodies have the authority to award contracts, private companies are left in a bind. By engaging regional authorities, they risk being blacklisted for central government contracts. But if they fail to act right away in securing contracts for exploration blocks, they run the risk of being left behind by their peers. In some instances, decisions by local governments will take precedence and engagement with local communities is often cited as one of the most important tasks to ensure that oil and gas exploration and production activities are successful. The experiences of Tullow Oil and Africa Oil in Kenya’s Turkana region show how quickly issues between local communities and energy companies can escalate. The partners were forced to suspend operations in October. While the disruption lasted less than two weeks, it cost the companies time and money. In a statement announcing the end of the suspension, Tullow said that it had signed a memorandum of understanding with Kenya’s energy ministry that “clearly lays out a plan for the Government of Kenya, county government, local communities in Northern Kenya and Tullow to work together inclusively over the long-term and to ensure that operations can continue without disruption in the future.” Tullow also repeated its commitment to local hiring.

International investors must appease local communities If there is one thing that central and regional governments can agree on in this matter, it is that the onus falls on international investors to appease local communities. In Kenya, local governments are allowed to levy taxes on oil and gas companies. More informally, companies are often required to make payments to allow personnel to travel within a region and conduct other basic activities. According to Davis Chirchir, Kenya’s minister for energy and petroleum, this should not be a problem as the companies stand to reap big rewards from their involvement, which can cover the informal payments. ■

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Nigeria

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Nigeria, endowed with some of the world’s largest untapped gas reservoirs, has the means to monetise gas for greater domestic use and to export regionally and internationally, but limited infrastructure has prevented the gas sector’s optimal development. Moin Siddiqi reports.

Fulfilling ‘great gas promise’ is key

to industrialisation M

UCH DEPENDS ON the success of the Nigerian Gas Master Plan (NGMP) to channel investments in pipeline infrastructure and new gas-fired power plants to help reduce gas flaring and boost electricity generation. With around 187 trillion cubic feet (tcf) of natural gas equivalent to 33bn barrels of oil, Nigeria holds the world’s 9th largest proven reserves and biggest in Africa. In energy terms, gas endowments far exceed oil reserves and should underpin exploration and development (E&D) activities well into the next century, compared with 42 years for crude oil according to BP figures. With the country’s overriding priority for many decades focused almost exclusively on petroleum exploration and production – which accounts for over 90 per cent of the national income – plentiful gas reserves have, until now, been largely neglected. The Nigerian National Petroleum Corporation (NNPC) estimates that ‘probable’ reserves (2P-IP) could total a staggering 600 tcf – much of which lie in unexploited deep and ultra-deep offshore terrain in the Niger Delta region. Hence, needs for massive foreign investment and advanced technologies to unlock huge probable reserves. That, in turn, can spur the development of regional pipelines, the expansion of liquefied natural gas (LNG) and other energy-intensive industries as well as fuel much-needed power generation. Despite holding a top-10 spot for proved reserves, Nigeria ranked as 19th largest gas producer in global league table with 2012 output reported by BP at 43.2bn cubic metres (cu m) – representing 20 per cent of Africa’s total (216.2bn cu m). By contrast, countries with relatively lower reserves, for example, Malaysia (46.8 tcf); Canada (70 tcf); Norway (73.8 tcf); Indonesia (103.3 tcf); and China (109.3 tcf) produced 65.2bn cu m; 156.5bn cu m; 115bn cu m; 71.1bn cu m; and 107.2bn cu m, of natural gas (natgas) during 2012. Nigeria consumed about 224bn cubic feet (cf) dry gas in 2012, less than a fifth of its total production.

Grossly under-utilisations Since most oilfields lack the infrastructure to produce and market ‘associated gas’ (gaseous by-products of oil extraction) much of it is flared. In 2011, the NNPC claimed that flaring cost Nigeria US$2.5bn per year in lost revenue – not counting environmental damages upon local

12 Oil Review Africa Issue One 2014

communities. Nigeria is among the ‘top-five’ gas flaring countries (after Russia) – ahead of Iran, Iraq and Algeria. Various factors have hindered a proper development of the gas sector. Nigeria sits on vast quantities of ‘stranded gas’ (ie, gas reserves that have been found but remain undeveloped due to physical or economic barriers). Since the bulk of gas is located in the Niger Delta, security risks have prevented energy groups to construct necessary infrastructure for supporting gas monetisation. Moreover, a poor regulatory regime coupled with sub-commercial frameworks, notably fixed low prices for domestic users, discourage investment in nonassociated gas. The UK energy consultants Wood Mackenzie noted: “The return on investment for gas exploration is not attractive until prices are much higher. There is little incentive to produce gas unless you control the entire value chain – end demand as well as supply.” Consequently, internal trade in gas remains modest.

The Nigerian Gas Master Plan seeks to address infrastructure constraints and poor commercial framework that for decades have deterred gas extraction and wider use in local energy consumption. One representative of an oil major said: “There would be more availability of associated gas in the country but there is no market for it due to the lack of infrastructure for electric power generation.” The growth of a domestic gas market requires a shift from a regulated pricing structure whereby producers receive supply contracts and assigned prices by the authorities towards a market-oriented pricing. Industry experts estimate that a price of US$4 per million British thermal units (mn Btu) is needed to cover E&D plus infrastructure costs of building pipelines and gas treatment plants.

Radical overhaul The Nigerian Gas Master Plan – approved in February 2008 – is the official blueprint for

A seventh train is under construction to increase the Nigeria NLNG capacity on Bonny Island – the country’s only operating LNG plant.

exploitation and governance of the nation’s gas resources. It seeks to address infrastructure constraints and poor commercial framework that for decades have deterred gas extraction and wider use in local energy consumption. The strategic aim is fostering a material and lucrative gas-related business with a target net operating income (excluding LNG dividends) of US$1bn by 2020. There are three major objectives incorporated in the plan: 6 Stimulating the ‘multiplier effects’ of upstream and downstream gas output and processing in the domestic economy in terms of job creation, supporting basic infrastructure and wider industrialisation by boosting power generating capacity in the medium term. “Gas could mean cheap energy for industry and reliable electricity. It can create jobs,” said Labi Ogunbiyi, ceo First Hydrocarbon Nigeria, a local oil-gas company. 6 The NGMP envisages Nigeria becoming a regional ‘industrial hub’ of West Africa for fertiliser, petrochemicals, aluminium, cement and iron-steel. It also intends to position Nigeria competitively in high value export markets such as Gas to Liquids (GTL) and LNG, of which Nigeria accounted for over eight per cent of globally traded LNG by exporting 19.8mn tonnes in 2012, according to FACTS Global Energy, making Nigeria 4th largest global LNG exporter. 6 Securing the country’s longer-term energy security through affordable and reliable fuel supply by leveraging natgas. According to the International Energy Agency (IEA), Nigeria – with an estimated population of 173mn (Africa’s largest) – has one of the lowest net electricity generation per capita rates in the world. By contrast, Bangladesh, a country slightly smaller in population (155mn), with

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Nigeria

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tiny gas reserves of 6.5 tcf and smaller (GDP) than Nigeria, produces nearly twice as much electricity as Nigeria. The goals are ambitious, but if effectively implemented, the NGMP can unlock the sector’s optimal potential, thereby making Nigeria a major gas producer.

The gas blueprint is being implemented in phases with some degree of progress. Recent progress The gas blueprint is being implemented in phases with some degree of progress. The NNPC has overhauled the commercial framework for natgas in the domestic market. Gas prices have been reviewed from past ‘sub-commercial’ levels towards near ‘market viable’ (ie, cost recovery) levels, with a view to attaining export parity in the near-term, thus making investment in gas more vibrant. Prices are now set at US$3/mn Btu and once gas producers meet their obligations to supply power utilities, they can sell surplus gas to industrial users at market prices. Previously, power utilities paid only US$1/mn Btu for gas. The contracting terms have improved over the past year and key regulatory frameworks such as the Network Code for gas pipeline open access have been devised creating a bankable framework for private investors. In addition, the World Bank Partial Risk Guarantee now provides revenue security for gas supplied to government-owned power stations across Nigeria. As part of diversification agenda, gas industrial hubs are being created, such as the Ogidigbe Industrial park – designed to be the biggest in Africa housing 1.3mn tonnes per year (tpy) petrochemicals and 2.6mn tpy fertiliser plants. It is intended that secondary manufacturing industries (including food processing) can develop across gas industrial hubs – geographically dispersed creating jobs. To end decades of long harmful practice of gas flaring and channel natgas resources toward productive use, the Domestic Supply Obligation (DSO) regulation was recently devised and a Gas Aggregation Co set up to facilitate steady growth in supply. The DSO scheme comprises many gas flare projects and by 2015, over 600mn cfd of flared gas is planned for utilisations in downstream projects. Moreover, the newly created Department of Petroleum Resources vets [all] new upstream oil-gas projects and prevents them from proceeding without proof of a concrete gas monetisation programme. Recently unveiled or upcoming gasgathering schemes include Sonam field development, Onshore Asset Gas Management project, Assa-North/Ohaji South development, Gbaran-Ubie, the Idu project, and the Tuomo gas

14 Oil Review Africa Issue One 2014

field. Two other downstream projects at advanced stages are: 6 Chevron-operated Escravos US$9.5bn GTL facility (expected online within a year) – converting 325mn cf/day of natgas into 33,000 barrels of liquids, principally synthetic diesel, to supply clean-burning, low-sulphur diesel fuel; and 6 Brass LNG complex – which is expected to operate two liquefaction trains with a total annual capacity of 10mn tonnes. The project – owned by a consortium of NNPC; Total; ConocoPhillips; and Eni is now in engineering phase. Meanwhile, a seventh train is under construction to increase the Nigeria NLNG capacity on Bonny Island – the country’s only operating LNG plant – to over 30mn tonnes/year (from existing capacity of 22mn tonnes). Finally, the NGMP calls for building several pipelines to carry gas from South to Northern and Western regions. Erik Fernstrom, energy analyst for the World Bank, said: “If you are going to have industrial development beyond the gas-rich southeast, pipelines to the north make sense from a structural transformation point of view.” The government is planning a pipeline from Niger Delta to Kano, a major northern urban centre, where a large steel plant is located. The progress to date is encouraging – the expansion of the Escravos to Lagos Pipeline System is two-thirds completed and economically vital East/West pipeline has also commenced. Such projects will increase access to both supply (located in the south) and growing industrial markets over the next

distribution infrastructure, and diversify power generation sources. Phillip Ihenacho, chairman of local-based Seven Energy, which is building gas pipelines to supply power plants, explained: “The government knows it will have to harness the private sector to fill the gap and will have to come up with a pro-business and private sector regime. If the plans come together it would be one of the biggest opportunities for the private sector in the world.” However, without ample gas feedstock, those power stations currently under construction or being commissioned will become expensive white elephants. Austin Avuru, ceo Seplat Petroleum warned: “For the companies involved there is too much at stake in the power reforms, not to get the gas supply right.” The National Integrated Power Project (NIPP) was formed in 2004 specifically for commissioning a new generation of gas-fired power plants using natgas that was flared. Although progress remains sluggish, NIPP presently contributes more than 1,000 MW to the national grid capacity, and it is projected to reach 4,771 MW by 2015 when all planned power stations are due online. A major source of capacity expansions is expected to derive from Independent Power Projects (IPPs), which currently contribute about 1,674 MW to the national grid, and capacity from IPPs is forecast to reach as much as 14,000 MW by 2020, according to the August 2013 Roadmap. IPPs under construction include investments from foreign groups such as ABB's 450 MW gas and steam turbine in Abuja and ExxonMobil's 388 MW gas-fired plant in Bonny Island.

Opportunities

The Chevron-operated Escravos GTL facility is at an advanced stage.

decade.

Gas-fuelled electricity Since early 2000s, Nigeria has had several schemes to develop new and upgrade current power infrastructure, including a target to create 40 gigawatts (GW) of capacity by 2020 (compared to 2012 installed capacity of 5.0 GW). Achieving this challenging target requires annual investment of US$10bn over ten years within a framework of market reforms and incentives to eliminate gas flaring, expand gas

Given the right political, regulatory and institutional frameworks, the fledgling gas sector is posied for a rapid strong growth in the coming years. The NNPC commented: “With efforts towards a credible and competive gas market, the policy reform looks set to deliver on the aspirations of President Goodluck Jonathan. Current projections of gas supply indicate that by 2018, Nigeria gas production – in barrels of oil equivalent – could be as high as 1.5mn barrels per day, making it a significant sector on its own.” The long-awaited Petroleum Industry Bill (currently stalled in Parliament) could resolve ongoing investment uncertainties and set a regulatory guideline for the hydrocarbons industry. A comprehensive gas programme will require more than US$15bn in investment and offers opportunities for engineering, procurement, construction (EPC) businesses in areas of upstream supply development, field support services, gas pipeline fabrication and construction, gas processing facilities as well as development-operations of downstream gas utilisations projects. In sum, Nigeria sits on a huge gas bubble to satisfy both domestic and exports markets. ■ www.oilreviewafrica.com

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Nigeria

Oil and gas producers in Nigeria are breathing new life into the country’s maturing fields and ageing infrastructure.

Out with

the old

Natural gas flaring, the burning of associated natural gas that is produced with oil, has contributed to environmental pollution.

IGERIA’S OIL INDUSTRY, Africa’s largest, is facing a new challenge, but this time it’s nothing to do with security issues, pipeline sabotage or ethnic divisions. With the country’s crude oil now flowing for more than half a century - oil was first discovered in the prolific Niger Delta region in the late 1950s - some fields are facing up to the problems of simple old age. It’s a common problem in other parts of the world too, from Texas and the North Sea, to the Middle East Gulf, the biggest oil hub of them all. In all of these locations, it has become a major headache for engineers working to maintain flow rates out of mature reservoirs that have been in service for decades. In fact, the Gulf’s oil production dates back even further than Nigeria, to the 1930s. Though Nigeria has witnessed substantial investment in more recent years too, this has been heavily skewed offshore, where spending has targeted the country’s now proven deepwater oil and gas deposits - away from the trouble spots onshore. The bulk of the country’s oil and gas production, however, still comes from the shallows and onshore areas of the Niger Delta, a territory that is laced with billions of dollars worth of equipment. As well as preserving the oil fields

16 Oil Review Africa Issue One 2014

themselves, the same goes for all the associated infrastructure and apparatus that supports this massive industry, from thousands of kilometres of flow lines and pipelines, through to high tech control systems and processing units. These once state-of-the-art installations that serve the upstream industry are likewise counting the cost of their years of service. And, unfortunately, it can be a tricky area for engineers to operate as well, given the logistical complexities of working in the Delta’s swamplands, not to mention an often hostile climate where security concerns still loom large.

EOR a huge focus Fortunately, enhanced oil recovery (EOR) has been a huge focus for the industry of late. That’s been driven by plain economics and the need to maximise extraction from maturing fields or difficult reservoirs, in order to secure a full return on assets. The difficulty in securing new upstream assets, whether in Nigeria or anywhere else, also means operators want their money’s worth - and that means squeezing out every drop of oil from any given field. With Nigeria’s onshore oil reserves dwindling, it is set to become an even more important challenge for the industry in the years to come.

[EOR] has been driven by plain economics and the need to maximise extraction from maturing fields or difficult reservoirs. Nigeria’s petroleum minister, Diezani Alison-Madueke, has said that the country’s onshore oil reserves were declining at a rate of up to 12 per cent per annum, as ageing fields pass peak production and investment in new projects slows. Last year, she claimed “the entire oil and gas sector of the Nigerian economy needs a revamp” although she was also referring to the nation’s legislative framework, as much as operational challenges and maturing assets. She did, though, identify ageing production facilities built in the early and mid-seventies requiring modernisation as one of the key challenges of the future.

Environmental considerations There are environmental considerations here too. According to the US’ Energy Information Administration (EIA), ageing infrastructure and poor maintenance have resulted in a number of oil spills through the years.

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Pipeline repair is often essential in ageing oilfields. Saipem recently completed work on a critical crude pipeline replacement project on an undisclosed offshore field.

Although sabotage is a common reason, spills are also a result of decrepit infrastructure. Also, natural gas flaring, the burning of associated natural gas that is produced with oil, has contributed to environmental pollution, it says. “Protest from local groups over environmental damages from oil spills and gas flaring have exacerbated tensions between some local communities and international oil companies (IOCs),” the EIA said in a December 2013 Nigerian update. “The industry has been blamed for pollution that has damaged air, soil, and water, leading to losses in arable land and decreases in fish stocks.” And the same principles extend to some of the country’s older offshore fields too. US super-major ExxonMobil, for instance, transformed the prospects for its Enang field, which it shares with the Nigerian National Petroleum Corporation (NNPC). Discovered in 1968, Enang first commenced production in 1974, reaching 40,000 bpd at peak four years later in 1978. By 2006, however, this figure had dwindled by about a half, to around 20,000 bpd. The joint venture launched an initiative the following year that saw five new wells drilled in 2007, elevating production to a more respectable 34,000 bpd. This project included the reprocessing of 3D seismic data to better understand the field’s geology, which yielded new drill targets that had yet to be exploited. Reversing production declines from such

18 Oil Review Africa Issue One 2014

fields and maintaining the integrity of infrastructure and other assets has been an important source of work for international contractors too. Italy’s Saipem recently completed work on a critical crude pipeline replacement project on another undisclosed offshore field. The company replaced six pipelines, with a total length of 85 km, and diameters ranging from 10 to 24 inches, connecting six offshore platforms, including a shore approach and bridges. It is a theme that we are likely to see more of as the years advance on Nigeria’s oil industry.

The evidence of how engineers are adept at reversing production declines from these maturing fields is certainly cause for good cheer. High profile target still for foreign investors Of course, with plenty of oil still flowing, the country remains a high profile target for foreign investors. And the locals aren’t panicking just yet. Indeed, last year, the head of one of the country’s legion of new independent producers claimed that the Niger Delta was in fact only a ‘mid-life basin’, rather than a mature one.

The managing director of Conoil Producing, Ebi Omatsola, reckons that only two per cent of the wells in the area have been drilled deeper than 15,000 feet, suggesting still more potential to come from the area. It means accessing these deeper target levels could help sustain some of the nation’s more established fields for many more years to come. There has been an active trade for mature assets in the past decade or so, which shows there is a healthy appetite to take on such projects, with operators seemingly undeterred by any technical challenges. This has been driven most recently by the disposal of some of the IOCs bulging Nigerian portfolios. And the evidence of how engineers are adept at reversing production declines from these maturing fields is certainly cause for good cheer. No one should underestimate the complexity of such projects, but the industry itself - and the technology it develops so effectively - is maturing similarly to rise to the challenge. The cost of replacing, updating and modernising huge amounts of scattered infrastructure - from sprawling, often vandalised pipelines, through to complex controls systems - is another challenge that it would be unwise to deny. For Nigeria, a country with more than 50 years as an oil producer under its belt - around the same period since its independence in 1960 - it’s all a part of growing up. ■

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The Nigerian Content Development Fund has grown to US$350mn and is now being accessed by Nigerian service companies. The executive secretary, Nigerian Content Development and Monitoring Board, Ernest Nwapa, disclosed this at the 2013 Practical Nigerian Content Forum, recently held in Yenagoa, Bayelsa State.

NCD Fund - timely intervention for indigenous

oil, gas operators T

HE FUND WAS established by the Nigerian Content Act and is pooled from one per cent of all contracts awarded in the upstream sector of the oil and gas industry for use in developing the supply chain and building local capacity in the industry. Managing director of Geomarine Systems Limited, an indigenous player in the oil and gas industry, Mr Mma Okezie, whose company is a beneficiary of the NCD, has applauded it for its interventionist initiative. Okezie spoke on the sidelines of the conference

What part of the oil and gas industry do you operate in? We do oil exploration geophysics, seabed, lake bed, river bed geophysics, hydrography, marine positioning and pipeline route survey.

Did your company really get funding from the NCD? I ask because there have been complaints that access to the funds is severely restricted but your company is probably the only company that has received funding from NCD. Yes, my company did receive funding from NCD through their mechanism with the banks. Our own bank is Diamond Bank, probably the only bank in Nigeria that understands the nitty-gritty of the oil and gas industry. These things work. The conditions may be stringent, and some of them even annoying, but I suppose they have to take steps to ensure proper utilisation of the funds.

Geomarine crew laying out Marine cable on PGS 3D survey for Chevron.

What was the role of your bank in the funding process? Banks keep money. They were directed to give us money and they gave us money, following the guidelines. And I can gladly report that all the requisite equipment for our work is in-country as we speak, thanks to NCD and Diamond Bank.

You said some of the requirements were annoying. Why are they? What was the timeframe between when application was made and when funding was approved?

Some were repetitive, some were inapplicable in our circumstance. Things like that.

Actually, very short. I mean real short like one week or so. But our case is special. Seismic exploration is a difficult job. Equipment layout is massive, personnel layout is massive, interaction with the society and environment is massive. In short, our footprint is huge. Even for small projects. So the tendency is that the industry has been dominated by foreign companies with deep pockets. What happened was that the executive secretary heard what we are trying to do, made some inquiries and invited us over for a chat. I guess he was mentally calibrating what he had heard with what he was hearing from us. Then he did something incredible and introduced me to the director of finance (I think that is his designation). He said "these are the kinds of persons we want to support. The director of finance will tell you what to do". And he left. Then the director educated me on how to go about things. As they say, the rest is almost history.

Do you think that NCD has lived up to its billing?

What do you mean by almost history?

That is the task we were given. I cannot go beyond the mandate I was given. I guess the idea is to look at short-term achievables. And my view is that the board will have to do a lot of internal capacity building and I will tell you why. We may not realise it but the NCD is catalysing Nigeria businesses in ways that may soon swamp the capability of the board to oversee with its present staff strength. The board has done an excellent job of informing, educating about local content, and of monitoring, ensuring compliance with the law, and developing metrics for the measurement of local value added, even if I personally have some issues with some of the metrics. Now assume an additional 200 companies come on-stream over the next two or three years in various fields of oil and gas and its associated/auxiliary businesses such as offshore/inland marine transport on the basis of the effective enlightenment campaign by the board. Do you not see that the board will be over-stretched in terms of competent personnel, sooner than later? It will not be nice for the board to be a victim of its own success. â&#x2013;

Well, the Executive Secretary did not just push us to his finance director and cut off. He followed up and the director of finance too. They were chasing after the bank to ensure that things moved fast. Indeed at a party by Diamond Bank in Abuja, on the heels of the annual oil & gas gathering, the executive secretary gathered all the senior bank people present and gave them a 20-minute talk on why our funding had to be top priority. As he correctly put it, that is one area that if Nigeria shows capability, then the rest will be smooth sailing . . . something to that effect. The rest is finally history.

The Nigerian NCD scheme is being recommended by international agencies to other upcoming oil producer nations. 20 Oil Review Africa Issue One 2014

Absolutely. And not because they arranged funding for us. Nigerian business in the oil & gas, and marine industry has two things to be thankful for - NCD and militancy.

How? Let us leave that for another time. But before then let me say something. The Nigerian NCD scheme is being recommended by international agencies to other upcoming oil producer nations. So, it is not all doom and gloom in Nigeria. Even doom and gloom provide opportunity to do business and innovate. That is why weapon makers are in business. That is why casket makers are in business.

You just spoke about your expectations of the NCD in the next three years. Why limit it to three years?

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Nigeria

Two representatives from Prime Atlantic of Nigeria described their company’s focus – providing solutions for the oil and gas industry – and more broadly, the issue of gender and the sector, with Stephen Williams for Oil Review Africa.

Prime Atlantic: serving Nigeria’s oil

and gas industry T

HE AFRICA OIL Week celebrated its 20th edition last November in Cape Town. Hailed as the pre-eminent event of Africa’s upstream oil and gas industry, it always attracts a wide crosssection of the sector’s players and hosts indigenous companies, such as Prime Atlantic, alongside the major multinational corporations with operations in Africa. Prime Atlantic, established in 2003, is a wholly Nigerian-owned company established to effectively provide services to Nigeria’s oil and gas industry. Speaking to Oil Review Africa, Taiwo Onifade and Olushola Christine Adeyanju described their roles in the company, as supporting business development. “We are at the Africa Oil Week in Cape Town in order to identify prospective businesses that we can offer our services to,” Onifade clarified. It is more than simply a marketing role, it spans the whole gamut of business support. Both Onifade, who has been with Prime Atlantic for four years, and Adeyanju for three years, are graduates of Lagos University. Onifade studied Economics while Adeyanju read History and Strategic Studies.

One of PACE’s training sites in the Ogere facility.

Essentially a holding company When asked to describe her company, Onifade explained: “Prime Atlantic is essentially a holding company for different investments in oil services’ companies that are targeted at oil industry operations in Nigeria to start with, and sub-Saharan Africa going forward. “We invest in subsidiaries and joint-venture companies, always taking a majority shareholding in these entities, and have renowned global partners in different parts of the oil and gas value chain. “We set up operations in-country to take advantage of local content policy that is designed to enhance and develop capabilities in Nigeria.”

A wide portfolio of operations

Taiwo Onifade (left) and Olushola Christine Adeyanju (right).

22 Oil Review Africa Issue One 2014

Prime Atlantic has a wide portfolio of operations with five joint-ventures and international partnerships, for example with Alan Kaine Enterprises of the UK and Falck Nutec of Denmark, that spans training, instrumentation calibration, risk management, personnel on-board services, as well as the repair and maintenance of technical equipment so vital to the oil and gas industry. But the very first joint-venture had as its foundation a consortium, established in 2001, that provided operations and management

“We set up operations incountry to take advantage of local content policy that is designed to enhance and develop capabilities in Nigeria.” training services to Chevron. Part of this consortium was the French company Cegelec who, with the newly formed Prime Atlantic created a new company, Pace, to continue work with Chevron and Total. It has trained and certified over 400 Nigerian personnel for the Chevron Agbami and Total Akpo operations in Nigeria. “Pace has worked with both Chevron and Total, training apprentices. We have also trained for Shell and a number of other smaller oil companies and conducted general maintenance and commissioning services for some of Total’s power plants,” Onifade said. Today, Pace has nearly 200 staff and operations in Lagos, Port Harcourt and Ogere so as to expertly serve the upstream (offshore and onshore exploration and production) as well as the downstream sector – refining, petrochemicals, oil and gas transportation and storage and product loading.

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The Pace training centre at Ogere features a mock-up of the Agbami offshore platform, Nigeria’s largest offshore development. With this mock up they are able to replicate simulations to see how this would affect its operations and how employees should respond to certain situations. Apprentice training is but one of Prime Atlantic’s activities. Working together in a joint-venture with the Danish company Falcke, Falcke Prime Atlantic provides a range of safety, survival and emergency response services. “We offer fire fighting, water survival, first aid and crisis response training. What we set out to do is ensure that the standards within our industry are the very highest possible,” Onifade says. “We have an action plan in that we pass on to the relevant people details of the companies that we have identified, and then, typically, I will follow up on later work, so the managing director is fully informed on progress,” Adeyanju explains. “I work directly with the managing director.” One of the interesting aspects of the 2013 Africa Oil Week was the number of parallel sessions with corporate presentations and farmout forums – something of a departure for the conference, but made possible with its new venue at the Cape Town International Conference Centre. Formerly held at the smaller BMW Pavillion conference centre, the Africa Oil Week had outgrown its usual venue. There were also meetings of organisations such as the Global Women in Africa Petroleum and Energy Business Breakfast. In fact, this organisation was founded by Babette van Gessel, the former senior partner at Global

Pacific & Partners (organiser of the Africa Oil Week) who became GP&P’s chief executive in late 2013. Former chief executive Dr Duncan Clark now serves as the company’s chairperson. As Onifade and Adeyanju had attended this business breakfast, it seemed appropriate to ask them about how the gender issue impacted their work.

The Pace training centre at Ogere features a mock-up of the Agbami offshore platform, Nigeria’s largest offshore development.

Adeyanju told ORA that she took away from the breakfast meeting the importance of women owning their own time, and setting boundaries. “Many women in the industry are also home-makers, so being able to balance work and family is crucial,” she explained. Onifade thought that it was slightly unusual for women to be able to break through the management ‘glass ceiling’, but that the situation was improving. In fact, Onifade has done a pretty good job in shattering the ceiling herself. After taking a masters degree at Nottingham University in the UK, she moved into corporate finance working for Ocean and Oil (Oando), KPMG and Zenith Capital before taking up her present position

with Prime Atlantic. “Certainly, in Lagos you have more women in managerial positions and senior roles,” Onifade commented. “If you looked at our own managerial team I think we have more women than men. The company has grown and even though that we’ve only been around for seven years, in those seven years it has become a pretty successful model. If you ask my MD, I think he will tell you ’yeah the women are fantastic.’ “In the industry as a whole, women are not so well represented, but it is also true that they tend to work behind the scenes – they are less likely to be client facing. But they do most of the work! They ensure that the office is running smoothly, things are being done. But there are some women in senior positions in the oil and gas services sector. “If you were to ask me what drives the company, I would say that it is to ensure that within the industry, best practices are identified and adhered to” “I have oversight as to what is happening in all our joint ventures and subsidiaries and we try to inculcate best practices in human resources, administration and finance. We try to analyse what is best for our company and formulate policies to achieve that end.” As both Onifade and Adeyanju made clear, their vision is for beyond the Nigerian oil and gas industry, beyond the Gulf of Guinea and embraces pan-African ambition. It was very interesting that Adeyanju had mentioned that what she remembered from school about the ‘Scramble for Africa’, she now better understood from attending the Africa Oil Week and witnessing the excitement over the continent’s booming hydrocarbon industry. ■

CAMAC secures long-term FPSO for Oyo Field AFRICA-FOCUSED INDEPENDENT oil and gas exploration and production company, CAMAC Energy, has announced that a letter of intent was signed for the terms and conditions of a long-term agreement for the floating, production, storage, and offloading vessel Armada Perdana. The vessel, situated on the Oyo field offshore Nigeria in OML 120, can process up to 40,000 bpd of oil. It has a storage capacity of one million barrels of oil and currently supports daily production of about 2,000 barrels of oil and 40 mmcf of natural gas from the field. "FPSO Armada Perdana has been instrumental in supporting our ongoing FPSO Armada Perdana.

24 Oil Review Africa Issue One 2014

operations deepwater offshore Nigeria. It has historically provided a high utilisation rate and we are pleased to have this long-term infrastructure in place that will allow us to execute our development and exploration programme," said chairman and ceo Kase Lawal. CAMAC recently announced a multi-year drilling rig contract with Northern Offshore Ltd. The Energy Searcher (mid-water drillship) is expected to be delivered to the Oyo field in the first half of 2014 to commence drilling and completion activities. It is proposed that the company will complete the Oyo-7, drill and complete Oyo-8, and drill and complete Oyo-9. The company said that these three wells will bring online a total of about 21,000 barrels of oil per day net. The Oyo field commenced production in December 2009 and produces oil and natural gas. CAMAC Energy has also signed a US$100mn one-year contract with Northern Offshore Ltd for the drillship, Energy Searcher, which is also to be delivered to the Oyo Field, where drilling activities will commence in the first half of this year, 2014. The rig contract with Northern Offshore ensures a highly capable and efficient rig to execute on its transformational development and exploration programme in 2014 and beyond. CAMAC plans to utilise the rig on its multi-year, high-impact development and exploration portfolio.

www.oilreviewafrica.com

S06 ORA 1 2014 Nigeria C_Layout 1 2/6/2014 1:34 PM Page 25

S06 ORA 1 2014 Nigeria C_Layout 1 2/6/2014 1:34 PM Page 26

Nigeria

Whither Nigeria’s global LNG market share? DRIVEN BY A growing demand for natural gas and impacted by macroeconomic fundamentals, technology evolution and shale revolution, the global LNG industry is rapidly evolving, with strong recovery now underway. Instructively, Nigeria, Africa’s top oil producer and world’s fifth biggest LNG exporter, has been negatively impacted by the shale gas boom in the United States as LNG exports to the US have seen significant decline. The Nigeria Liquefied Natural Gas (NLNG) Limited, which used to control ten per cent of the global market share, has seen its share drop to between five and seven per cent. Nigeria is home to the world’s ninth biggest gas reserves and one of the world’s largest LNG export terminals. In 1989 the NLNG Limited was established to harness the nation’s vast natural gas resources and produce LNG and natural gas liquids for export. Although the country’s presence in energyhungry Asia has been growing in recent times, it is now being threatened by the increasing LNG export potential of the US and East Africa, as well as Singapore’s aspiration to become the region’s LNG trading hub.

26 Oil Review Africa Issue One 2014

As a result of rising shale gas production, it is projected that the US would become a net exporter of natural gas in the year 2020. This would lead to LNG supply abundance in the market and a likely decline in LNG delivery price to Asia and Europe, the main destinations of Nigeria’s LNG. Analysts have said that Nigeria’s share of the LNG market could significantly fall as the increasing availability of LNG from US and East Africa finds their way into the Asian region, the top destination for the fuel. Already, Asian buyers have expressed concern over the high price they are forced to pay and are increasingly considering the US as a cheaper alternative. Surging shale gas production has pushed down prices in the US, which has started relaxing restrictions on gas exports. Four LNG projects have so far been approved in the country, with over 20 proposals still awaiting approval. Japan and South Korea have reportedly cut deals in recent months to buy gas from US terminals. Enter Singapore. The country is apparently taking no prisoners in its drive towards realising its ambition to become Asia’s LNG trading hub by the end of this year, as it is investing heavily in new facilities. With the city-state now on the verge of

becoming Asia’s new trading hub for LNG, it is hoped that the federal government and other stakeholders would see this as a wake-up call to tighten up the many loose ends such as the long delays of LNG projects limiting the growth of the nation’s oil and gas industry. Aside from the threat from the US and Singapore, analysts believe that East Africa’s proximity to Asia is likely to stand it in good stead for LNG exports. The prospect of Mozambique and Tanzania becoming LNG exporting nations is expected to present a veritable alternative for Asian buyers. East Africa, in particular Mozambique, could be a new hotspot in LNG exports due to its recent large offshore discoveries, according to British maritime classification society, Lloyd’s Register, in its ‘Global Marine Trends 2030’ report.

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SHELL IS BATTLING to keep the position of largest supplier of gas to Nigeria’s domestic gas market. A major effort is being made in the eastern Niger Delta, where the largest reserves are and the company has a number of projects, including studies, new construction and upgrade. A well has just been completed on Okoloma field, which will increase the throughput on the field’s 240mmscfd capacity gas plant. There’s progress on the new 80 mmscfd gas plant (and ancilliary facilities) that the company is building on the Agbada field. “Maturation is going on at Buguma Creek, but they haven’t yet taken final investment decision on that”, according to sources at the National Petroleum Investment Management Services (NAPIMS), the quasiregulatory arm of the state hydrocarbon company NNPC, which oversees the government interest in the Joint Venture with the AngloDutch major. The 53mmscfd Obigbo gas processing plant was shut down because of encroachment on high pressure pipelines. “We are engaging with the state and local government authorities to rid the place of that danger”, NAPIMS sources said. Okoloma, Obigbo, Imo River and Alakiri gas fields constitute the Shell East Nigeria Gas Cluster, which supply both government and Shell-operated power plants at Afam, the Notore fertiliser company, the Rusal (aluminium smelting) company, as well as textile and glass industries in the east of the country. Shell is upgrading the Alakiri Creek Gas Plant from 80mmscfd to 120mmscfd. But the plant is located in the Oil Mining Lease (OML) 18, which is currently on auction. The company has committed to upgrade the plant even though it is selling its stakes in it. A significant challenge to Shell’s effort in the ENGC is that the oil pipelines keep being strafed, which affects supply to gas plants, as a significant portion of the input gas is sourced from associated gas fields.

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FMC taps Aveon for Egina subsea structures FMC TECHNOLOGIES HAS contracted Aveon Offshore to fabricate more than 5,000 metric tonnes of subsea structures for the Egina field development offshore Nigeria. Operator Total Upstream Nigeria awarded FMC the engineering, procurement, construction, and commissioning contract for the subsea production systems. Aveon is performing fabrication at its 240,000-sq m yard in Rumuolumeni, near Port Harcourt. First steel was cut in December. Load-out and sail-away of the subsea structures is expected to get under way during the second half of 2015.

xxx

Oil Review Africa Issue One 2014 27

Nigeria

Shell to boost East Nigeria gas cluster

S06b ORA 1 2014 Nigeria News Extra_Layout 1 06/02/2014 13:53 Page 28

Building capacities in Nigeria to support increased investment in the oil and gas industry Q

The Nigerian Oil and Gas Industry Content Development (NOGICD) Act 2010 was signed into law by His Excellency President Goodluck Ebele Jonathan on 22 April 2010. This piece of legislation established the Nigerian Content Development and Monitoring Board to superintend over the implementation of the provisions of the NOGICD Act. Over the past three years and half of its establishment, the Board has achieved several feats under the leadership of the Chairman of the Governing Council, Her Excellency Diezani Alison-Madueke, Honourable Minister of Petroleum Resources. One notable achievement is the establishment of the Nigeria Oil and .HZ PUK\Z[Y` 1VPU[ 8\HSPĂ&#x201E;JH[PVU :`Z[LT 56.0* 18: HU LSLJ[YVUPJ WSH[MVYT [OH[!

Q Currently captures more than 16,000 entries of individuals and professionals and their skills and competencies; Q Has more than 5,000 service company portal accounts with details of their capacities; Q Offers oil and gas assets categorisation modules; Q Uses Expatriate Quota Management modules. The Board has also commenced the development of Oil and Gas Industrial Parks to promote manufacturing and JYLH[L QVIZ ZOVW Ă&#x2026;VVYZ HUK Z[PT\SH[L the development of linkage sectors. This is being implemented under the Nigerian Oil and Gas Industrial Parks :JOLTL 56.07: HUK ^PSS PU]VS]L the establishment of the physical infrastructure and create an

enabling environment for low-cost manufacturing, domiciliation of capacity, technology acquisition, training, employment opportunities and structured community participation. :V MHY [^V ZP[LZ VM HIV\[ hectares each have been secured in Bayelsa and Cross River, and development commences in the second quarter of 2014. The Nigerian Content Development Fund has also grown to more than $300 million and is now being accessed by Nigerian service companies. The fund structure earmarks 70 per cent to guarantee loans from Nigerian Banks to service providers to build capacity. The 30 per cent balance is currently being used to fund direct intervention WYVQLJ[Z Z\JO HZ [OL 56.07: WYVNYHTTL

S06b ORA 1 2014 Nigeria News Extra_Layout 1 06/02/2014 13:53 Page 29

pilot pipe mill initiative, training and employment initiatives in geosciences, environmental remediation, construction skills and so on. Below are highlights of some of the achievements.

The Board has commenced the development of Oil and Gas Industrial Parks to promote manufacturing Oil and gas equipment

New and upgraded facilities Q More than $5 billion worth of investments have been made in the development of new fabrication yards and upgrade of existing yards and facilities; Q Government efforts at maximising in-country fabrication have stimulated the establishment of these facilities to achieve in-country fabrication capacity of about 120,000 tons per annum, and has created jobs for around 10,000 Nigerians.

Human capital development Q More than 5,000 employment and On the Job Training (OJT) slots have been created for Nigerian engineers and technicians on ongoing oil and gas projects; Q The Board is training about 1,000 geoscientists, environmental scientists and vocational/construction professionals who will be attached to companies and projects to gain expertise.

Construction work has commenced for two steel pipe mills in Bayelsa and Edo states. These mills will produce about 400,000MT per annum of steel pipes for the oil and gas industry by 2016 and create more than 10,000 direct and indirect jobs during the construction and operating phases of the mills. The Equipment Component Manufacturing Initiative (ECMI), which began in 2011 to develop local capacity for manufacturing of equipment packages and components, has birthed investment commitments of almost $2 billion by Original Equipment Manufacturers and their local reps.

Nigerian-owned and operated marine assets Today, more than 55 per cent of the offshore support marine vessels used in the oil and gas industry are owned and operated by Nigerians. This has resulted in the retention of about $2.5 billion in Nigeria, out of about $5 billion expended by the industry on marine vessels.

Nigerian companies have mastered land and swamp activities and are now owning and operating jack-up rigs and venturing into deep-water development.

Nigerian Content Development and Monitoring Board Revenue House, Lambert Eradiri Road Onopa Yenagoa, Bayelsa State 560001, Nigeria Email: info@ncdmb.gov.ng www.ncdmb.gov.ng

S06b ORA 1 2014 Nigeria News Extra_Layout 1 06/02/2014 13:53 Page 30

Oando’s Nigerian oil and gas push

Migeria

Eland announces production start at Opuama STATE-OWNED OIL company Nigerian Petroleum Development Corporation (NPDC) has started producing from the Opuama oilfield, located on the OML 40 license, onshore Nigeria. London-listed Eland Oil & Gas, the joint venture partner, revealed. Following successful testing and commissioning of the facilities, two existing wells were re-opened. Output from the wells is expected to stabilise at 2,500 barrels of oil per day.

Crude produced will be delivered to the Shell Forcados export terminal via a recently-commissioned flowstation and export pipelines. The field has gross recoverable proven and probable reserve of 52.4mn barrels. NPDC is the operator of the field and holds a 55 per cent interest, while Eland’s joint venture company, Elcrest Exploration & Production, holds the remaining 45 per cent. Production from the field was delayed late last

year, sending Eland shares plummeting. Eland expected production to begin by the end of 2013, after pushing back the start date from the end of last year's first quarter.

Indigenous companies to account for more ATLANTIC ENERGY CO-CEO, Scott Aitken made a presentation at the recent African Oil Week in Cape Town. In his presentation titled: “Onshore Niger-Delta – A changing Landscape”, Aitken explained there are 100s of underdeveloped discoveries onshore Nigeria and with the recent divestments of onshore assets by international oil companies operating in Nigeria, this would increase the opportunities and access of Nigerian indigenous oil and gas companies to eight billion barrels of crude oil and 46 tcf of natural gas gross reserves. Aitken discussed the challenges to the development of existing assets and increasing production including ageing infrastructure some of which have not been replaced or maintained properly further to which he suggested a detailed evaluation and phased infrastructure replacement/upgrade. He also noted host community/stakeholder relationships and expectations were having a negative impact on production levels and suggested improved community engagement and update needs assessment. Aitken made an example of Atlantic Energy’s strategic alliance with the exploration arm of NNPC, Nigerian Petroleum Development Company (NPDC) wherein Atlantic Energy provides funding, technical and project management assistance to NPDC for designated assets. He also reported that Atlantic Energy has made significant achievements through an increase in the reserves of the assets covered by the strategic alliance as well as new field development programmes. He noted that Atlantic Energy has invested more than US$500mn further to the strategic alliance agreement with NPDC and also noted that NPDC and its joint venture partner have commenced a 60,000 barrel of oil per day flow line and flow station reinstatement. At the end of the presentation, Atlantic Energy’s other ceo, Kola Aluko affirmed his colleague’s presentation by stating, “Nigerian companies like Atlantic Energy have pushed for increased local participation in the upstream sector. As recent as five years ago, six to seven international oil companies were producing over 97 per cent of Nigeria’s oil and gas, now Nigerian companies are producing close to 10 per cent and I believe we can have 30 per cent of Nigeria’s oil and gas production being produced by Nigerian companies within five years.”

New patrol vessel deployed offshore Nigeria HOMELAND INTEGRATED OFFSHORE Services Limited (HIOSL) has taken delivery of a Damen FCS 3307 Patrol, to be deployed offshore Nigeria in the next few weeks. Established in 2006, HIOSL serves the The Damen 3307 Nigerian oil and gas industry with a patrol vessel wide range of maritime, security and Guardian 1. logistics services. The Lagosheadquartered company has ambitious plans to become the leading marine logistics provider in the Nigerian offshore industry. The Damen FCS 3307 Patrol, to be named ‘Guardian 1’, has just undergone sea trials in the Netherlands and will soon set sail to Port Harcourt. Guardian 1 is the company’s third patrol vessel. It will be used for maritime security purposes, crew transfers and supplying cargo and provisions. The company also works very closely with the Nigerian Navy. As well as patrol vessels and tugs, HIOSL provides

30 Oil Review Africa Issue One 2014

equipment for the producers, supplies house boats, barges and cranes, and the company operates one of the largest crawler cranes in Nigeria. HIOSL managing director Louis Ekere, commented: “The Damen vessel gives us much more speed. This is crucial, as nowadays you really need the most modern equipment before you can get these type of contracts in Nigeria.” Mr Ekere continued: “The vessel could also be delivered very quickly. Damen not only builds world-class vessels, they are also great partners for technical support services. We have been blown away by Damen being able to build such a vessel in such a short interval (seven months), even ahead of schedule. And we can now can take advantage of this because Guardian 1 already has work.”

THE EMERGENCE OF Africa’s oil majors has redefined the economic prosperity of an entire continent. With much of this activity taking place in Nigeria, now is the time to improve the country’s global standing, according to Dr Ainojie Irune, head of corporate communications, Oando. Based on the country’s growth trajectory, Nigeria is set to become Africa’s largest economy over the next five years. Undoubtedly the oil and gas sector is one of the main contributors to the country’s GDP – approximately 14 per cent in 2012. The upstream sector is the most important in the country’s economy, but is currently dominated by IOCs, which have accrued 43.4 per cent of its total oil production, while the NNPC, the single biggest resource holder, produces 39.1 per cent. In view of this, the Nigerian government has increased its impetus for achieving participation of indigenous companies in the upstream sector. The actualisation of this vision, however, is dependent on both the oil and gas companies and the Nigerian government overcoming key challenges faced by the sector. Some of these include: • The emergence of shale oil in the US; • Large oil discoveries in East Africa • Delay in passing the Petroleum Industry Bill (PIB); • Oil theft and vandalism in the Niger Delta. Though thronged with these setbacks, the outlook for Nigeria looks promising, with marginal field bid rounds expected to provide up to 35 possible fields for sale. In addition, Shell and Chevron have announced plans to divest from some of their assets. IOCs will be expected to invest funds obtained from asset sales, as indigenous companies look to take up interests in the fields divested by the IOCs. www.oilreviewafrica.com

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S07 ORA 1 2014 Ghana F B_Layout 1 06/02/2014 13:54 Page 32

Ghana

The Ghana government has taken a major step to ensure full participation of Ghanaians in the country’s oil industry with the passage by parliament of the Local Content Law last November. Jon Offei-Ansah reports.

Ghana’s

local content G

HANA’S LOCAL CONTENT law seeks to promote value addition and job creation through the use of local expertise, goods and services, businesses and financing in the hydrocarbon industry value chain and their retention in Ghana. It also hopes to develop local capacities in the industry and maximise local employment, as well as spending of oil revenue and increase the capability and international competitiveness of indigenous businesses and related industries to sustain Ghana’s economic development. Under the law, first consideration must go to Ghanaian independent operators in the award of oil blocks, oil field licenses, and oil lifting licences and in all projects for which contract is to be awarded in the Ghanaian oil and gas industry. An important feature of the law stipulates that, where bids are being evaluated, and where bids are otherwise equal, the bid containing the highest level of Ghanaian content shall be selected. Such a provision sounds great for local Ghanaian operators and businesses and will in effect place Ghanaians at the forefront of the nation’s oil business in a relatively shorter period. In the case of non-Ghanaian ownership and operations, the entity must provide for the participation of a citizen of Ghana in an interest of at least five per cent in the exploration and production activities under petroleum licenses. In addition, an Oil and Gas Business Development and Local Content Fund will be established to support local capability development aspects of the local content framework. The fund will be used primarily for education, training and research and development in oil and gas.

Ministry to oversee disbursement Sources of the fund will include contributions from licensed operators, oil and gas revenue, levies, grants and other support from Ghana’s development partners. The ministry of energy will oversee the disbursement of the fund. This is undoubtedly fitting for a developing nation like Ghana but it remains to be seen how effective the administration of this fund will be. In general, the move by government is expected to obligate operators to attach significant importance to local content and to ensure that as many benefits as possible are retained in the local economy by indigenes. The issue of local participation in the country’s nascent oil industry is of grave importance to the government. Integrating Ghanaians into all

32 Oil Review Africa Issue One 2014

Ghana’s Local Content law hopes to develop local capacities in the industry and maximise local employment.

Integrating Ghanaians into all aspects of the oil and gas industry will be of maximum benefit to the country. aspects of the oil and gas industry will be of maximum benefit to the country. According to energy and petroleum minister Emmanuel Kofi Buah, the projected revenue from the country’s oil fields is US$20bn in the next five years, and the law will ensure that a large chunk of that amount is spent in the country. He says all international oil companies (IOCs) are required to submit their local content plan to the Petroleum Commission, detailing provisions made for the procurement of goods and services within the country. On employment in the sector, Buah stressed that qualified Ghanaians should be given first consideration, adding that, the days when ‘oil companies took insurance policies from foreign insurance companies are over, as an aspect of the new law which deals with insurance, states categorically that a contractor or sub-contractor, licensee or other allied entity engaged in a petroleum activity that requires insurance shall procure the services of a local insurance company.’ Provision has therefore been made under the law for the National Insurance Commission to grant approval for acquiring offshore insurance services only when local capacity has been exhausted.

In addition, the law stipulates that preference be given to a Ghanaian lawyer or law firm whose principal office is in the country. The same applies to the engagement of financial services. “The regulation also guarantees employment for Ghanaians in junior and middle-level positions, while requiring a succession plan for Ghanaians to take over positions currently occupied by nonGhanaians,” Buah said.

A few reservations from IOCs The law has been largely accepted by the IOCs albeit with a few reservations. While pledging to commit to the provisions of the law, the IOCs hope the authorities would address some of their concerns within the 90-day transitional period which ends in February. “As foreign investors in Ghana, we would like to reiterate that we believe in and support local content as the best way to create a sustainable long-term business in Ghana,’ Paul Hinsworth, country director of Vitol Upstream Ghana Limited said at the meeting with energy ministry officials early last December. However, there were a few issues that needed clarification with regard to the implementation of the law. “In very simple terms, we put forward our comments but they have not been factored in because they are not in the legislation,’ Kosmos Energy’s commercial director Philip Liverpool told newsmen on the sidelines of the meeting. He added, ‘we are very encouraged about the fact that in the coming three-month period, we would have another opportunity to discuss one item in particular around

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issue of Ghanaians filling senior level positions, Gadzekpo explained that the law categorised various positions and when they should be attained, which ranged from five years upwards.

Government and industry to work together

Aerial view of FPSO Kwame Nkrumah.

transitional arrangements, and that is how to harmonise [the law] with our existing petroleum agreements because we signed ahead of [the new law].” He said the IOCs looked forward to working with the Petroleum Commission and the ministry “to get something that was practical and enforceable.” But Vivienne Gadzekpo, legal director at the

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energy ministry, disagrees. She said it was unfair for the IOCs to say their comments were ignored and asked the companies not to expect that anything they wanted would be taken on board. “As a country, there are certain things that we also feel strongly about so we took on board some of them. [Others] we didn’t think were acceptable.” On the

In a bid to reassure the IOCs, Buah said “government and industry are going to work together and win together.” About the minister’s discretionary authority under the law, about which the IOCs expressed misgivings, Buah referred to PNDC Law 84 and the 1992 Constitution saying, “I want to emphasise that the ministry’s discretionary authority has always been there.” He however assured them that those powers would not be exercised without consultation with the Petroleum Commission and the partners in the industry. He would be flexible, especially during the transition period. ■

Oil Review Africa Issue One 2014 33

Ghana

As foreign investors in Ghana, we would like to reiterate that we believe in and support local content as the best way to create a sustainable longterm business in Ghana.

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Ghana

Over the next three years, over 150 newbuild MODUs will enter the offshore arena worldwide. With state-of-the-art engineering and boasting powerful dual offline activity capability, these newbuilds will once again raise the bar in terms of rig performance. But will those operating the rig be able to keep up?

Continuous improvement worth millions

in deep water A

BUOYANT OFFSHORE industry, increasingly complex rigs, and an everincreasing skills shortage all combine resulting in a perfect storm. So, how do operators deal with the experience gap and enable both experienced and new rig teams to get the most out of their equipment, operating safely while reducing costs and the potential for human error?

The answer: Continuous improvement. The concept of continuous improvement has been around since the 1950’s when Deming formalised his Plan-Do-Check-Act cycle as a means of implementing standardisation and continually raising the bar. This transformed the Japanese automotive industry with Japan today laying claim to eight of the top ten most reliable car makes worldwide. The Deming Cycle - or adaptations thereof – is used in some form or shape on most

rigs, usually in the form of advanced planning meetings (APM), after action reviews (AAR), and a lessons learned process.

Separating good from great What separates good from great is the rigour with which the process is followed, implemented, and embedded. When operations run smoothly, the rig team is 100 per cent staffed and there is spare capacity in the system; this is not an issue. However, in today’s operating environment those

What separates good from great is the rigour with which the process is followed, implemented, and embedded.

times are few and far between. More often than not, offshore operations suffer from time constraints, operational setbacks, inexperienced rig teams, and high staff turnover in key leadership roles. And that’s when performance creep leads to poor practice; measurement becomes intermittent, after action reviews become a luxury and lessons learned are captured but not consistently closed out. Operators are increasingly aware of the associated opportunity costs and are teaming up with performance Improvement organisations to bring in the services of an external, independent coach, whose sole focus and key performance indictor (KPI) is to drive the continuous improvement process. One such operator in West Africa has invested in independent continuous improvement support for their rig teams. With a number of rigs operating in the region, this international operator partnered with

Leveraging the knowledge and experience within the rig team while also enabling transfer of best practice and an accelerated learning curve is essential.

34 Oil Review Africa Issue One 2014

www.oilreviewafrica.com

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iVISION a key tool Simple but effective, one of the key tools used is iVISION. Core rig activities as well as on-going operations are filmed on a daily basis and edited into short educational video clips, which in turn are used for pre-job planning, after action reviews, or to complement written work instructions. Weekly pre-tour and topical safety videos further add to result in a comprehensive video library. Videos are stored on an online knowledge management platform, integrated with the drilling programs, written work instructions, work permits, job safety analyses, advance planning

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meetings, after action reviews, and other operation-specific information.

Rig efficiency initiative Another Exceed initiative which has brought significant benefit to the rig team - both operator and contractor - is the implementation of WorkSmart, a rig efficiency initiative. Based on the premise that the crew knows best, the WorkSmart initiative incentivises the rig team to submit practical solutions to optimise process, efficiency and equipment, and to enhance crew welfare onboard the rig. Implementation of this programme alone has resulted in excess of US$10mn of savings on each rig. The initiative has also had a positive impact on the culture on-board the rig with an increasing number of winners donating their reward to a local rig-adopted charity. It’s no longer about the cash (perhaps it never was) but about the satisfaction of seeing an idea implemented, knowing you’ve contributed to efficiency and made life easier for yourself and those around you. The idea behind WorkSmart is not new, but where many other initiatives are met with cynicism and fail due to lack of follow-through, WorkSmart is consistently driven and rewarded by an external resource. And that makes the difference. On today’s state of the art rigs, the functions

fulfilled by a performance coach are more important than ever. From a simple suggestion to land BOP more efficiently on a newbuild sixth generation rig to the ability to prepare for a nonroutine operation with the support of previously captured video footage, the support of a performance coach drives an environment of continuous improvement. We know that the positive improvements and transformation that takes place are owned by the rig team; it’s their result. At the same time, a dedicated expert resource is essential to catalyse the change and accelerate the transformation. In Exceed’s experience, implementing a continuous improvement process on offshore operations positively impacts HSE performance while delivering a Return On Investment in excess of 20:1. For those who believe a performance coaching service is a luxury they cannot afford, the question is can you afford not to? ■

Exceed is an international Oil & Gas consultancy specialising in performance improvement and deepwater wells project management services. With head offices in Aberdeen, Scotland, Exceed operates globally and has a local presence in a number of countries internationally. For more details, please visit www.xcd.com.

Oil Review Africa Issue One 2014 35

Ghana

performance improvement consultancy Exceed on three of their deepwater rigs. Exceed bring a rigorous approach to planning and learning, objective measurement, and administrative support for the rig leadership team. Sponsored by the operator, a key KPI for the Exceed coach is rig team engagement; leveraging the knowledge and experience within the rig team while also enabling transfer of best practice and an accelerated learning curve. Exceed is not unique, but in an environment where staff turnover is high, they bring a number of innovative tools in response to these specific challenges.

Ghana

S07 ORA 1 2014 Ghana F B_Layout 1 06/02/2014 13:54 Page 36

Ghana to spend US$20bn in E&P

Ghana signs US4.9mn deal with PYXERA

SOME US$20BN IS to be spent on exploration and production in Ghana over the next five years. This will be spent by oil and gas companies on a range of services from seismic acquisition through to hydrocarbon storage, processing, logistics and export facilities. Three big projects are responsible for most of the opportunity, according to Alexander Mould, the new managing director of Ghana National Petroleum Corporation. They include the TEN cluster, whose development is ongoing, Sankofa-Gye Nyame fields, whose plan of development is still in discussion and the MTAB cluster, which is in pre-development plan stage. Further down the line is the Hess-operated acreage, also in the prospective deepwatwer Tano basin, where the American independent has seven discoveries, due to be appraised in 2014. The company hopes to start development activities around 2015-16. Mould said that Ghana is open for business, to companies with any range of services, on terms that factor in Ghanaians as partners. Oil service companies in well services, subsea activity, shipyards, equipment fabrication, pipeline installation and repairs, all have a chance to look in. Of the three projects, the development of TEN, which is acronym for Tweneboa, Enyenra and Ntomme fields, has gone far. Centennial Jewel, a very large crude carrier (VLCC), is in the process of conversion into a FPSO vessel at the Jurong Shipyard in Singapore. The Japanese contractor MODEC is overseeing the conversion and it has responsibility for the engineering, procurement, construction, mobilisation and operation of the FPSO, including topsides processing equipment as well as hull and marine systems. The TEN development is billed to cost around US$5bn and the project is scheduled for commissioning in 2016.

THE MINISTRY OF Trade and Industry has formalised a working relationship with PYXERA Global, a partnership that was sealed with the signing of a Memorandum of Understanding in Accra. The Ghana Supply Chain Development Programme will enable collaboration towards increasing the participation of local small and medium-sized enterprises in the supply chains of international oil companies operating in Ghana. According to the US Embassy in Accra earlier in 2013, USAID awarded a five-year US$4.9mn grant to PYXERA Global to implement the programme in the Western Region of Ghana. It said the programme, which is based in Takoradi, seeks to increase sustainable participation of Ghanaian small businesses in oil and gas procurements. “The programme strives to increase capacity of local business service providers relating to sector procurement regulations and standards; create market linkages between the oil and gas sector; and collaborate closely with the Enterprise Development Center to facilitate the sustainable provision of business development services”, the release explained. In his remarks, US ambassador to Ghana, Gene Cretz, noted that, “Today’s MoU signing is a visible demonstration of the US commitment to ensuring that Ghanaian businesses have the expertise and support needed to bid for and, most importantly, win procurements in the oil and gas sector in Ghana. There can be no clearer example of our strongly-held view that local content is a worthy goal and can be mutually beneficial.”

36 Oil Review Africa Issue One 2014

www.oilreviewafrica.com

S08 ORA 1 2014 Recruitment_Layout 1 06/02/2014 13:56 Page 37

Produced By

Local Partner

FEATURING

AICC, Accra, Ghana 8- 10 April 2014

OUR INDUSTRY LEADING SPEAKERS INCLUDE U Hon Emmanuel Armah Koﬁ Buah, Minister of Energy & Petroleum, Ministry of Energy & Petroleum

U Alex Mould, Chief Executive Ofﬁcer, Ghana National Petroleum Corporation (GNPC)

U Hon John Abdulai Jinapor, Deputy Minister of Energy & Petroleum, Ministry of Energy & Petroleum

U Terry Hughes, Director - Project TEN, Tullow Oil

U Theo Ahwireng, Chief Executive Ofﬁcer, Petroleum Commission

Heavy Lift Specialists

U Gauthier Pourcelle, Country Manager, Electricity Company of Ghana (ECG)

S08 ORA 1 2014 Recruitment_Layout 1 06/02/2014 13:56 Page 38

Recruitment

A look at the increasing trend towards demand for hiring and developing local talent in the face of limited supply and how different companies and governments are approaching the challenge.

Developing local talent

in Africa R

ECENT YEARS HAVE seen the upstream E&P sector grow rapidly in Africa, with a number of nations in the continent discovering oil and gas reserves. The discoveries in the likes of Kenya, Uganda, Mozambique, and the ongoing extraction in wellestablished nations such as Nigeria, led a host of oil companies to make their way to Africa. Just about every potential hydrocarbon basin across Africa is the subject of investor interest and major, super majors and large independent oil and gas companies have been rapidly expanding in the region. The discovery of these natural resources and the development of a strong oil and gas industry has been of significant benefit to the people and governments of these nations. The growth of the E&P sector has not been easy in recent years and operating in Africa comes with a number of significant challenges. Political instability, the risk of violence, as was witnessed in South Sudan and the Central African Republic recently, and the climate conditions all provide challenges. However, a new challenge has emerged for oil and gas companies in recent years, in the shape of a lack of local expertise and talent. In Nigeria, which has been part of the oil production industry for over five decades, the level of Nigerian manpower is still only at 40 per cent. There are a wide range of reasons this trend has developed, as multinational oil companies have traditionally favoured expatriate workers, who can come into the situation with a career filled with experience and technical knowledge. Many governments across Africa would like their nation's natural resources to have as big an impact on their own economy as possible. This means using local talent, locally made machinery and equipment and even allowing companies from their own nation to take responsibility for the discovery and extraction of resources from the ground. A number of nations have introduced expatriate quotas, which requires oil and gas organisations to employ local people within their organisations, however many of these systems are vulnerable to abuse. However, organisations looking to operate successfully within Africa have realised that they need to contribute to infrastructure, training and education within the countries they operate in. It is hoped that investing in these areas will see a rise in local talent capable of filling the roles major companies create in Africa.

38 Oil Review Africa Issue One 2014

Many African nations have introduced expatriate quotas and are now employing local people.

Organisations have realised that they need to contribute to infrastructure, training and education within the countries they operate in. In many African nations the education system has not been working effectively. It has become fiercely politicised and higher education institutions are not providing graduates of the required quality to fit into the petroleum industry. Africa needs stakeholders to address the teaching and research infrastructure within the continent and the separate nations in it, which is where corporations have come into the equation. In a recent oil and gas roundtable in Lagos hosted by Cripps Sears & Partners, a leading energy and natural resources executive search firm, there was some suggestion that having an oil and gas advisor to national governments would help them understand the challenges the industry faces in its attempts to reduce expatriate numbers whilst increasing production, this may create an aligned and more productive environment for promoting indigenous staff programmes.

Investing in education and training Organisations have been investing heavily in education and training, donating equipment and facilities. Shell has supported with infrastructure investment in Nigeria for several decades and is heavily relied upon. Keith Hill, chief executive of

Africa Oil, recently told How We Made It In Africa that his company is investing a significant amount in this area in Kenya. He said strengthening the universities in the region is a major aim, as currently the company sends potential employees abroad to learn the necessary skills and expertise required to work in the industry, but that getting people to come back after training is a big issue. "When you send people overseas they don't always come back. One of the things we are also looking at is strengthening universities here. There is very strong education system hereâ&#x20AC;Ś what we need to do is strengthen those to be more specifically tailored to the oil industry; such as petroleum engineers, geologists, geophysicists, people that are not normally trained at the universities," he told the news provider. The company has also dedicated itself to investing in vocational training for welders, pipe fitters, electricians and other skilled labourers drawn from local communities. He said: "Eventually we want to replace all of our people with local people. Our goal is to have little or no foreigners coming here and working. Local people will be more motivated to make this a successful project because they have a vested interest in the country." In Nigeria, PEM Offshore Limited recently signed a multi-million dollar contract with Kongsberg Maritime for the supply of a full suite of offshore anchor handling, dynamic positioning, power management and crane simulation systems, which will be used as the main infrastructure for a world-class offshore simulation training centre and the first of its kind in Nigeria and West Africa.

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Recruitment

Governments want their own population to be put to work and local communities benefitting from the activities of the exploration and production sector. Kongsberg Maritime is supplying to PEM Offshore a full suite of offshore anchor handling, dynamic positioning, power management and crane simulation systems, which will be used as the main infrastructure for a world-class offshore simulation training centre and the first of its kind in Nigeria and West Africa.

40 Oil Review Africa Issue One 2014

The centre, which will be located in Lagos, will support the training of local personnel involved in oil and gas operations, indicating the wider drive for a move towards local talent in Africa to appeal to governments that want to see more local people involved in the procedure. China Petroleum & Chemical Corp, which is more commonly known as Sinopec, has also been making strides to contribute to infrastructure and education in the areas it operates. Since its purchase of Addax Petroleum, which operates assets in Nigeria, Gabon, Cameroon, Nigeria and São Tomé and Principe, Sinopec has retained most of the positions held by local staff. Employees were also sent to China for further training and to experience the home culture of the company, in order to foster a better working relationship. Company staff often go to the local schools to donate school bags, stationery and footballs. The company has donated more than US$6.58mn in Africa in recent years, as well as recruiting more local employees to raise their incomes and cultivate a talent pool of professionals in Africa. Africa is one of the most resource rich regions in the world and remains an incredibly attractive investment target for those companies involved in the oil and gas industry. The way in which companies can invest and operate is evolving. Governments want their own population to be put to work and local communities benefitting from the activities of the exploration and production sector. As Africa’s middle class grows, local education is improving and International University attendance is on the up, there is a noticeable increase in talented and educated local employees being given opportunities and promoted to managerial positions. Even with this trend, demand for this type of profile remains incredibly high and in short supply creating its own challenges in staff retention. The oil and gas sector faces the threat of a global skills and experience shortage. There is a significant amount or experienced staff reaching retirement age with a limited pipeline of replacements available. The emphasis on training a local work force creates a long term solution to the future of the industry and will be simultaneously beneficial to the national economies. There remains significant challenge to the industry in recruiting, developing and retaining local members of staff but the fact that these issues have been highlighted and are being addressed is a big stride in the right direction. ■ www.oilreviewafrica.com

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Human Resources

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The quantity of investment in oil, gas and mining projects in developing countries over the next twenty years is likely to be greater than total international aid flows. The investments – and the revenues – can make major contributions to the development of host nations. By Willy H Olsen*

Access to human resources is critical for future

success of O&G industry S

OME OF THE most important societal benefits from this expenditure will come through opportunities for employment and for local enterprises to supply goods and services. The need to harness these benefits is also increasingly recognised within the industry. More than 40 countries, among them Brazil, Nigeria and Angola, have in recent years introduced local content policies in the oil and gas sector. International companies have responded by providing more local training and more involvement of local firms. Enterprise centres have emerged in several countries to assist small and medium sized companies in developing capacity and competence to supply the oil and gas sector. Many international oil companies’ business development programmes now include training and assistance to local firms, including development and implementation of quality improvement plans, managing upgrades and technology transfer, as well as training in the specific elements associated with the provision of goods and service to the oil industry. Education is the key to unleash the potential in many countries in Africa, including Nigeria. Education directly affects the quality and magnitude of Africa’s social development, amongst its youth and older populations alike. Education is the most potent weapon available to expand economic growth, raise living standards, have greater freedom of choices and compete in the global economy. Success in the modern oil and gas industry is increasingly based on knowledge and advanced technological solutions. But Africa’s science and technology education has been undervalued and under-resourced for too long.

Nigeria – a strong and oil supported economy The outlook for economic growth in Nigeria remains positive. Real GDP grew by 6.8 per cent in the third quarter of 2013. The telecom sector is booming. Services, retail trade, housing and construction are doing well, supported by robust performances in agriculture. Growth is projected to increase to about seven per cent in 2014. The Nigerian Central Bank (CBN) has maintained stability of the naira, contained inflation and facilitated business confidence. Oil revenues are likely to remain significant. Nigeria depends on crude exports for about 80 per cent of

42 Oil Review Africa Issue One 2014

The two Shell companies, SPDC and SNEPCo, employ around 4,000 direct employees — over 90 per cent of them Nigerians.

government revenue and the industry accounts for about 12.5 per cent of gross domestic product. The government’s Transformation Agenda aim is to sustain the robust growth of the economy but also ensure a much stronger impact on boosting jobs and cutting poverty. The programme focuses on economic diversification, to be achieved mainly by expanding infrastructure; promoting laborintensive sectors; and safeguarding macroeconomic stability. Finance minister Ngozi Okonjo-Iweala is looking to areas where Nigeria can create more employment. Nigeria’s focus is on areas that will create enough jobs for youth, in the rural areas as well as in the cities. The minister is actively supporting young entrepreneurship programmes. She is emphasising that natural resource and mining sectors do not create a lot of jobs, like agriculture and manufacturing, but the extractive industries can create important revenues for the state to invest in structural transformation.

Ambitious Nigerian content strategy Nigeria has over the last decade developed an ambitious Nigerian Content strategy in the oil and gas sector. The Nigerian Content Development and Monitoring Board was established in 2010 as a result of the Nigerian Content Act. The ambition is to increase indigenous participation in the oil and gas

Human capital management is now becoming critical for all oil and gas producing environments. industry, build local capacity and create linkages to other sectors of the national economy. Nigerian Content is likely to boost the industry’s contributions to the growth of the national economy.

Human capital management is critical The role of human capital, competence and people issues is ascending on the strategic agenda of both public and private enterprises. We have been through a period with heavy focus on capital efficiency, asset values and shareholder returns. Human capital management is now becoming critical for all oil and gas producing environments: As important in the mature provinces in North America, the Middle East, Nigeria, Malaysia, Indonesia, UK and Norway, as in the new oil and gas producing countries in Africa like Ghana, Uganda, Tanzania and Mozambique. Employment in the US oil and gas industry has increased close to 40 per cent over the past decade as a result of the shale oil and gas revolution.

www.oilreviewafrica.com

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Human Resources

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The oil industry has a long history of engagement in training and capacity building in Nigeria.

Total is also striving to continually expand the local content of its activities and operations.

Skill shortage The oil and gas industry is facing a skill shortage and has to look for new sources and smarter ways of recruiting. The industry is facing a big crew change. The generation that entered the sector in the late 1970s and 1980s is retiring. The battle for experienced people will be tough. Schlumberger Business Consulting global survey data shows that strong efforts have been made to recruit in the last decade, but the effect of the retiring generation is hitting hard. More than 22,000 senior petrotechnical professionals are set to leave the industry between 2012 and 2015. The number of inexperienced industry professionals will increase significantly and could become a major headache in the light of the challenges that the industry faces. The gap is emerging in the 35-49 year-old age group and people with between eight and 15 years’ experience and they are critical for the industry’s success. The oil and gas industry has not been on top of the wish lists for the young generation in Europe or in the USA in the last decade. Few have looked to maths and science as their priority. Asia stands out – with more students with relevant backgrounds emerging and with energy high on the priority list of the new Asian talent. We are also seeing a higher share of women looking to the energy sector. The number of females in the industry is still far too low, but the industry has realised that women are an untapped resource.

The training ambitions in Nigeria The Nigerian Content Act has clear focus on employment and training programmes. The Nigerian Content Development and Monitoring Board (NCDMB) is responsible for creating employment, developing training facilities and coordinating training on the back of oil and gas projects. The mandate is to engage in targeted

44 Oil Review Africa Issue One 2014

capacity building programmes. The vision is to create over 30,000 direct employment and training opportunities in the medium term. The Board has introduced several human capital development programmes in collaboration with the oil companies, service companies and the Petroleum Technology Development Fund (PTDF). The Board is providing institutional support to the establishment of a Training Center of Excellence in Nigeria. The aim is for the training centre to provide internationally certified training and certification opportunities for over 10,000 Nigerians over the medium term. NCDMB’s ambition is to raise the skill levels of Nigerians through the use of regulation and with aggressive targets for training and human capacity development initiatives to meet industry shortages. The oil industry has a long history of engagement in training and capacity building in Nigeria. The initiatives have been driven by the leading oil companies in partnership with NNPC. Mobil and NNPC launched a scholarship programme for undergraduates in Nigerian higher institutions of learning in 1974. Since then more than 500 scholarships have been awarded, mainly in core disciplines in engineering and geosciences. A major share of the scholarships has gone to indigenes of the operational communities. ExxonMobil also awards post graduate scholarships as part of its policy to recruit, train and develop qualified Nigerians to fill positions within and outside its organisation. The two Shell companies, SPDC and SNEPCo, employ around 4,000 direct employees — more than 90 per cent of them Nigerians. Shell pays a share of its profits into a federal government education fund for the rehabilitation, restoration and consolidation of education in Nigeria. The payment represents US$635mn over the last five

years. The Shell companies emerged “Best Company in Education” at the annual Social Enterprise Report and Awards due to their efforts to promote education in the Niger Delta and Nigeria through secondary and tertiary scholarship awards, sponsorship of eight university professional chairs in diverse disciplines and innovative programmes for teaching and learning of core subjects in secondary schools. Every year, more than 4,000 Nigerian undergraduates write aptitude tests to join the ever growing list of students which Shell Nigeria supports in Nigerian Universities. ExxonMobil has launched the “Power Forward” initiative in partnership with American basketball associations and Africare. The project is designed to teach leadership and build health awareness through a combination of classroom and athletic activities. 10 public and private high schools in Abuja are participating in the programme. They have been assigned a coach to oversee the curriculum, guide students through lessons and monitor their progress. “Skoool Nigeria” is the first resource of its kind designed specifically for the students and teachers. It leverages the expertise of top teachers in their fields for the development of its content. The objective is to provide a rich and integrated approach to science and maths. The content was developed by Intel Corporation under the joint sponsorship of Intel, SPDC and Education Trust Fund (ETF).

Conclusions From a global perspective, economic and social developments are increasingly driven by the advancement and application of knowledge. Education in general and higher education in particular are fundamental to the construction of a knowledge economy and society in all countries. The potential of higher education systems in developing countries is frequently thwarted by long-standing problems of finance, efficiency, equity, quality and governance. Many developing countries have neither articulated a development strategy linking knowledge to economic growth nor built up their capacity to do so. The economic success of the "Asian tigers" has been linked to substantial prior investment in human resources. Countries that have increased their innovative capacities have invested heavily in science and engineering education, and also in promoting competition as the basis for innovation. ■ * Willy H Olsen is senior advisor INTSOK, Norway, and senior associate, CWC School for Energy, UK. Willy has held a number of senior positions including managing director of Statoil UK and head of Statoil’s activities in the former Soviet Union. www.oilreviewafrica.com

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Morocco

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Following a string of large oil discoveries along Africa’s western coast, oil exploration fever arrived in Morocco in 2012. Recent deep-water oil has given oil companies hope that Morocco’s deep-water cretaceous sandstone, which is geologically analogous, will yield up similar bounty. As a result they are descending upon Morocco in the hope of finding another Ghana, Atlantic Canada or Brazil hydrocarbon treasure trove. Nicholas Newman reports.

Morocco’s oil -

the next Ghana? I

NDEPENDENTS AND THE newly arrived energy majors have announced important exploration and drilling programmes in the past year. This has led Stéphane G Foucaud, analyst at First Energy Capital, London, to forecast the drilling of up to 28 wells ,“nine offshore wells and 19 onshore wells, targeting a combined resource of more than 3.6bn barrels of oil, at a cost of over US$1bn between autumn 2013 and the end of 2014”. “Morocco is currently profiting from an increase in the oil industry’s focus on the North Atlantic Margin - an under explored hydrocarbon province that offers high impact exploration opportunities across multiple play types”, said Simon Boughey, analyst Citi Equity Research. Morocco and its deep water Atlantic margin is “frontier territory” offering 3,500 km of coastline up to 150 km wide with multiple play types. High prices of oil and gas combined with a decline in exploration and development activity in Libya and security concerns in Algeria have increased exploration interest in Morocco. At a cost of US$80mn to drill an average well off the coast of Morocco, “It is worth a punt" said Femi Oso, analyst at Wood Mackenzie. This is not the first time that Morocco has attracted interest. With improved fiscal terms introduced in 2000, the application of modern technologies and success in analogue basins such as West and North Africa, the Gulf of Mexico, and the conjugate Atlantic margin of Canada exploration activity between 2000 and 2011 amounted to around 50 exploration wells drilled, 42 onshore and eight offshore. These wells confirmed the existence of a working petroleum system. This time the gas price is much higher, fiscal terms have improved again and new play concepts are being tested with 3D seismic technology.

Exploration activity The usual business strategy for frontier situations is being repeated in Morocco. First entrants are normally small companies that acquire licences for untested acreage. They do the research and attract partners for the drilling stage. If they strike oil or gas, the large independents, international oil companies or energy majors will buy out the company or fund the field’s development.

Offshore exploration From autumn 2013 through to end 2014 drilling offshore will be focussed in two main areas: near the Atlantic port cities of Casablanca in the North

46 Oil Review Africa Issue One 2014

Kosmos has signed up the Maersk Discoverer for the FA-1 exploraton well in Foum Assaka offshore block in Morocco.

The attractions of Morocco lie in both its underground and above ground features. and Agadir in the south. There is also interest in the waters of Western Sahara and the Mediterranean coasts. Large independents - Cairn Energy, Kosmos Energy and Genel Energy - with a record of accomplishment of finding large oil accumulations in previously under explored areas, have acquired off-shore licences and acreage in the last 18 months, mostly along the Atlantic coast between Western Sahara and the Straits of Gibraltar. They were joined by small independents including

Fastnet Oil and Gas, Chariot Oil and Gas Explorer, Longreach Oil and Gas, drillers and national subsidiaries of international oil companies. These early entrants have been joined by international oil companies including BP, Chevron, Total, and Galp. In January 2013, Anglo-Turkish group, Genel Energy began 3D seismic surveys of two off-shore blocks. The company drilled one well in the fourth quarter of 2013 and will drill three in 2014 for an estimated prospect of 2.4bn barrels of crude according to the company’s Chariot Oil and Gas in April 2013, acquired an interest in the Loukos and Rabat Deep, located offshore northern Morocco. The company aims to conduct 3D seismic surveys during 2014 and initiate a well partnering process in 2015, followed by potential drilling in 2016.

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Onshore exploration Since 2000, only 50 wells were drilled in Morocco, of which 90 per cent were onshore. Onshore exploration activity in 2014 is forecast to pick up, with seven wells focused on biogenic gas, noted Foucaud. Fastnet Oil and Gas announced the acquisition of eight onshore exploration blocks in the Tendrara basin of the Northern Atlas mountains close to the Europe–Maghreb gas pipeline. Proximity to such a major pipeline should provide a low cost export route for any future Tendrara gas discoveries. In the last five months, First Sahara has undertaken an intensive evaluation of 14 available oil and gas properties in the Beni Znassen block, which shares a similar profile to the oil and gas fields in Tselfa.

Underground: geology Geologically, Morocco is very attractive. It shares the geology of previously overlooked, now successful oil and gas producing Atlantic regions such as Angola, Ghana, Brazil and Newfoundland. “It is the good prospects that is attracting so much interest”, observed Tom Quinn, North African analyst of Wood Mackenzie. A view supported by senior geologist, Silim Lahsini, of Morocco’s state agency, responsible for exploration, ONHYM. There are four main play types being targeted in Morocco. “Offshore, the primary targets are the Cretaceous and Miocene channel/fans along the Atlantic Margin (sands) in deep water and Jurassic carbonates reservoirs in shallower waters. Across these two themes, companies are attempting to replicate the successes in deep-water exploration around the world and are particularly after analogues to large discoveries off West Africa and Eastern Canada”. Onshore, companies “are chasing

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Morocco

In October 2013, Cairn Energy began offshore drilling operations at two wells and added additional frontier exploration acreage on its Atlantic Margin portfolio. Its Moroccan subsidiary has a 75 per cent working interest in the three areas, known as the Cap Rhir Deep, Cap Cantin Deep and Cap Walidia Deep, with the Office National des Hydrocarbures et des Mines(ONHYM) holding the remaining 25 per cent. PuraVida Energy company’s Toubkal prospect in the Atlantic ocean, is an analogue to the Jubilee field in Ghana with an estimated mean prospective resource of 1507 mbo. 3D seismic data for the Mazagan offshore permit indicates some 5.3bn barrels of oil. PuraVida Energy says it will dig exploration wells off-shore from November 2013 to end 2014 at a cost of between US$500mn to US$1bn. In January 2013, Chevron Corporation and its partners signed petroleum agreements with Morocco's ONHYM for three offshore areas in order to acquire seismic data and to conduct studies in deep-water areas known as Cap Rhir Deep, Cap Cantin Deep and Cap Walidia Deep. Also in October 2013, BP followed Chevron’s lead, buying stakes in three off-shore blocks covering 14mn gross acres of post and pre-salt Cretaceous plays in the Agadir basin. BP is paying for an exploration well in each, planned for the first half of 2014.

Chevron has signed exploration deals offshore Morocco.

shallow Miocene biogenic gas in Northeast Morocco or unconventional Silurian oil and gas shales in the southwest of the country” said Stéphane Foucaud. The wells destined for deep off-shore Cretaceous sands are the most expensive costing around US$120mn each whilst onshore wells for biogenic gas may cost up to US$10mn each. Onshore there are major oil and gas fields in the Essaouira basin and Gharb Basin in the north where production has been ongoing since the 1950s. One of the most important recent discoveries is the Meskala gas field. Essentially much of the onshore potential is untouched and unexplored including the Mediterranean Aboran Basin, east of Tangier, in which Circle Oil made 10 commercial gas discoveries from 11 wells drilled since 2008.

Above ground: Additional attractions Added to the compelling geological attractions of Morocco’s Atlantic Margin is the government’s

The arrival of significant oil and gas production in the future will enable Morocco to boost its economy and reduce energy imports.

Morocco is one of Africa’s largest energy consumers, yet it remains remarkably underexplored, particularly along its long Atlantic Margin.

generous fiscal regime, including a ten year tax holiday, royalty payments of 10 per cent on oil and five per cent on gas and a 25 per cent state participation requirement. These terms are “close to the most attractive in the world” stated Larry Bottomley, Chariot's ceo. Morocco’s extensive network of refineries, pipelines, roads, railways, airports and seaports and power grid make it very easy to establish and develop production bases. For instance, it has good gas and oil pipeline links to neighbouring countries in Europe with the Maghreb gas pipeline that passes through northern Morocco, linking Algerian gas fields with Spain and the EU gas network beyond. Currently Morocco is Africa’s second largest energy importer and the continents’ largest energy consumer importing 99 per cent of its oil and 91 per cent of its gas, according to the World Bank. “Energy demand in Morocco will have doubled by 2020, and tripled by 2030”, said Amina Benkhadra, minister of energy, mines, water and environment. The arrival of significant oil and gas production in the future will enable Morocco to boost its economy and reduce energy imports.

The future As a politically stable country with this geological heritage Morocco hopes to reduce its dependence on costly energy imports and especially its dependence on imports from Algeria. In order to attract investment it offers top fiscal terms. Two cautionary notes to this optimistic scenario are necessary. Firstly, companies operating onshore are focusing on shallow Miocene biogenic gas in northeast Morocco or unconventional Silurian oil and gas shales in the south west of the country, which are partly located within a disputed territorial area. Secondly, even if significant viable offshore resources are found in the coming year, it will take at least a decade before Morocco can supply its domestic energy needs, let alone compete with its neighbour, Algeria. ■

Oil Review Africa Issue One 2014 47

Geology

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Swala Energy upbeat in Pangani basin THE 100-KM-LONG 2D seismic survey carried out by Swala Oil & Gas Limited, in the Pangani basin in Kilimanjaro region has given hope of natural gas and oil in the area. According to ceo, Dr David Ridge, the 2D seismic survey commenced mid-November and was scheduled to terminate on the 20 December. During this time the company has acquired a licence to 200 km of 2D seismic over the Mvungwe and Moshi basins. Results from the survey show that the Moshi basin to the north of the license area, appears to be a deep basin with sedimentary fill of probable Neogene age, indicating a shallow depth of burial and positive for oil search. Further evidence from the seismic survey suggests that the basin is fault-bounded, some 25 km wide, and with basin fill to between 2,000 and 3,000 metres depth. “The Mvungwe basin, to the south of the license area, is still being processed but initial results suggest that the basin is shallower, at less than 1,000 metres deep, and contains sediments of probable Neogene age,” he said. He added that shallow basins may be quite productive with the right heat flows and the company will now continue with its planned basin modeling programme to determine whether the regional high heat flows would allow hydrocarbon generation in Mvungwe at these relatively shallow depths of burial. Completion of the Pangani survey marks the end of Swala’s 2013 seismic programme in Tanzania, during which over 500 km of seismic probing has been shot over five basins within its two licenses. “The results of the Pangani survey follow positive results received from the survey over the KilosaKilombero license as has been previously announced,” Dr Ridge noted. Results from the 2D acquisition over Pangani are highly encouraging, especially in the northern Moshi basin where we appear to have defined another Neogene basin,” the geologist intoned. “We now aim to consolidate our understanding of the two licenses by completing the seismic interpretation over Pangani, the basin modeling over Mvungwe and the analysis of geochemical samples collected from our basins as part of our seismic survey,” he elaborated. Swala Energy Limited is an Australian independent oil and gas exploration company exploring the East African Rift System. It currently holds substantial equity in assets in Tanzania and Kenya and has an active business development program in Sub-Saharan Africa.

ERHC hires BGP for Kenya 2D shoot HOUSTON'S ERHC ENERGY has hired BGP for a 1000-km 2D seismic survey over its block 11A in northwest Kenya. The explorer said BGP would start data BGP lined up for Kenya seismic shoot. acquisition in the spring for the seismic shoot, which comes after the completion of an airbone full tensor gravity gradiometry survey spanning 14,943 line kilometres of the Lokichar basin acreage. ERHC Energy’s 2D seismic survey in Block 11A will reportedly be premised on structural mapping of prospective basins enabled by the explorer’s recently completed FTG survey of the block, which had covered 14,943.8-line kilometres. The US independent said it was awaiting final regulatory approval for a farm-out agreement signed in November “with a renowned integrated oil and gas company.”

TGS launches new frontier seismic surveys TGS IS TO perform new seismic surveys offshore East Africa. The CSM-14 and AN-14 2D surveys, covering 8,847 km offshore Madagascar, will be acquired respectively by the M/V Geo Arctic and the BGP Challenger. TGS will process the data using its Clari-Fi broadband processing technology with final data available to clients in 4Q 2014. The company has also signed a letter of award to deploy the seismic vessel Polarcus Naila. The six-month charter is expected to start in April.

Dana kicks off Cameroon 2D shoot DANA PETROLEUM HAS kicked off a 350-sq km 2D seismic survey at its Bakassi West shallow-water block off southwest Cameroon. The explorer, which is a wholly-owned subsidiary of Korean National Oil Corporation, said that BGP would acquire the data at the block over the next six months. Dana Petroleum hopes to sink its first well on the Rio Del Ray basin licence in late 2015 or early 2016. The explorer operates the Bakassi West production sharing contract on a 55 per cent stake with partners Calgary's Madison Petrogas on 35 per cent and local player SoftRock Oil & Gas on 10 per cent.

3D seismic survey begins offshore Namibia PANCONTINENTAL OIL & GAS has announced that a 3D seismic survey has commenced in the Licence area EL0037 offshore Namibia. According to the explorer, the 3D acquisition is to take place in an area of approximately of 3,000 sq km and a second acquisition phase will cover approximately 1,000 km of 2D data. The total acquisition is expected to take up to 120 days. The survey is managed by the EL0037 joint venture operator Tullow Oil, using the seismic acquisition vessel Polarcus Asima.

48 Oil Review Africa Issue One 2014

Tullow Oil farmed-in to EL 0037 in September 2013 and reportedly identified a number of geological leads to be covered by the 3D survey. Pancontinental Oil & Gas will retain a 30 per cent free-carried interest through the surveys and one optional well to be drilled by Tullow Oil. The Namibia EL0037 consortium consists of operator Tullow Kudu Limited with 65 per cent. Paragon Oil & Gas carries the remaining five per cent interest.

www.oilreviewafrica.com

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Mozambique Multi-Client Gravity Gradiometry Survey

ARKeX and the Mozambique National Petroleum Institute will carry out a multi-client Full Tensor Gravity Gradiometry (FTG) and magnetic program onshore and offshore Mozambique in the area around Beira High. The area will encompass onshore and shelf area, offshore and deep offshore. The objectives of this program are to provide: â&#x20AC;˘ A high resolution FTG and magnetic data over the proposed area to enable companies to understand the geology and tectonic framework in more detail â&#x20AC;˘ A powerful interpolation tool when combined with available 2D seismic data and deliver an enhanced 3D perspective of the geology of the Beira region ahead of a licence round

For more information about this program contact: multi-client@arkex.com +44(0)1233 427400

E&P

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Cobalt hits pre-salt target offshore Angola

Angola’s onshore oil potential over 7bn bbls

COBALT INTERNATIONAL ENERGY Inc, in partnership with the National Concessionaire Sonangol, Nazaki Oil & Gas and Alper Oil, has reported the first discovery in the Syn-rift interval in the Bicuar #1A presalt deepwater exploratory well on Bloc 21 offshore Angola. The well was drilled to a measured depth of 5,739 m and encountered 56 m of net pay from multiple presalt intervals. Results of logging, coring, and fluid acquisition confirmed the existence of both oil and condensate in multiple intervals. No free gas zones or water contacts were observed. All well data was collected via openhole logging. The Bicaur-1A was Cobalt’s fourth pre-salt discovery offshore Angola to date. The well is also the first discovery of mobile hydrocarbons that have been tested in the deeper pre-salt syn-rift reservoir. After running production casing, the well was temporarily abandoned. Following full processing and integration of all subsurface data collected from the well, the block 21 partners will evaluate any additional activities necessary to assess Bicuar’s commerciality. Cobalt, as operator, owns a 40 per cent working interest in block 21. Partners include Sonangol Pesquisa e Produção, SA, Nazaki Oil and Gaz, and Alper Oil Limitada.

THE 10 BLOCKS that Angolan oil company Sonangol plans to put up for auction contain more than half the known oil reserves in Angola, according to the head of exploration of the state company, Severino Cardoso. "The ten blocs that we will award have great potential, with on average 700mn barrels each," said Cardoso. "But that can increase with more exploration," he added. "Several foreign companies have shown interest in these blocks," said Suzel Alves, the firm's director of negotiations, calling on local companies also to invest in the sector. State-owned Sonangol will still own the blocks, but firms will be granted exploration and production rights. Exploration is set to start in 2015. After the first presentation of the potential of the 10 blocks, seven of which are located in the Kwanza River basin and the others in the Congo River basin, Cardoso noted that their reserves were estimated at least seven billion barrels of oil. "We will do studies on five other blocks which will be part of a second auction, but only around two-and-a-half to four years from now," said Paulino Jeronimo, one of the firm's executive committee members. He noted the Angolan company’s interest in having Angolan businesspeople taking part in the auction, but admitted that the oil industry required intensive capital investment. He gave the example of offshore oil blocks requiring investment of US$100mn, whilst onshore blocks needed between US$15mn and US$20mn. Oil accounts for about 96 percent of its exports and 46 percent of gross domestic product, according to the World Bank.

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50 Oil Review Africa Issue One 2014

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SNH launches licensing round in Cameroon

Eco presents findings on offshore Namibia block ECO (ATLANTIC) OIL & Gas has submitted an initial evaluation report for the offshore Daniel license, block 2013B, to Namibia’s Ministry of Mines and Energy. The 2,250-sq km concession is off the Skeleton Coast in the Walvis basin of Namibia. Eco Atlantic has a 90 per cent operated interest, in partnership with state-owned NAMCOR. Oil and gas rights were granted in August 2013. Eco Atlantic has reviewed existing 2D seismic and regional interpretations, and has concluded that the southeast corner of the block, on the eastern slope of the basin, has good exposure to the Cretaceous and Syn-Rift sections. Coo Colin Kinley said: “The newly established oil kitchen in the Walvis basin confirming light 40° API gravity oil; the oil shows onshore on the Daniel clock which prompted the drilling of the Toscanini well; and the slicks evident in the region from the Fugro oil slick study that was completed for Eco, all indicate that oil is migrating through the block from the deeper kitchen and that further work is warranted to find a suitable trap and seal. “We still have significant work to do and further study is required, with shallow water depths and shallow drilling depths...”

Simba inks Guinea farm-out deal CANADIAN JUNIOR SIMBA Energy is farming out a large portion of its holding in a pair of onshore blocks in Guinea. The explorer has signed a letter of intent with a private player to farm out up to 45 per cent of its holding in blocks 1 and 2 in the Bove basin. The unidentified Calgary-based buyer will initially take a 25 per cent stake and conduct an airborne full tensor gravity gradiometry survey over a minimum of 9000 sq km for an initial investment of US$4.5mn. The farminee will then have an option to take a further 20 per cent stake and carry out a 2D seismic survey, costing another US$20mn. Once the seismic data is collated, the partners will then decide to either drill a wildcat or seek a farm out. www.oilreviewafrica.com

FRONTIER RESOURCES HAS confirmed oil in its acreage in the Owambo basin in northern Namibia. The company completed a soil gas survey to determine if any of the source rocks were hydrocarbon-bearing. Samples were sent to Houston and analysed by Exploration Technologies. "The results show the presence of anomalous, above background levels of methane, ethane, propane and butane gases which, by both their magnitudes and ratios, confirm the existence of one or more oil generating source rocks within the licence area,” the company said. “Based upon the results of this initial survey and the fact that the samples were acquired only along widely spaced roads and tracks, Frontier plans to extend the licence period so that additional sampling may take place during 2014.” Frontier’s blocks 1717 and 1817 cover an area of about 18,922 sq km. Frontier is the operator of the blocks with a 90 per cent working interest, while the Namibian National Oil Company has a 10 per cent carried interest in the licence.

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E&P

CAMEROON HAS OPENED a new bidding round for four oil blocks, according to its state oil firm, the National Hydrocarbons Corporation, SNH. The Central African country currently pumps less than 100,000 bpd, far below its peak of 185,000 bpd in the mid-1980s. Sinopec-Addax and French oil firm Perenco are producing while Kosmos is exploring. SNH said the licensing round was for the Bomana, Lungahe and Ndian River blocks in the Rio del Rey Basin and the Manyu block in the Mamfe Basin. They include onshore and offshore acreage. The deadline for submissions is June 26 and the results will be released in mid-July, SNH said. The purpose is to conclude a Production Sharing contract (PSC) within the framework of the Cameroon Petroleum Code and its enabling acts, for the exploration, appraisal, development and exploitation of hydrocarbons within those four blocks. The Bomana and Lungahe Blocks are within very close proximity to existing oil producing fields and have 3D seismic data coverage, as well as hydrocarbons discovery wells. Those two blocks are in Conventional Petroleum Operations Zones, as defined by the Petroleum Code. The Ndian River Block has 2D seismic data coverage as well as identified leads; and is located in shallow water, near-shore. and mangrove and inland environments. The Manyu Block is covered by inland forest and neither has seismic coverage nor well data. These two blocks are qualified as "Special Petroleum Operations Zone" as defined by the Petroleum Bode. In accordance with the Petroleum Code, Bomana and Lungahe blocks will be licensed for an initial period of up to three years, renewable twice, for periods of two years each, while the Ndian River anti Manyu Blacks will be licensed for an initial period of up to one year renewable twice (or a period of two years each).

Frontier confirms oil in Namibia

E&P

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Uganda to sign pact with Tullow for production

Tullow finds more oil in Kenya

UGANDA HAS COMPLETED negotiations with Britain's Tullow Oil and its partners and will soon sign an agreement that could pave the way for the start of crude production. East Africa's third-largest economy struck hydrocarbon deposits in the Albertine rift Members of the parliamentary forum on oil and basin but commercial gas tour Gunya 1 oil well in Bulisa. production has been delayed and is not expected until 2016 at the earliest. In a speech at a private function for Tullow recently, energy minister Irene Muloni said the government would shortly sign the memorandum of understanding (MoU) with Tullow and its partners, France's Total and China's CNOOC. Developing Uganda's oil fields and building the required infrastructure would cost between US$15bn and US$22bn, although there were plans to try to reduce that, Muloni said. "Negotiations about this MoU are now fully complete and we anticipate its signing very soon. This is a significant milestone since the market framework is critical for the commitment of project financing," she said. Muloni did not say when the signing would take place. The pact will detail the facilities required to be put in place, such as pipelines and a refinery, the roles of the different parties, and the flow rates for oil fields before actual production can start.

TULLOW OIL HAS made two new discoveries in Kenya, boosting prospects for turning East Africa’s largest economy into an oil exporter. The company has doubled its Kenyan resource estimates to more than 600mn barrels after the Amosing and Ewoi wells found crude. "Exploration results to date... have proven that Tullow's onshore acreage in northern Kenya has the potential to become a significant new hydrocarbon province," exploration director Angus McCoss said. "Tullow believes that the overall potential for the basin, which will be fully assessed over the next two years through a significant programme of exploration and appraisal wells, is in excess of one billion barrels of oil," the company said. The latest discoveries -- two wells in Block 10BB, Amosing-1 and Ewoi-1 -mean Tullow has clocked up seven consecutive finds in northern Kenya. The company, which plans more than 20 wells in northern Kenya over the next two years, said it had started preliminary design work on a pipeline to an export terminal. “Kenya is one of our core and key areas going forward,” Tullow chief eecutive officer Aidan Heavey said in a phone interview. “We are also starting discussions with the government now on the development plans.” Kenya may become East Africa’s first oil exporter as soon as 2016 as Tullow and its partner Africa Oil Corp continue to explore the Lokichar Basin in the north of country. Tullow, which works with France’s Total SA and China’s Cnooc Ltd to develop fields in neighbouring Uganda, has plans to combine oil exports from the two countries through one pipeline network. The Amosing well drilling results “significantly” exceeded expectations in Block 10BB, Africa Oil said in a separate statement. The companies agreed to relinquish their license to Block 10A, where the Paipai well discovered gas last year.

Apache reveals Egypt discoveries

Kenya puts off new block licensing

US INDEPENDENT APACHE has applied for two new development leases in Egypt after striking a couple of discoveries in two different concessions. The explorer hit 87 feet of net pay at the Apries-1X well on the Khalda Offset concession in the Shushan basin, it said. The well, drilled and completed at a cost of US$5mn, tested 4389 bopd and 14.2 mmcfd from the Paleozoic Basur sand. The NTRK-H-1X well on the North Tarek concession in the Matruh basin hit 60 feet of fracture-stimulated Jurassic Lower Safa pay. The deep-gas condensate well, which cost US$7mn to drill and complete, tested at 20 mmcfd of gas and 250 bpd of condensate. The Khalda Petroleum joint venture also drilled the NRQ-8X well to appraise the NRQ 3151-1X discovery, hitting 98 feet of net pay in the Jurassic Upper and Lower Safa formations. Testing is expected in this quarter. Apache also said the first well of a multi-well horizontal drilling programme in the Western Desert - the AG-115H in the Abu Gharadig field - was drilled, completed and is currently producing.

KENYA WILL DELAY licensing new oil exploration blocks until a new law regulating the sector that is being sent to parliament by June is in force, a senior official said. Energy and Petroleum principal secretary Joseph Njoroge told Reuters that seven new blocks will be up for licensing once the new energy law is in place. "We are still working on the Energy Act," he said according to the news wire. "We want first of all to get the policy and the Act in place which will happen before the end of this financial year, that is before June. And then from there we will be able to know how to move," Njoroge said. Oil discoveries in Kenya by Tullow and its partner Africa Oil Corp in the northwest of the country have increased inquiries from others seeking exploration blocks. In an update this month, Tullow and Africa Oil doubled the estimate of their discoveries in the South Lokichar basin to 600mn barrels. Consultants Hunton & Williams and Challenge Energy - employed to help review the law - have recommended the Act includes clearly defined policies for upstream, midstream and downstream sections to avoid overlaps and reduce inefficiency. It is also expected to provide guidance on natural gas exploitation, not adequately covered under existing law. The government has said in the past that some companies licensed to prospect for oil and gas were reluctant to do so due to concerns over the lack of a legal and fiscal framework to commercialise natural gas discoveries. The new law will also allow for the creation and management of a sovereign wealth fund for petroleum revenue, and specify how revenue will be shared between national and local governments and communities where discoveries were made.

52 Oil Review Africa Issue One 2014

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The Baker Hughes Rig Count tracks industry-wide rigs engaged in drilling and related operations, which include drilling, logging, cementing, coring, well testing, waiting on weather, running casing and blowout preventer (BOP) testing.

DECEMBER 2013 - LAND & OFFSHORE DECEMBER 13 Country Land & Offshore ALGERIA 49 ANGOLA 14 CAMEROON 2 CHAD 10 CONGO 4 EQUATORIAL GUINEA 0 GABON 6 GHANA 0 COTE D'IVOIRE 2 KENYA 11 LIBERIA 0 LIBYA 12 MOZAMBIQUE 1 NIGERIA 17 TANZANIA 0 TUNISIA 2 UGANDA 2 D R CONGO 2 NAMIBIA 0 SOUTH AFRICA 1 MAURITANIA 2 ETHIOPIA 1

NOVEMBER 13

VARIANCE

DECEMBER 12

NOVEMBER 12

Land & Offshore 44 13 2 10 4 0 7 1 0 9 0 16 1 17 2 2 2 2 0 1 1 1

From Last Month 5 1 0 0 0 0 -1 -1 2 2 0 -4 0 0 -2 0 0 1 0 0 1 0

Land & Offshore 38 7 2 2 2 1 6 2 3 3 0 15 2 13 2 2 2 0 0 0 0 0

Land & Offshore 37 7 2 2 2 1 5 1 3 3 0 14 3 13 2 4 2 0 0 0 0 0

VARIANCE From Last Month 1 0 0 0 0 0 1 1 0 0 0 1 -1 0 0 -2 0 0 0 0 0 0 Source: Baker Hughes

Algeria in round launch ALGERIA HAS LAUNCHED another energy bidding round with 31 oil and gas fields on offer for foreign companies. Ali Betata, head of ALNAFT, the agency in-charge of handling bids, said that 17 of the fields would be in the south, five in the north and the rest located in the centre of the country. Youcef Yousfi, energy minister, said, “We will explain to our partners the elements and incentives included in the bidding.”

The last round held in 2011 awarded only two contracts out of the 10 offered — one to Spain’s Cepsa and the other to Algeria’s state-owned energy firm Sonatrach. The country gets most of its output from mature fields and reportedly needs foreign investment to develop new reserves, Reuters reported. Algeria’s new energy law, passed in 2013, includes tax and other contractual incentives for foreign

companies, and benefits for unconventional energy resource investments such as shale oil and gas contracts. Yousfi said that as a part of new developments, the country’s offshore explorations would start at the end of this year or early 2015. Algeria has also said that it plans to build five oil refineries to double its production capacity, but has not yet given details on when construction

would begin. Oil production in the country is around 1.2mn bpd, with energy export earnings US$63.5bn in 2013, down 10 per cent from a year ago, officials said.

Chevron signs offshore Morocco deals CHEVON MOROCCO EXPLORATION Ltd has signed petroleum agreements with Morocco’s Office National des Hydrocarbures et des Mines for three offshore areas. “We look forward to participating in exploration activities in Morocco, which provides Chevron an opportunity to advance our growth strategy in frontier basins,” said George Kirkland, vice chairman, Chevron Corporation. Once awarded, Chevron will acquire seismic data and conduct studies in deepwater areas known as Cap Rhir Deep, Cap Cantin Deep and Cap Walidia Deep located between 100 to 200 km west and northwest of Agadir. The areas

54 Oil Review Africa Issue One 2014

encompass approximately 29,200 sq km with average water depths ranging from between 100 meters to 4500 meters. Ali Moshiri, president, Chevron Africa and Latin America Exploration and Production Company, said, “This is an opportunity for Chevron to expand its already strong presence in the region and allows us to acquire further knowledge about promising geology in an emerging area.” Chevron Morocco Exploration Ltd has a 75 per cent working interest in the three areas, with the Office National des Hydrocarbures et des Mines holding the remaining 25 per cent.

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Gas

In Amenas ‘close to full capacity’ ALGERIA’S IN AMENAS gas plant, which was attacked by Islamist militants a year ago, is expected to be at full capacity within weeks as work on the last of its three processing units is nearing completion, according to a recent report. In Amenas produced about 11.5 per cent of Algeria's natural gas output before the attack and full resumption would free up more of the fuel for export to Europe, Reuters reported. "Two thirds of capacity is already on stream and the last unit will start in a few weeks so In Amenas will be back at full capacity in a few weeks," Ali Hached, senior adviser to Algeria's energy minister, was quoted as saying on the sidelines of a recent conference in London. He said the capacity of the site was about 30mmcmd and that it was currently producing around 20mn cu m. Norway's Statoil, which operates In Amenas with BP and Algeria's state-owned Sonatrach, said in May that production at the second of the three processing trains had resumed but that it was unclear when the third would reopen. BP chief executive Bob Dudley told a conference call for analysts in October that expansion projects for In Amenas and In Salah gas producing sites would not get going in 2014 as planned. It has said it expects to return personnel to the Algerian sites once agreed security measures are in place. Statoil said in November some of its staff had returned on a permanent basis to its operational centre at Hassi Messaoud, some 700 km to the southeast of Algiers but that it would take more time to return to In Amenas. Hached said the companies were gradually returning their staff to sites deep in the desert, starting with oil and gas producing complex Hassi Messaoud, and would eventually go back to sites at In Salah and In Amenas.

Victoria signs pact to expand gas volumes in Cameroon UK-BASED VICTORIA Oil and Gas has signed key customer agreements for its operating subsidiary Gaz du Cameroun (GDC) to expand gas production volumes. The oil and gas exploration and development company unveiled three new gas agreements for its local subsidiary in Douala, and said it had received a first installment of payments from partner RSM Production The company said that the collaboration agreement has been signed with Cameroon’s electric utility AES-Sonel, under the terms of which AES's heavy and light fuel oil power generation stations will be replaced with gas-fired generation. As part of the deal, GDC will supply temporary gas units with a combined capacity of 45MW, and the first stage of the deal is expected to start during the second quarter of 2014 with anticipated gas consumption rates in the range of 2.6mn to 5.9 mmcfd of gas. "Supplying the major domestic electricity utility with gas to drive their oil-fired generators will be a big step forward for us," said chairman Kevin Foo. "With most electricity coming from hydro-electric sources in Cameroon, consistent power supply during the dry season is an issue.” GDC has also entered into an agreement with cement-manufacturing company Dangote to supply thermal gas. It will supply 0.4-0.5 mmcfd, with connection anticipated in the second quarter.

56 Oil Review Africa Issue One 2014

IPR strikes major gas discovery in Egypt TEXAS INDEPENDENT OIL & gas explorer IPR has announced the discovery of a significant gas condensate field in its Alamein Concession located in Egypt’s Western Desert. IPR, operator of the concession, pursued a new play concept for several years targeting the untapped Alam El-Bueib (AEB) formation in the Yidma-11X well. The discovery well, located 130 km southwest of the city of Alexandria, encountered both gas and condensate at a depth of 3,658 metres. The well tested 14.3 mmcfd of gas and 1,000 bpd of condensate of 53° API gravity with no water produced. This primary target of the AEB was discovered by IPR after subsurface imaging of high quality 3D seismic revealed bright spots in this region of the Alamein Ridge. While no gas has been found in this formation in this region of the Western Desert, it appears that commercial quantities of very rich gas exist. IPR and its technical experts are remapping what could prove to be a much larger structure of gas and condensate. Dr. Mahmoud K. Dabbous, chairman of the IPR Group, stated “finding high quality onshore gas in the Western Desert was very rewarding, especially knowing Egypt’s critical need for energy – particularly for natural gas for power generation and gas condensates for domestic consumption – is a top priority at the present time. Our technical team of E&P experts will continue to aggressively develop this discovery for the benefit of the country with the IPR Group’s longstanding history as a technology leader and an active investor in the Energy Sector, in addition to monetizing the upside for the shareholders.” IPR plans to invest in 57 wells in Egypt in 2014 as a part of its aggressive growth plan in the MENA region.

Longreach find significant gas in Morocco LONGREACH OIL AND GAS, an independent oil and gas company holding numerous exploration licenses in Morocco, has encountered a significant natural gas occurrence in the Koba-1 well. Longreach has a 50 per cent operated interest in the Sidi Moktar license area covering 2,683 sq km. Longreach is partnered by ONHYM and MPE On 31 December, 2013, the company announced that the Koba well had been drilled to a total depth of 3,100 metres and had encountered a gross interval of approximately 45 metres with reservoir potential. Over this section, gas shows of over 10 per cent were encountered throughout the interval with heavier hydrocarbon components of over C5+. The Koba-1 well has now been logged and suspended. The Koba structure is the first prospect to be drilled as part of Longreach's exploration programme. A portfolio of leads and prospects has been identified and, following the results of Koba-1, the company intends to determine the extent of this natural gas occurrence by further drilling.

OVL and OIL complete acquisition of Mozambique’s offshore gas field IN JUNE 2013, OVL and OIL had agreed to buy a combined 20 per cent interest for US$5bn in the gas field jointly owned by Videocon and USbased Anadarko Petroleum in the Rovuma Area-1. Payments to Videocon Group to close the deal have now been made, the companies have said. OVL will pay Anadarko Petroleum this month. OVL has raised about US$1.5bn in one-year bridge loans from foreign lenders, while OIL borrowed US$900mn to fund their respective share of payments to Videocon Group, PTI reported. The 10 per cent stake will be split in a 60:40 ratio between OVL and OIL respectively. Area-1 covers about one million hectares in the deepwater Rovuma Basin and with recoverable reserves estimated at 991mn cu m to 1.8mn cu m. ”Area-1 has the potential to become one of the world’s largest LNG producing hubs and is strategically located to supply LNG to the growing Indian gas market,” the OVL statement added. www.oilreviewafrica.com

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Dangote to receive thermal gas from Gaz du Cameroun DANGOTE CEMENT HAS penned an agreement with Gaz du Cameroun, for the provision of gas-fired thermal power at its plant in Douala, Cameroon. The cement factory is a brand new one with an installed capacity of the annual production capacity of is 1.6mn tonnes. The gas connection is anticipated in the second half of 2014. Gaz du Cameroun is a subsidiary of Victoria Oil & Gas, a British minnow which operates the Logagba gas field and gas processing plant in the country and has connected industries in Cameroon’s major commercial city with fuel. The company executes gas sales agreements with customers to sell gas at US$16/mmbtu, with prices fixed for five years and the contract term lasting 20 years.

Gas consumption by Dangote is expected to range from 0.4 to 0.5mmscfd. The agreement with the cement firm is one of the company’s two key highlights of January 2014. Gaz du Cameroun also signed a collaboration agreement with AES-Sonel, a Cameroonian electricity utility, for conversion of Heavy Fuel Oil (HFO) to gas power generation. GDC and AES-Sonel will work on a technical and operating plan to progressively replace HFO and LFO power generation stations with gasfired generation. “This collaboration on power generation is a first in Cameroon”, GDC says. It is planned that the company “will initially supply temporary units with gas, with a combined capacity of 45MW. This first stage is expected to be online during

ENOC to supply oil products to Tanzania

Zambia to get new oil refinery in 2016

DUBAI’S EMIRATES NATIONAL Oil Company (ENOC) has won a tender to supply oil products to Tanzania for the first time in a sign that the company might be expanding its trading operations, according to industry sources. The government-owned company won the tender from Tanzania's Petroleum Importation Co-ordinator to supply nearly 170,000 tonnes of oil products for delivery in February at a weighted average premium of about US$44 a tonne above Middle East quotes, the sources said. The importers, who represent oil marketing companies in the east African nation, were seeking two combination cargoes for delivery into Kurasini Oil Jetty. One of them was for 5,300 tonnes of 500 ppm sulphur gasoil and 31,475 tonnes of gasoline for 6 to 8 February delivery. The other cargo was for 16,700 tonnes of gasoil, 19,241 tonnes of jet fuel and 800 tonnes of kerosene for 20 to 22 February delivery. The importers were also seeking 94,927 tonnes of gasoil for delivery into the country's single point mooring from 9 to 11 February. While ENOC has supplied into Africa previously, this is the first time the company is supplying to Tanzania, one of the sources said. "Demand within Asia has slowed down a lot, so (ENOC) is probably looking at other markets to diversify portfolio," another source said. "Africa is one of the continents that a lot of middle distillates players are looking at as it's a growth market." ENOC operates businesses in supply, trading and processing, terminals, marketing, retail and exploration and production, according to the company website.

58 Oil Review Africa Issue One 2014

AUSTRALIA’S MAYSEN AND Borowski Claymont Joint Venture (MBCJV) and Phoenix Materials and Constructing Company have signed a joint venture (JV) to build an oil refinery worth US$1.6bn in Zambia. The construction of the Bwana Mkubwa refinery will begin in 2016 with a capacity to process about five million mt of oil annually, the JV statement said. It will be situated at the Sub-Sahara Gemstone Exchange (SGE) Industrial Park in Ndola, Copperbelt. According to Charles Kamwi, MBCJV group executive director, the new refinery would triple the current national crude oil supply. He added that the new plant will be fed with crude oil through a new pipeline that will be built alongside the 1,800 km Tazama pipeline.

second quarter of 2014 with anticipated gas consumption in the range of 2.6 to 5.9mmscfd. AES-Sonel is preparing a study of the conversion of the 13MW Logbaba and the 86MW Dibamba heavy fuel oil power plants to gas”. Gas du Cameroun has developed a local market for gas with customers including breweries, metal foundries, food processing plants and packaging facilities. Gas Sales Contracts have been signed throughout 2010-2013 with numerous industrial firms including some multinational firms. GDC anticipates daily sales volumes reaching 12 mmscfd by December 2013 with an estimate of total gas demand to in excess of 100 mmscfd within five years.

The new refinery, which is expected to stimulate the growth of other auxiliary industries, will also include the development of commercial entities, warehousing, dry port, container depot, a skills training centre, houses and a green space. The project will also include developing two new exporting lines to the DRCand Tanzania to provide efficient regional distribution of refined oil products. ”Last year, the government gave approval to conduct a bankable feasibility study. The group will spend close to US$3mn this year in completing the study. The project is being developed in cooperation with a number of companies, including Samsung Engineering of South Korea,” Kamwi said. Nawa Mutumweno

Uganda and oil partners strike deal UGANDA AND TWO companies exploring its oil prospects have reached a deal on the production value chain of the country’s oil. An agreement between China National Offshore Production Company, Tullow Oil and Uganda will see the country construct a small oil refinery, a crude oil export pipeline connecting to Lamu in Kenya, and a power plant for electricity production. The deal is a follow up on a decision by Uganda’s president Yoweri Museveni and Kenya’s Uhuru Kenyatta to have a shared East African pipeline connecting inland countries in the region to the Kenyan port of Lamu — this pipeline will be used by Uganda, Kenya and south Sudan. As indicated by the Uganda’s Energy Minister eng Irene Muloni at a farewell party for Tullow’s outgoing president Elly Karuhanga, “It’s a significant milestone since the market framework is critical for the commitment of project financing”. The country has been looking for partners to invest in the construction of a 60,000 bpd oil refinery in its western region, and has already shortlisted eight companies one of whom will be selected. Speaking at the same event Tullow Oil executive director and company secretary Graham Martin revealed that Uganda’s oil production is expected to average 220,000 bpd from recoverable reserves of 1.7bn barrels, from a an estimated discovery of 3.2 bn barrels. Of the two companies that negotiated the deal with the Ugandan Government, CNOOC has already been granted a production license while Tullow oil is still in negotiations for one, and is fronting its success in Ghana where Martin says it has delivered more than US$5bn to the Ghanaian taxpayer and “have a solid track record as a partner in Africa’s development.” “We can do the same here,” he adds. So far, Tullow oil Uganda has invested US$2.8bn and expects to invest between US$15-22bn more in the country, according to the company’s general manager, Jimmy Mugerwa. The company also expects to put over US$50bn in Uganda’s tax coffers over 20 years.

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OIL SPILL RESPONSE Ltd (OSRL) has opened a new base in Saldanha Bay, South Africa, to support regional and global response operations. The base houses cutting edge well capping equipment designed to shut-in uncontrolled subsea wells. The establishment of the base in South Africa marks a major advancement in Africa’s oil spill response capability. The Saldanha capping stack is available to oil and gas companies across the industry through OSRL’s Subsea Well Intervention Service (SWIS) which provides for swift subsea incident response around the world. The integrated subsea well intervention system includes four capping stacks suitable for international use and two hardware kits for debris clearance, BOP intervention and the subsea application of dispersant at a wellhead. The equipment can be used for the majority of known subsea wells in water depths up to 3,000 meters. The SWIS equipment is currently stored in three international locations – Stavanger, Norway; Singapore; and Saldanha Bay, South Africa; and is maintained ready for immediate mobilisation and onward transportation by sea and/or air in the event of an incident. Further capping and dispersant equipment will be delivered for storage in Brazil by the end of this year. A global containment solution is

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also being developed to supplement the intervention system and will be ready for use by the end of 2014. In 2011, nine international oil and gas companies formed the Subsea Well Response Project (SWRP), pooling resources to develop equipment that could enhance subsea well control capability. OSRL collaborated with SWRP to make this equipment available for the benefit of the wider industry, and companies can now subscribe to SWIS to incorporate this essential subsea well contingency into their own incident response plans. Robert Limb, chief executive of OSRL, said: “SWIS represents a transformational addition to our portfolio of services, helping our members prepare for, and handle, potential subsea well control incidents on a global scale. Our new facility at Saldanha has strategic significance in that we are now able to deliver an enhanced service in this region – a development that is wholly consistent with our mission to enable the most efficient, safe and effective response to oil spills wherever they may occur.” Keith Lewis, project manager, Subsea Well Response Project, commented: “The oil and gas industry faces continuous challenges to improve safety and must be in a position to respond effectively to a subsea well incident, wherever in

Technology

Oil spill response base opens in South Africa

the world subsea well operations take place. The delivery of world-class intervention equipment to Saldanha represents a major advancement for the region. As part of a package of measures, it is designed to enhance the international industry’s capability to respond to a subsea well incident. Collaboration across the industry and around the world has made this possible.”

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Logistics

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The recent oil and gas finds in Africa will continue to have a positive impact on local economies if local African suppliers, service providers and other businesses are geared up to service this growth. This is according to Steve Harley, president of the Energy Sector for DHL Customer Solutions and Innovations.

Energy finds in Africa highlight

shifts in sector T

HESE ENERGY FINDS provide many possibilities for local businesses, to echo the express operator's own marked increase in the transportation of energyrelated material in the region. Forecasts expect African oil supply growth to continue over the next 25 years, with predicted ranges of growth over the period of between 0.5mn and two million barrels per day. "Africa will need to adapt in order to keep up with demand, as well as evolving trends in the highly competitive sector." Globally, the steady and reliable supply of energy is critical to economic activity, and due to Africa's availability of the resource, it is expected that the continent will see continued and steady economic growth. "We have also witnessed an increased demand for the resource on the continent, and currently Africa is the region with the highest increase in oil consumption globally - five per cent in 2012 versus only a one per cent increase globally. This is likely to continue as many of the fastest growing economies are situated on the continent." However, as the easily obtainable oil reserves have been almost depleted, most of the new developments are either very remote or technically challenging, and this brings issues of infrastructure, transportation and expertise to the fore. "Forecasts predict that conventional oil production will decline by five per cent per year. Extraction from unconventional sources is more complex and relatively more expensive from a supply chain perspective. As such, customers will need complementary expertise from integrated logistics suppliers to meet the challenges of these new geographies and technologies."

Global footprint and local expertise Logistics suppliers need to provide a global footprint in combination with local market expertise. As a trustworthy partner, they also need to drive cost and process optimisation while maintaining safety and compliance both on and off-site. "This is particularly true in Africa," noted Harley. "While the continent is showing promise, issues around infrastructure, regulatory hurdles and lack of an integrated supply chain in most markets, can be a major hindrance for energy businesses. Couple that with the need to optimise production and improve supply chain management to introduce more robust metrics, optimise the inventory and find cost-effective transport solutions. This highlights the need to partner with an experienced provider who has extensive knowledge of the region. DHL has an

60 Oil Review Africa Issue One 2014

Ophir Energy drilling with the Deepsea Metro 1offshore Tanzania.

Customers will need complementary expertise from integrated logistics suppliers. unrivalled global presence and experience to ensure partners are offered integrated solutions that address today's energy industry challenges." Firstly, energy professionals need to partner with integrated suppliers who can offer them global coverage but also in-depth local understanding. Secondly, they need to seek better visibility of endto-end supply management while also addressing the downward pressure on costs. Thirdly, they should reduce their overall vendor base while simultaneously investing in more external expertise. Finally, they have concerns that safety and compliance standards will not be adhered to if more MRO work is contracted out, while being aware that they do not always have adequate metrics to evaluate safety performance. The onus is therefore on integrated suppliers to show that they can meet each of these concerns head on and add substantial value to client businesses.

Exceptional challenges The past year has brought exceptional challenges for upstream and downstream Maintenance, Repair and Operations (MRO) professionals in the energy industry and it looks unlikely to get any easier in the years to come. Fluctuations in demand, together with price volatility, have forced companies to look for ways to reduce costs. This has led to more sourcing of supplies from low-cost locations. At the same time, production has moved to areas that are more remote, difficult to support and unfamiliar. This transition has increased the complexity and extended the length of the materials supply chain.

Expanding into unfamiliar markets The next phase of extraction has meant that energy businesses are expanding into unfamiliar markets, where they have limited pre-existing networks to handle their supply chain. In addition, they are utilising new technologies which in turn bring new challenges and increase demand for new, efficient, cost-effective supply chain practices. All of these trends ands challenges are taking place in the context of growing regulatory pressure and environmental concerns. Safety, environmental

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Logistics

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The In Amenas gas field in Algeria - a challenging location.

Expansion into emerging markets has resulted in a more multi-national, fragmented supply chain. and regulatory compliance remain top priorities across the industry. Oil and gas businesses now see a strong role for integrated suppliers to play in assisting them with delivering end-to-end supply chain management. Fundamentally, customers want to rely more on integrated suppliers as they do not feel that they have the required in-house expertise to meet the challenges of new markets and remote territories. Expansion into emerging markets has resulted in a more multi-national, fragmented supply chain. Most energy businesses readily admit that they do not have access in-house to the skills or systems required to meet these challenges, driving interest in delegating such responsibilities to external experts. Integrated suppliers therefore have a critical role to play in helping energy companies meet the challenges of entering emerging markets and servicing remote locations in a cost effective and efficient way. Partnering with an integrated supplier who can offer global coverage is part of the solution. To keep ahead of lead times for large-scale projects, companies have to think about making the right purchasing decisions well in advance. They need to be able to source in a cost effective way from lowcost countries for projects overseas or at distance from remote sites. They will have to organise cross-border transportation as well as monitor regulatory requirements across multiple markets, to ensure they are meeting Health, Safety, Security, and Environment (HSSE) standards. Investment in compliance software and skilled personnel, capable of overseeing strict adherence across multiple countries, are therefore pre-requisites for expansion into new markets. Global coverage must also be matched with in-depth local expertise.

Inventory optimisation Delegating single-point responsibility to an integrated supplier for inventory optimisation can help customers meet their inventory goals. Firstly, they can bring a differentiated approach to a business’s material stocking strategy. Controlled access would be offered to higher value parts, while uncontrolled access (for example, free issue bins at the point of use) would be introduced for low-cost,

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high-volume materials that are quick-moving. Moreover, inventory optimisation directly impacts on how successfully managers are able to meet wider business objectives. This allows for a just-in-time stocking strategy that ensures savings associated with labour and inventory. Eliminating redundancies in the inbound flow of materials, suppliers and equipment should mean inventory and overhead costs drop by 15 to 20 per cent. In addition, the implementation of this approach can release large quantities of inventory for immediate use – so realizing a substantial first year cash saving – a useful benefit in these cost-focused times. Strategically located cross-docks or consolidation warehouses can act as integration points, so that material handling activities are moved off-site to consolidate orders and reduce deliveries. Partnerships with other groups may be necessary so that supplies are effectively transported from sellers to cross-docks and then on to relevant production areas for distribution to end users (for example, warehouses, tool stores, site stores, etc). Having these solutions in place will help clarify the supplier pick-up schedules and provide ultimate oversight to the client of how the supply chain fits together. It should also bring down transportation and logistics costs – with a particular focus on the reduction in emergency response deliveries. As indirect material management becomes more complex, energy customers want external expertise. Simultaneously, they want simplicity and standardisation. Integrated suppliers should assist with vendor rationalisation and provide endto-end supply chain management if they want to be perceived as valued partners, rather than as just another provider.

The drive for external expertise More complex projects, lengthier supply chains, more global sourcing – energy customers across the world acknowledge that the challenges associated with the new supply chain necessitate higher investment. Faced with a choice between acquiring and training up staff in-house or partnering with an integrated supplier to take on indirect material management for them, many prefer the latter option as they feel that understanding MRO is not core to their business and a sub-optimal use of valuable resources. Yet there is a complicated dynamic to all this. On the one hand there is a desire to acquire more external expertise, but simultaneously customers admit to being averse to hiring more providers to help them with MRO. There is an important role for integrated suppliers to play as partners to the energy industry. One part of that role involves helping customers to identify the

most effective vendor relationships and terminate surplus ones. Providing businesses with a data-base of KPIs (Key Performance Indicators) on vendor performance can assist with these decisions. Another factor is being able to offer visibility of end-to-end supply chain management and full traceability of materials, including accurate documentation. A final consideration is the need to demonstrate and prove to energy customers that integrated suppliers have industry expertise which may be tailored appropriately to the job at hand. Whether that’s understanding industry terminology or being able to adapt seamlessly to the safety culture on-site, customers need reassurance that their supply chain is in safe hands. Only then can integrated suppliers become partners, not just providers. An integrated supplier can take on sole responsibility for supplier management. Systems can be introduced to ensure traceability, reducing the risk of clients being left without essential materials. Materials are often not delivered on-time with reasons ranging from bad weather, lack of transportation to failure to send the purchase order. Suppliers would be given a user-friendly online tool to schedule jobs. End-to-end traceability shows where an item is picked up, where it moves in the supply chain and where it is eventually delivered. And in the event of a delay or issue where materials will not be delivered in time, integrated suppliers would be tasked with finding an alternative solution at an acceptable cost. Safety and compliance are paramount within the energy industry globally, yet many customers are worried that contractors will not maintain the same high standards that they expect from their own staff on-site. In actuality, integrated suppliers can introduce standards, systems, processes and metrics that raise the safety and compliance performance of vendors across the board to meet or exceed those of the client organisation itself.

Conclusion The major developments currently taking place in the energy industry mean it is more important than ever for businesses to form effective partnerships with integrated suppliers, who bring true expertise to the management of indirect materials. As businesses expand into unfamiliar markets and are forced to handle more supplier relationships, it becomes imperative to integrate their supply chain so that one party is responsible for end-to-end management, to standardise systems and ensure visibility of all processes. Not only would an integrated supplier monitor and ensure high standards of HSSE compliance are maintained by vendors across sites, they would also introduce more accurate data gathering and management to assess contractor performance, raising the bar across the supply chain. In turn, having access to more metrics on performance should allow for weaknesses within the supply chain to be eliminated and underperforming suppliers to be terminated, resulting in stronger cost control at a time of greater scrutiny on spend within departments. Partnering with an integrated supplier therefore means a simpler supply chain, more transparently managed and more easily controlled. ■ www.oilreviewafrica.com

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les manager We are currently looking for a sa ntact: and distributors across Africa. Co out more. friday@portwest.com.ng. to find

Technology

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Off the coast of Peru, the first of a new type of offshore platform for the offshore oil and gas industry has begun operation, and its setup may well revolutionise exploration and production around the world. Trelleborg’s role has been to make sure all the pieces fit together.

Buoyed by

success A

NEW TYPE of oil platform that is making its debut in the Pacific Ocean offshore Peru is expected to cut the cost and time involved in setting up new drilling operations across the industry. “The Buoyant Tower was designed to reduce the overall duration from offshore exploration to production by fabricating and installing a drilling and production platform in a short timeframe with reduced costs,” explained Bao Nguyen, project engineer at GMC Inc, one of the companies that developed the new design and managed the project. It could pave the way for a new generation of platforms that are simpler to make, easier and cheaper to install and that can be moved easily from location to location, anywhere in the world. It took only 13 months to design, build and transport the BPZ Energy’s CX-15 production platform, the first platform using the Buoyant Tower concept, to the Peruvian Corvina field, where it is expected to produce 12,200 barrels of oil and 12.8 mmscfd of gas. The concept was developed by HortonGMC, a joint venture between Horton Wison Deepwater and GMC Inc. The Buoyant Tower hull consists of four cylindrical tubes with one central suction pile. Each cell measures 8.4 meters in diameter and 60 meters in length. The central suction pile, integral to the hull structure, attaches the structure to the seabed. On top of the 2,500-tonne Buoyant Tower hull sits a 1,500-tonne platform where the production drilling is carried out. A critical operation is the float-over, which involves placing the production platform over the tower and then connecting the two together. Trelleborg supplied the leg mating units (LMU) and deck support units (DSU) for the project. An important aspect of the design was to help dampen the loads while performing the float-over. The crucial challenge being to transfer the load from the topsides to the tower mating points in a controlled manner without causing damage to either structure. “The company’s customer service and track record were key contributors to being selected,” Nguyen said. Traditionally the topside is lifted on to the tower or substructure by an offshore heavy lifting crane. However, the rates for hiring these can be very high. Leg mating units (LMUs) and deck support units (DSUs) provide a more cost-effective solution and offer a proven technology and successful installation method for offshore constructions. JP Chia, engineering manager at Trelleborg Offshore & Construction in Singapore, explained:

64 Oil Review Africa Issue One 2014

Leg mating units consist of steel structures incorporating engineered elastomeric pads (Courtesy Trelleborg).

The design turnaround time was critical in order to meet the installation schedule. “The design turnaround time was critical in order to meet the installation schedule. Installation took place in the open sea where there are rough sea conditions and high swell, and the float-over window period was very limited. With such critical factors, the LMU and DSU designs were modeled accurately with our in-house finite element analysis.” “Trelleborg was able to fulfill the design and delivery process within four months – a record,” added Vincent Tan, sales and marketing manager within Trelleborg Offshore & Construction. Nguyen explained that a major benefit and cost saving for the Buoyant Tower design was that only one major construction vessel was needed for the installation procedure. “One vessel acts as both the heavy transportation vessel and the main construction vessel,” he said. “Traditionally fixed structures need a transportation vessel and an expensive derrick barge to perform heavy lifts for installation. This project was the first cantilevered float-over operation from a heavy transportation vessel. The motions of the transportation vessel and the design of the cantilever structure had to be thoroughly evaluated. “The structure is suited for water depths between 50 and 280 meters in any type of field with any type of reservoir characteristics – gas, oil or a combination,” he said. “The drilling and/or

production equipment can be modularised to adapt to the needs of the operation, and in this case the compliant behavior of the tower can resist seismic loads better than a traditional fixed platform. Plus, the Buoyant Tower can be relocated to new fields, requiring less overall capital expenditure to bring a field online.” The tower is designed on existing cell spar technology that has been proven in offshore productions worldwide. Due to the simplicity of the cellular components of the hull, it falls in the category of a "compliant structure" – one that accommodates the dynamic forces through flexibility instead of resisting the loads rigidly, thereby limiting the internal dynamic loads – and is less expensive than fixed platform alternatives. The system is well suited for regions with seismic activity, better than a traditional fixed platform. The LMUs – which consist of steel structures incorporating engineered elastomeric pads – make the transition possible by dampening the forces created, as the topsides' load is transferred to the tower. DSUs are also important components for safe float-over operations. The topside is loaded onto the vessel with a deck support frame and the DSUs are then placed between them to absorb the weight of the topsides. This enables the LMUs and DSUs to work together in synchronisation. When the heavy vessel starts to ballast, decompression will occur on the DSUs and vertical compression will occur on LMUs. Following the success of the Peruvian project, the design is being evaluated for use in all major regions of the world. ■

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Technical Focus

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Damen Shipyards Group is offering a fresh approach to offshore vessel customers. The company believes its global presence, combined with its continuing family-run ethos, can make a significant impression in a market characterised by niche yards.

Damen unveils its

offshore series

Damen’s oil spill response vessel.

ELIVERY OF WORLD Diamond, the first of six newly-designed PSV 3300 platform supply vessel to Norwegian owner World Wide Supply opens a new era in offshore for Damen Shipyards. One of five PSV variants available by Damen, the range is just one of six vessel types now being offered by the shipbuilder, which form the yard group’s new ‘Offshore Series’. The global group’s strategic ambition to challenge traditional offshore yards across a range of vessel types in this specialised market recently found form in World Diamond, the first of six Damen PSV 3300 vessels built for Norwegian offshore support company World Wide Supply. The platform supply vessel was constructed at Damen Galati (Romania) and entered service under Remøy Management operation in July.

Excitement Creative designer Gijs Lokker describes the PSV 3300 as “an elegant truck on the sea which has to be tough as well. The eye-catching, edgy lines and the distinctive yellow colour make the ship stand out from others at sea. The two nose holes on both sides at the front gives the PSV a tough and selfconfident look. The pride of the company is reflected by using the inclined line at the back of the accommodation - like a swan she will be proud

66 Oil Review Africa Issue One 2014

The global group’s strategic ambition is to challenge traditional offshore yards across a range of vessel types in this specialised market. to be on the sea to fulfill her duty and tasks.” A more functional description is provided by Mark Couwenberg, design & proposal engineer Offshore & Transport Damen Shipyards, who describes “a sleek bow, slender hull lines, and diesel electric propulsion with azimuth stern drives, all leading to a high cargo intake combined with low fuel consumption, not only in calm water but also in rough seas. The vessel features DP2 capability as well as newly designed anti-roll tanks and an optimised superstructure for crew comfort.” Both descriptions nonetheless convey the excitement Damen’s designers feel as the wellknown shipyard group builds on its past experience and extends its reach into an offshore shipyard scene. The 80.1 metre length World Diamond itself is a diesel-electric PSV, built to the Damen ‘E3’ formula of Economy, Efficiency and Environmental optimisation. Drawing a draught of 6.15 metres, the

vessel can carry loads of up to 1,500 tonnes on deck and is designed for challenging weather conditions. The versatile vessel can be adapted for oil spill response, construction, ROV and diving support activities, and for many other functions. Jan van Os, Damen product director Offshore, says: "We have already supplied 20 PSVs of various types and sizes into the market. With the PSV 3300 we’ve aimed for a 'workhorse', a PSV with excellent seakeeping qualities, low maintenance and fuel consumption and in line with the latest Clean Design and Environmental Protection requirements of the major classification societies.”

Optimised hull Slamming has been minimised through the new design, which results in improved comfort and safety for the crew, vessel and cargo. “The vessel provides a very safe working environment, especially on deck but also in all other working areas,” says Mark Couwenberg. “Additionally, there is a safe, sheltered foredeck. Particular attention has been paid to accommodation - designed in line with the 24/7 offshore industry; outfitting is according to high comfort standards, using warm, modern colours for interiors. Each cabin has access to the Internet, radio and television.” “The starting point for all of the vessels in the new Offshore Series has been conceiving the right

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Technical Focus

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Damen’s well stimulation vessel.

hull because this is vital in reducing fuel consumption,” says Mark Couwenberg . “Hull shape, coatings, the location of oil tanks, refrigerants, recovery of waste heat and engine emissions – all of these are part of the E3 concept.” Couwenberg explains. “We spent considerable time on CFD studies to investigate and simulate ship behaviour and optimise the hull shape. A model of the resulting hull has been tested at Maritime Research Institute Netherlands (MARIN) to verify the results. The slender hull reduces fuel oil consumption, not only in calm water but especially in rough seas. Smooth surfaces and a distinct lack of angles, lines and recesses also have a positive effect on the durability of coatings.” Damen’s five fresh PSV designs extend from vessels of 1,500 dwt to 6,500 dwt. As well as a range of multi-purpose vessels featuring shipboard cranes and a variety of pontoons, the highlights of the new Damen Offshore Series include: Construction Support Vessel: offshore oil, gas and wind fields need specialised vessels to install and maintain subsea equipment. The Damen CSV 8019 is designed with a large clear deck, a large accommodation area and can be fitted with ROVs, a 100 tonnes subsea crane, moonpool, heli-deck, etc. A larger vessel of this type is under development. Well Stimulation Vessel: increasing the production performance of deteriorated oil wells is often performed by old PSVs which have been retrofitted with the required pumping and mixing equipment. Damen has designed a versatile wellstimulation vessel in recognition of the fact that purpose-built vessels are increasingly coming to be seen as safer and more economical. The AHTS200: Part of the Anchor Handling Tug and Supply vessel category, offered from 70t bollard pull upwards, the 200t bp AHTS200 has been designed for water depths up to 3,000 metres. The vessel features a 670 sq m working deck, extensive winch lay-out, ROV functionality and can be used for subsea construction. Fast crew suppliers: More than 70 vessels featuring the unique Damen Sea Axe vessels bow ranging from 19 metres to 67 metres have been supplied. These vessels cut through waves maintaining speeds of up to 20 knots, reducing slamming and vertical acceleration by up to 75 per cent. The latest variant, a Twin Axe Bow version, the FCS 2610, is making an impact in the windfarm construction sector,

68 Oil Review Africa Issue One 2014

Our presence in the market has also been developed on the back of advanced modular principles that shorten delivery times. handling crew transfer in wave heights of up to 2.5 metres and operating at speeds up to 25 kn. Damen Offshore Carrier: a 7,500 dwt multipurpose vessel with heavylift, ro-ro and offshore installation capabilities. It features 65 days endurance, 2,300m2 of deck area, and deck strength of 20t/sq m. The vessel can be fitted with the Damen Deep Dredge system, for mining and dredging. The Offshore Heavy Lift Vessel 1800: a DP2 ship with two 900 t mast cranes, 3,100sq m of free deck space and 20,000sq m of adjustable cargo hold. It can work in water depths of up to 3,000 metres. Oil Spill Response Vessel: an increasing demand for vessels which are able to respond to environmental disasters is expected, especially after the Macondo disaster. Having built a number of dedicated oil spill response vessels, Damen is working on a new type for this market. But design prowess is not the only asset Damen is bringing to the offshore sector. The shipbuilder believes it also offers an approach that will spark a rethink in the way owners order, build and support their oil and gas industry support vessels. van Os says: “World Diamond opens a new chapter in our offshore strategy because it embodies the ‘Damen standard’ PSV for a market that is fast-changing. “Damen as a brand is widely known in other specialised markets. We have built more than 5,000 vessels since 1969 and turn out around 150 a year based on a reputation for quality, proven technology and the highest safety and environmental standards. Our presence in the market has also been developed on the back of advanced modular principles that shorten delivery times, sometimes even building to stock. In effect, we offer customised designs using standardised components.” Damen also operates a network of companies fabricating a variety of components for the

shipbuilding industry – nozzles, rudders, stern tubes, tunnels, anchors, chains, winches and gears. With yards in all parts of Europe, in Asia, Africa, South America and the Middle East, van Os emphasised the way Damen’s own facilities are close to all of the main offshore markets. Damen also operates 16 shiprepair and conversion yards worldwide, undertaking more than 1,000 repair jobs a year.

Financing Damen also operates its own service business unit, which is able to distribute ship plans digitally and takes responsibility for delivering spares, maintenance and crew training. The company even has its own ‘DAMOS’ software system to help plan and execute maintenance, available to Damen staff and clients’ vessels wherever they are active. Centralised control over remote operations is a feature of the offshore industry, a way of thinking Damen shares. “We believe offshore owners are entitled to the type of logistical support that only a group with global reach and capabilities honed in supporting merchant fleets and tugs worldwide can offer,” says van Os. “As well as our design and building expertise, Damen is an experienced project manager. We have delivered vessels to specification in locations where it has been necessary to build the slipway or even the shipyard itself. Through the Damen Technical Cooperation, we can even supply a prefabricated shipbuilding kit and can, on request combine this with expert assistance, training and back-up.” There are other benefits conferred by being a global group. “Because of our track record with financing institutions, Damen can offer assistance with all kinds of tailor-made financing solutions,” van Os says. “As far as shipbuilding is concerned, we have everything in house, from the very first conceptual design studies up to after-sales service that can be offered even beyond 20 years after delivery, and everything in between.” If scale is a plus, it is worth remembering that Damen remains a family-run business. The company believes that offshore operators will see significant benefit an approach that mixes the best of two worlds - global reach and the personal touch. ■

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Technical Focus

Chikezie Nwaoha recently interviewed Clifford Neal Prescott, executive director Offshore Technology Fluor Corporation, USA, on the subject of subea technology.

An industry perspective on

subsea technology W

ITH TWO-THIRDS of the earth’s surface covered by water, and the world supply of hydrocarbons being depleted onshore, the oil and gas industry is turning more often to the offshore environment. As hydrocarbon reserves are being found in progressively deeper water, the industry trend is to focus more upon subsea developments to lower the cost of production. Smaller, more widely scattered reserves, which were in the past uneconomic or too technologically challenging to develop, are now benefiting from higher oil prices and more advanced subsea hardware solutions and technology.

How has subsea technology evolved over the past decade? How is the subsea technology of today more effective/efficient than the technology of previous generations? The progressive evolution of subsea technology can be divided into three distinct phases: 1960’s – 1970’s: This was the period of early development and when initial concept selections were being made, but where both subsea system complexity and reliability were low. 1970’s – 1990’s: As initial subsea concepts were developed to commercial reality, there was a slow rise in system complexity but system maintenance reliability increased sharply as subsea technology matured. 1990’s – 2000’s: This period saw a rapid move into deeper water where higher reservoir pressures and temperatures were found, challenging subsea development and requiring advancements in technology. System complexity rose sharply and subsea system maintenance reliability plunged as a result as the subsea industry raced to meet this rapid move into deepwater. During the past decade, the subsea industry deemed the following top six improvements were needed for offshore production and, as a result, research and development has focused upon these areas: 6 Safety & environment 6 Efficiency 6 Cost 6 Accuracy 6 New technology 6 Reliability Safety scored the highest in the wish list of areas that were needed for improvement for offshore developments as there is now more pressure on offshore operators to improve

70 Oil Review Africa Issue One 2014

The Pazflor development plan is strikingly innovative, based largely on the installation of separation and pumping units on the seabed.

Safety scored the highest in the wish list of areas that were needed for improvement for offshore developments. awareness of personnel to adopt the personal responsibility for their actions. During this past decade, the top three items considered the most important in the prevention of offshore incidents and disasters are: * Best practice field development * Prevention and well control technology * Intervention techniques What are the major products available in market today in terms of subsea technology? The industry is becoming one that must address the produced water in order to extract additional reserves. Technology advances in handling, cleaning and disposing produced water will eventually allow production increases of hydrocarbons with clean reservoir water that may be injected into the sea without harming the environment. Subsea separation technologies have focused on: 6 Two-phase gas liquid separation 6 Water separation for injection use 6 Much higher oil in water content than discharge limitations

6 De-sanders and/or filters to remove suspended solids to sizes small enough for injection. Compact subsea oil/water separators and desanders for deepwater have been developed and are to be installed in the near future. There are multiple technologies in this area that are under development. Currently, subsea oil/water separation systems do not meet discharge limitations on oil and grease concentrations, however new technologies are being developed to meet required discharge limitations. When selecting a particular subsea technology, what are some key considerations an end-user should make to ensure success? Reliability should be considered the highest in the wish list of areas that would be needed for improvement for offshore developments, as it directly impacts both CAPEX and OPEX costs for a development. Some key considerations an end-user should make to ensure success are: 6 Monitoring and sensing will need to be sufficient to allow for proper control. 6 The system will need to include capacity for equilibration and up set overflow. 6 The use of desanders and hydrocyclones will be important to add in concepts. 6 A control system module will be included. 6 Architecture for discharge diffusion should be considered. 6 Options should consider minimal use of moving parts.

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In re-positioning the company for greater services, we recently acquired Fire Fighting Trucks, Emergency Medical Response Ambulances and other notable training equipment for efficient and professional service delivery. We offer the following courses at the center among others: TBOSIET HUET/SAS Basic Fire Fighting & Self Rescue Basic First Aid Offshore Safety Induction FOET

AED Advanced Fire Fighting Advanced First Aid IMIST STCW 95 PSCRB

COXSWAIN HLO Swing Rope EHS Fork Lift Crane Operator

OFFICE/TRAINING FACILITIES Offshore Safety Training Centre (OSTC) 58 Trans-Amadi Industrial Layout, Port Harcourt Tel: +234 803 312 9962, 0803 760 0151, 0809 990 1280 Email: tolmann@tolmann.com. Website: www.tolmann.com International Centres Texas Engineering Extension Services (TEEX) USA Survival Systems Ltd. Canada

Technology

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6 Process flow should consider dual trains for double 100 per cent capacity.

6 Hysys modeling to be done on process stream What are some best practices you can offer end-users in the areas of specification, installation and maintenance of subsea technology to ensure long-term performance? From a supply chain perspective, materials management and control from qualified suppliers, all the way from the mill or factory until the subsea component is installed for operation, is most critical to the success of subsea facility. Rigorous pilot development programmes, Factory Acceptance Tests (FAT) and Systems Integration Testing (SIT) by third party certification agencies and qualified internal Quality Assurance (QA) groups within engineering and operator organisations are necessary in the development of subsea technology to ensure the quality of subsea components used offshore. Are there collaborations between academia and industry in the implementation of subsea technology? One that will develop new theory or methodology, and also address a relevant industrial problem? As the subsea industry rises to meet the ever increasing challenges of technology development, it has been necessary to develop a stronger collaboration between academia and the industry. Towards this, the academia and industry are coming together to develop more resources and bring in innovation in the subsea industry. For example, in the USA, the University of Houston (UofH) has started the first academic programme at both graduate and undergraduate levels specifically for subsea. This is the first time an accredited undergraduate programme has been developed in the USA that aims directly towards subsea engineering. The focus is on standardising the curriculum by getting inputs from the industry with the goal of producing highly skilled and competent and universally accepted subsea engineers.

FMC’s testing loop for its electrocoalescer, which uses electric fields to encourage water-in-oil droplet growth and emulsion breakdown to enable effective oil-water separation. It is designed to be fitted into pipe spool upstream of the separator.

72 Oil Review Africa Issue One 2014

Cameron’s compact electrostatic separator allows rapid separation of oil from water in a subsea environment by reducing the entrained water.

Academia and industry are coming together to develop more resources and bring in innovation in the subsea industry. Instructors for this new programme have been drawn from professors at the university and senior industry staff from companies working in the subsea industry. The success of this programme has allowed UofH to expand it outside of Houston to other remote locations through on-line instruction. By forming such an alliance with wellestablished industry leaders such as Cameron and FMC, and with universities from around the world, such as Curtin University Australia, Federal University of Rio de Janeiro (Brazil), National University of Singapore, University of Aberdeen (Scotland), University of Bergen (Norway), and University of Stavanger (Norway), the objective is to combine a real world approach to teaching and research, in order to address the unmet demands in this emerging subsea technology. What are the plans for the future, from the industry stand point? Hot topics and challenges facing the subsea industry with respect to subsea separation and processing are: 6 Final lowest limits of acceptability are being reached by hydrocyclones and filtration 6 RO (reverse osmosis membranes) are not successful in oil industry due to oil clogging filters

6 Compact coalescers hold promise for a solution 6 6 6 6

for advances in subsea separation Discharge of sand is prohibited in most areas There is a continued need for high reliability Control and measurement are key requirements Verification will be most important to regulators

With respect to long distance subsea tie-backs, the following areas are receiving further development within the industry: 6 Wet gas compression 6 Electric trees 6 Downhole safety valves (DHSVs) 6 Controls 6 Electric power distribution.

Conclusion The overall outlook for the business is one of significant long-term opportunity. International oilfield service and equipment vendors could benefit substantially while exploration and production (E&P) companies will face economic challenges from working on increasingly capitalintensive deepwater projects. ■

References 1. Safety comments referenced from IQPC Offshore Safety Summit 2011, 28 February – 01 March, 2011, Aberdeen, UK 2. Figures 2 – 3, are referenced from the Research Partnership to Secure Energy for America, RPSEA, Report “Ultra Deep Water Discharge of Produced Water and/or Solids at the Seabed”, 09121-310001, April 24, 2012 www.oilreviewafrica.com

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Innovations

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Modular building rentals pave the way forward WITH A GLOBAL focus on the need to reduce carbon emissions and other pollutants, as well as limit the use of non-renewable resources, numerous projects in this sector have been initiated in South Africa where a high level of renewable energy potential exists. At present, the renewable energy independent power producer programme (REIPPP) in South Africa has 28 projects under construction and 19 more projects are expected to be added. Manufacturer and erector of prefabricated buildings, Kwikspace Modular Buildings, is playing a major role by providing temporary accommodation facilities in remote areas. Rentals have proven to be an ideal means amongst businesses of providing housing and office facilities where major projects such as these in the renewable energy sector are underway. The rental fleet may comprise office, ablution, kitchen, dining and dormitory units which are available for short and long term hire. Kwikspace, whose products are likewise less environmentally taxing than traditional structures and whose rental offerings consists of

74 Oil Review Africa Issue One 2014

Zozo Units, CI Parkhomes and Kwiktainer units, delivered a total of 42 rental units at the Letsatsi PV Power Station, where the erection of three office units measuring 604.8 sq m in total was required onsite. In addition, a rental building measuring 172 sq m was erected at the Kaxu CSP Power Station and similarly, a building of the same size was set up at the Khi CSP Power Station. Considering successes such as these, Kwikspace has emerged as a leader in the provision of rapidly deployed rental units in the renewable energy sector; however its products are by no means limited to this particular industry. Within the oil and gas industry, Kwikspace supplied 249 units including an office, change rooms, diners and ablution facilities for the Sasol shutdown 2013. In view of the state of the economy, the drastic increase in fuel prices and the current inflation rate, many businesses across the board are looking to cost effective housing and office solutions. For this reason, prefabricated buildings are a sought after option as opposed to

traditional buildings that have higher costs involved. As importantly, businesses are seeking the efficient completion of units so as to maintain and increase their profits by preventing hindrances in their business outputs. Due to the fact that prefabricated buildings are rapidly deployed, they are an ideal offering, particularly in instances where projects requiring units of this kind are anticipated to continue for less than two years. Whereas conventional buildings can take months to finalise, prefabricated units can be fully assembled onsite within 48 hours. Furthermore, the fact that buildings are manufactured offsite means that the completion of the project onsite is not as typically interrupted by weather elements, sick employees or equipment malfunctions that may be associated with traditional construction. Having already established rental branches in Johannesburg, Cape Town, Durban and Port Elizabeth, Kwikspace anticipates the opening of a branch in the Northern Cape so as to supply units to sites in the region most efficiently.

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Innovations

Multiple screw pumps on FPSO vessels DURING THE PAST five decades, the booming offshore activities of the oil & gas industry required new approaches to processing and transportation of the well streams from platforms and subsea fields. FPSO vessels offer an economical and flexible alternative to further develop remote fields without pipeline connection to onshore treatment facilities. FPSOâ&#x20AC;&#x2122; make it feasible to produce small oil fields and allow an easy relocation to another field. Flowlines and flexible risers connect drilling and wellhead platforms or subsea wells to the inlet manifold of the FPSO topsides. The well flow is boosted by single phase or multiphase pumps. Leistritz twin screw pumps of the L4Series are particularly suitable for this purpose. They can handle oil, produced water and gas at high flow rates and differential pressure. After entering the inlet manifold of the FPSO, the three phases are separated in the first stage separator. The separated gas is released to a gas treatment unit consisting of a compressor for either reinjection into the wells (gas lift) or into an export pipeline. The produced water is handled in the produced water system and the crude oil is directed to the second stage separator with an electric dehydrating system, which is used to reduce the remaining water content of the export crude oil to 0.2 to 0.5 per cent. Leistritz twin screw pumps of the L4â&#x20AC;&#x201C;Series serve as transfer and feed pumps within the system. The generally high chloride content of the produced water requires duplex stainless steel for the wetted pump parts.

Multiphase booster pump on a wellhead platform.

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Innovations

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Complete coatings package for subsea

Small-scale LNG unit from Dresser-Rand

INTERNATIONAL PAINT NOW offers a complete coatings package for subsea equipment which requires long-term barrier and corrosion protection. A range of coatings consisting of Interzone, Intertherm, Interseal and Intersleek products make up this package. “Some of these product ranges have been protecting subsea equipment since 1986”, explained Toby Stein, upstream market manager for International Paint’s Protective Coatings business. Equipment expected to survive maintenance free for many years and operate at low temperatures is usually protected with the surface tolerant epoxy product Interseal 670HS. For high temperature operating equipment or the need for higher film build, products such as Interzone 954 or Interzone 1000 are more commonly used. “Interzone 954 has a long track record in the subsea industry and was the product of choice for much of Total’s Pazflor subsea equipment”, explained Stein. As the subsea market evolves, new fields operating at higher temperatures will come onstream. For these elevated temperatures a lot of questions are asked about the compatibility of coatings with cathodic protection. International Paint has now completed a full set of high temperature cathodic protection testing on its subsea range. For elevated temperatures, the Intertherm range is best suited and most commonly selected. “Other coatings selected include Intersleek, which minimises marine growth build up and can offer operational efficiencies to subsea heat exchangers”, explained Stein. Now with a comprehensive product offer, as the subsea industry has evolved so too has International Paint.

DRESSER-RAND’S FIRST small-scale liquefied natural gas (LNG) plant, known as LNGo has successfully produced LNG. Dresser-Rand designed, constructed and commissioned this demonstration plant, which has reached a key milestone with the initial production of LNG. Extended performance and endurance testing is being initiated as the final step prior to full market release. "We are very excited about this technology for small-scale LNG production, which allows for very small stand-alone plants that are portable and can be moved to support changing requirements and needs,” said Vincent R Volpe, Jr, DresserRand president and ceo. “The standard LNGo plants are sized to produce approximately 2,800 litres of LNG per day. There is substantial Dresser-Rand scope potential in this offering, including our newly introduced MOSTM reciprocating compressor, Guascor engines, Enginuity control systems, and project management to integrate all of these and the process components into compact, portable packages.

Protective clothing and safety footwear PORTWEST IS A market leader in the design and manufacture of an extensive range of workwear, flame resistant clothing, safety footwear and PPE products. The company operates five ultra modern warehouses holding more than seven million units of immediately available stock. Family owned since 1904, their products are of guaranteed quality and are extensively tested and carry full CE markings from independent world-renowned testing institutions. On their stand B24 at Nigeria Oil and Gas, visitors can obtain their copy of the new Portwest brochure containing 214 new products. Most of which have been specifically designed for the African market. The new 400-page brochure is printed in 24 languages and showcases every stock product available from Portwest. The brochure is also available online at www.portwest.com. Portwest hold high stock levels in their state-of-the art distribution centres around the world and have a consistent quality expected of a premium European manufacturer. The company is committed to growing its business through excellent customer service and competitive prices. Due to the company’s rapid development in Africa, they are currently seeking a sales manager and distributors.

76 Oil Review Africa Issue One 2014

New gas generator line from Cummins GLOBAL POWER LEADER Cummins Power Generation has launched a new lean-burn gas generator set product line. The new 50 Hz products, which extend the capabilities of the existing QSV91G generator range, offer exceptional transient performance and improved fuel capability, allowing them to run on low methane number fuels and produce lower emissions. The new line marks the debut of a 2 MWe variant, alongside the improved 1,540 kWe and 1,750 kWe models. Primary applications for the new models include prime, peaking and combined heat and power (CHP), as well as continuous operation in island mode and standby power. Their robust load handling attributes and capability of running on pipeline and low methane number fuels down to 43MN make them ideal for remote locations where grid power is unavailable, such as mining, oil or gas fields, or in regions of the world where grid power is either unreliable or inaccessible. In keeping with Cummins’ commitment to a reduced carbon footprint to help meet worldwide emissions standards, NOx emissions ratings as low as 250 mg/Nm3 are available where required. In another stepup in performance, the new product line is designed to meet the ISO 8528 G1 standard.

Top quality work footwear SAUDI LEATHER INDUSTRIES Company Ltd (Slic) is a Saudi Arabian company that has grown to become a leading supplier of industrial safety, work and security/defense footwear in Saudi Arabia, the Gulf States, Middle-Eastern as well as African countries. Slic footwear is not just tough, but rather is among the most comfortable industrial footwear available. In fact, Slic's highest priority is on quality, and the company pays attention to apply international standards to produce the best quality product. It utilises the latest technologies to produce high performance work footwear with excellent quality and flexibility. Slic proudly meets the world's highest safety standards as a manufacturer. Yet it is committed to much more. Slic is dedicated to the production of work footwear with nothing less than legendary level of comfort as well as providing safety with composite toes. That is why Slic products offer a guarantee against manufacturing defects, for a six month period. Slic had also added a safety shoe for ladies. www.oilreviewafrica.com

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Technical Focus

Martyn MacDonnell, business development director, Paradigm Flow Services, discusses the need for a holistic approach to fire water systems.

No smoke without

fire

A deluge pipe with the nozzle removed showing the level of scale build up that can occur.

IL AND GAS assets in Africa are ageing, particularly in the more mature West African hydrocarbon producing regions. Operators want to maintain these assets as the fields are still viable, and many significant finds are still to be fully exploited, so attention needs to be focused on asset integrity to ensure platforms and FPSOs are fit for purpose. Safety is important for these assets and safety critical systems, such as fire water deluge systems, on older assets are of increasing concern. Corrosion and marine growth in fire water systems is an industry-wide problem, which can restrict water flow, thin pipeline walls and also cause blockages in deluge pipes and nozzles. Paradigm Flow Services effectively tackles this issue and seeks action over reaction for industry going forward. This phenomena can be exacerbated in warm water areas.

Donâ&#x20AC;&#x2122;t play with fire Being fixed at a high level, the offshore fire water deluge system offshore is usually not coated, or protected, and can go unnoticed for years. This, coupled with the aggressive and corrosive environment, results in the optimum situation for corrosion to occur. A poorly maintained deluge system that contains an abundance of rust, scale and marine growth deposits will, if used, cause that material to wash along the pipe to the deluge outlet nozzle and cause blockages. Some current methods of tackling the problem

78 Oil Review Africa Issue One 2014

It is essential to have frequent deluge testing to obtain acceptable results and to reveal any early warning patterns. are not ideal. There are limited options available at present; with either chemical treatment or high pressure retro jetting being the conventional methods. This can be time consuming and expensive, involving large resources, equipment and manpower. More importantly it can take the deluge system, and therefore production, offline for significant periods.

A holistic approach While immediate remediation of the problem at hand is obviously vital, ongoing operability and compliance is required to future proof the safety critical systems for the oil and gas industry in Africa going forward. Specific long term inspection and maintenance programmes help ensure deluge and firewater systems are correctly designed, engineered, tested and maintained. It is essential to meet the required level of deluge and firewater system technical integrity for preservation of life, and safety case compliance from start up to decommissioning. Without continual asset assurance, integrity issues of this nature can risk lives. A more holistic

approach incorporates auditing, risk assessment, hydraulic modelling and surge analysis and application of engineering knowledge and expertise to apply correct overall procedure and assist throughout design, installation and commissioning. As part of this overall remediation, Paradigm deploys unique technologies and methods in deluge preservation using mechanical micro-power and environmentally friendly chemical solutions used to tackle biofilm deposits in firewater ring mains. Both technologies can be used in live systems without the need for shutdown, which eradicates costly outages.

Quantifying the problem To ensure industry best practice standards are being maintained, an onshore health check can audit systems and procedures to validate compliance with design philosophy and the safety case criteria to meet requirements. Offshore, periodic wet testing will demonstrate how the level of water spray coverage achieved under test compares with the design coverage and minimum standards. Sometimes production units or deluge systems are upgraded or modified. On occasion the modification has not included an upgrade of the hydraulic model or relevant detail drawings. It is essential to have frequent deluge testing to obtain acceptable results and to reveal any early warning patterns. Wet test records will identify the extent and location of blocked nozzles. A simple trend analysis will allow a subjective review to

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Connecting your business. Wherever you are.

When it comes to staying connected, corporate customers worldwide rely on SkyVision, a leading provider of IP telecommunications solutions. SkyVision’s customized end-to-end solutions for the Oil & Gas sector offer a wide range of advantages: Enhanced crew welfare through reliable satellite connectivity for highspeed data applications, voice and video ÷ Ensured business communications between onshore and offshore teams Optimized business productivity with real-time interpretation of drilling data, for faster and more accurate analysis ÷ Guaranteed bandwidth necessary for real-time applications .SVIHS ZH[LSSP[L HUK ÄILY JV]LYHNL ^P[O seamless integration to the MPLS network ÷ Business continuity and disaster recovery assurance completely independent of terrestrial infrastructure Solutions for Maritime and Mesh networks Resilient design and Enhanced SLA

AFRICAN ICT IN OIL AND GAS VERTICAL MARKET PENETRATION LEADERSHIP AWARD

Technical Focus

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Recent projects

Fire main fouling found on an ageing asset.

The reliability of safety critical systems is high on the agenda for the continuing success of the oil and gas industry in Africa. show whether corrosion to fire water deluge pipework has become a safety issue, and steps can be taken by operators to eliminate this problem.

Technology behind safety Paradigm launched the Deluge Protect technology to combat corroded deluge systems. The process uses a unique a micro cleaning system which is deployed at the deluge nozzles and moves through the internal pipe work. The cleaning can de-scale and polish the pipes, giving a high quality clean, returning it back to its original internal condition. The cleaning system can navigate its way through bends and difficult access areas to target the blockages. The cleaning is carried out online and very quickly, with debris being flushed from the system and captured for analysis, all without the need for

costly platform shut downs. Paradigm then passivate the system with an environmentally friendly inhibitor to provide on-going corrosion protection. Another crucial element of maintaining the fire safety system is the fire water ring mains. This pipework which supplies the water to the deluge system can be overlooked and can be problematic to clean. Operators may think that dealing with corrosion in the deluge pipes will solve the visible problem. Pure-Flow is a chemical solution which can be injected into fire mains systems while pressurised, making it possible to deal with organic accumulation without shutting down operations for the first time. Paradigm has developed a unique method of generating the chemical solution in-situ which is then injected into the live fire mains in low concentrations through existing access points to create a circulation loop. The powerful, but environmentally friendly biocide then rapidly removes biofilm and marine growth deposits with no need for dismantling the pipework. The Pure-Flow solution degrades quickly into sea salt after use and is approved for use in environmentally sensitive areas.

Paradigm recently completed work for a major oil and gas operator to provide specialist internal cleaning of the fire main system and remove all growth and material from this aged assets. This had to be carried out while maintaining the fire water ring main system pressure at 6-13 bar so it could still be used at any time. The Pure-Flow solution was deployed through hydrant entry points to the system. Pure-Flow was used with flushing sweeps to effectively remove the marine growth. This process was used in conjunction with over board flushes and biodegradable gel sweeps for maximum remediation of the system. The work was completed within one month and wet deluge tests indicated a substantial increase in flow performance through the system from four litres/sq m/min to 35 litres/sq m/min.

Standing the test of integrity The reliability of safety critical systems is high on the agenda for the continuing success of the oil and gas industry in Africa, as without these lifesaving systems in full working order, there is a major risk to personnel. Many deluge systems in major African oil basins will have battled the elements externally, as well as salt water circulating internally, for decades. Therefore it is easy to see why corrosion and organic accumulations in these pipes can be a problem. Paradigm has been working with operators to develop a range of long life corrosion inhibitors. As part of the firewater deluge lifetime solutions service from Paradigm, there is also the Tri-Flow filtration system, along with bespoke chemical dosing packages. Filtration systems and chemical dosing packages can future proof the deluge infrastructure to ensure the system remains fit for purpose. The company also provides an on-call, fast response service team as required. This responsive action keeps the industry ticking over, but there is a pressing need for a more strategic and proactive approach to the growing need to tackle asset integrity. ■

Deepwater presalt logging technology HALLIBURTON HAS PROVIDED wireline services technology for two deepwater presalt exploratory wells in Angola for Cobalt International Energy. The wireline technology enhances the understanding of the rock and fluid properties of the formation, and enables the company to make informed decisions and minimise drillstem test risks. Combined with the standard suite of petrophysical tools, Halliburton employed its RDT reservoir description tool to collect formation pressure and samples over the course of three to four days. The tool collected reservoir formation pressure gradients, mini-drillstem tests with straddle packers, and fluid samples in a single run, saving time by working longer than conventional tools in this hostile environment. In addition, Halliburton’s new HRSCT-B hostile rotary sidewall coring tool was deployed on both rigs, taking samples at three

80 Oil Review Africa Issue One 2014

times the volume of conventional core samples for better lab results. This technology produces samples that are 38 mm in diameter and 61 mm in length, while eliminating the microfractures typical in percussion cores and reducing the potential for uncertainties. Rated to withstand temperatures up to 400°F, the tool saved considerable time over coring operations performed by previous service providers in some of the most challenging formations on earth. “Halliburton’s latest portfolio of technologies, designed specifically for the challenging and often hostile environment of deepwater exploration, performed exceptionally well and delivered key data for the analysis of these wells,” said Brady Murphy, senior vice president of Halliburton’s Business Development and Marketing. “We are proud to be a part of this exciting and new play in the presalt of Angola and with such an innovative operator as Cobalt.”

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Project Databank Compiled by Data Media Systems

OIL, GAS AND PETROCHEMICAL PROJECTS

Project Stubb Creek Field Total - OML 58 Upgrade Phase 1 Okwok oil field - OML 67 Mart Resources Umusadege Field Development YFP - Aje Blk OML 113 Chevron Nigeria Escravos Gas-to-Liquids (GTL) Project NNPC - Olokola LNG (OKLNG) Plant Brass LNG - Brass River LNG Plant Owowo Oil Field - OPL 223 Total - OML 99 Ikike Field Njaba Oil Field - OML 124 Flex LNG Storage and Offloading (FPSO) Afren - OPL 310 Development Total - Egina Field Development Ebok Development Oyo Field Development Southern Swamp Associated Gas Solution Project (SSAGS ) Chevron Texaco - Agbami Oil Field Development Okoro and Setu Fields Development Afren - OML 115 Development Ofon Field Development Phase 2 NNPC - Qua Iboe Power Plant Ministry Of Power Mambilla Hydropower Station NPA - Lekki Deep Sea Port NEPA - Zungeru Hydro-Electric Power Plant

Sector Oil Oil, Offshore Oil Oil

Facility Oil Field Development Oil & Gas Field Oil Field Development Oil & Gas Field

Budget 200000000 1000000000 400000000 500000000

Status Construction Construction Construction Construction

Offshore Gas

Offshore Platform Gas to Liquids (GTL)

10000000 1700000000

Construction 2004-Q4 Construction 2001-Q3

2015-Q1 2014-Q2

Gas Gas Oil Offshore Oil Offshore

EPC ITB EPC ITB Construction FEED Construction Construction

2005-Q1 2004-Q4 2005-Q3 2009-Q2 2008-Q1 2006-Q1

2017-Q3 2018-Q3 2015-Q3 2018-Q4 2016-Q4 2017-Q1

Oil, Offshore Oil Oil Oil, Offshore Gas

Liquefied Natural Gas (LNG) 20000000000 Liquefied Natural Gas (LNG) 3500000000 Oil Field Development 250000000 Offshore Platform 400000000 Oil Field Development 150000000 Floating Production 500000000 LNGP1 (Floating LNG Production) Oil & Gas Field 200000000 Oil Field Development 3100000000 Oil Field Development 450000000 Oil Field Development 1000000000 Gas Production 1000000000

Construction Construction Construction Construction Construction

2003-Q4 2007-Q2 2006-Q1 2011-Q1

2014-Q3 2017-Q4 2014-Q2 2016-Q3 2016-Q2

Offshore Oil, Offshore Oil Offshore Power Power Grid

Oil Field Oil Field Development Oil & Gas Field Offshore Platform Power Plant 3200000000

Petrochemicals Terminal Power Hydro Power Station

5000000000 Construction 200000000 Construction 150000000 Construction 500000000 Construction 20000000 Construction Engineering & Procurement 1350000000 1300000

Construction Construction

Start Date 2003-Q4 2006-Q1 1968-Q1 2008-Q4

1998-Q1 2006-Q3 2010-Q1 2007-Q2

Completion Date 2014-Q1 2014-Q2 2015-Q4 2014-Q4

2017-Q1 2015-Q4 2016-Q2 2015-Q1 2018-Q1 2018-Q1 2017-Q1 2018-Q1

Project Summary Project Name

Chevron Nigeria - Escravos Gas-to-Liquids (GTL) Project

Name of Client

NNPC (Nigerian National Petroleum Corporation) Chevron Nigeria Ltd

Budget ($ US)

Facility Type

Gas to Liquids (GTL)

Status

Construction

Start Date

Q3-2001

1,700,000,000

End Date

Q2-2014

Contract Value ($ US)

1,700,000,000

Location

Escravos, Nigeria

Award Date

Q4-2009

Project Backgrounds Chevron Nigeria Ltd, along with the Nigerian National Petroleum Company, is constructing the 34,000 barrels per day (bpd) Escravos Gas-to-Liquids (EGTL) plant in Escravos, Nigeria.

Project Status The EGTL plant is planned to be expanded 10 years after it is completed. The plant will use both Sasol Chevron's proprietary Fischer-Tropsch technology and Chevron's proprietary Isocracking technology. The plan will make use of the rich gas resources of the Escravos field, which can now produce 340mn cubic feet of dry gas per day along with 1,200 barrels of condensate and 8,500 barrels of LNG.

Sasol Chevron will work on the design and development of the EGTL, provide management, operating and technical services, and market products from the EGTL. In April 1988, a pre-feasibility study was started. A more in-depth engineering feasibility study, to confirm the design configuration and economics, followed. In July 2001, a Front-End Engineering and Design (FEED) study started.

S16 ORA 1 2014 Technology & DMS_Layout 1 2/6/2014 1:32 PM Page 83

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Technology

ORA 1 2014 Innovations Extra_Layout 1 03/03/2014 17:14 Page II

Rigless platform well abandonment CLAXTON ENGINEERING SERVICES Ltd, a member of the Acteon Group’s risers, conductors and flowlines business, has celebrated the 10th anniversary of its success with the world’s first rigless platform well abandonment and continues to set new standards in engineering innovation. In the 10 years since its feat at the Perenco Well A1 in the North Sea, Claxton has become the North Sea’s preeminent riser supplier and launched an expanding range of product, process and running tool innovations. The company has also been involved in decommissioning more than 60 North Sea platform wells, in most cases without using a drilling rig or lift vessel. In total, the Claxton decommissioning tooling spread has been used on more than 260 successful well abandonment and conductor removal projects. Claxton has also achieved significant geographical expansion since 2003, having opened new facilities in Norway, Singapore and the Middle East. Today, the company can select from more than 4,000 items of rapid call-off stock and swiftly design new components to meet urgent operational challenges. For that first rigless abandonment project, Claxton used a custom conductor reaction recovery system designed and manufactured specifically to interface with the Leman platform and to retrieve and handle well trees and tubulars. Its full casing recovery package was also required. The Sabre abrasive water jet cutting system played a key role and has since been used on many significant abandonment campaigns. When the Leman abandonment was completed, calculations showed that the overall cost of the project, as conducted by Claxton and Acteon sister company, InterAct, was less than 50 per cent of an equivalent rig-based solution. The Perenco Well A1 proved to be a gamechanger with the introduction of pioneering technical solutions that have since become commonplace.

II Oil Review Africa Issue One 2014

Emergency components for Gabon oil facility MALONEY METALCRAFT HAS stepped in to redesign and deliver emergency components for Shell’s Koula oil facility in Gabon, Africa, after parts failures led to the temporary shut down of the facility. Maloney Metalcraft received the call when Exterran – the company operating the facility – discovered fire tube failures on site. The company has now been commissioned to redesign and manufacture firetubes for the site’s free water knockout vessels on a fast-track delivery schedule, as well as providing obround gaskets for the existing heater treater firetubes, which will enable the site to return to operation more quickly. Austen Adams, managing director at Maloney Metalcraft, said: “Firetubes are key components in any oil facility and, without them, the site can’t operate safely or effectively. “While it takes a certain amount of time to redesign, manufacture, ship and install components to Gabon, our design team has an excellent track record in the industry and was able to return new drawings on the same day the enquiry was received. “Our supply chain expertise also meant we were able to source and order the required materials on the same day, allowing them to be delivered and work to begin as quickly as possible. With the facility producing somewhere in the region of 25,000 bopd, every lost day of operation is expensive so the ability to provide a quick turnaround was an important consideration when sourcing the parts.” While the firetubes themselves will take 12 to 13 weeks to deliver, excluding works, this represents a fiveweek improvement on previous early delivery commitments. Similarly, Maloney Metalcraft was able to mobilise its excellent supply chain connections to provide a sevenday turnaround for the new obround gaskets, rather than 28 days quoted elsewhere. Austen continued: “The team is now working hard to incorporate design improvements such as temperature sensors and water-jet spray systems into the firetube designs, which should help optimise their performance while maintaining the low-tech simplicity of the site.”

Sustainable water treatment solution BAKER HUGHES AND DuPont Chemical Solutions have announced a strategic arrangement aimed at bringing a more sustainable water treatment technology to the oil and gas industry. Baker Hughes will use the chemical compounds and generators from DuPont, as well as their expertise in the application of chlorine dioxide (CIO2), in conjunction with Baker Hughes' H2prO water management service to augment its pressure pumping operations. The co-operation between Baker Hughes and DuPont will lead to industry-leading best practices for water treatment and knowledge sharing between the two companies. CIO2 is used to treat water in the pressure pumping process. While this compound is in its infancy in the oil

and gas industry, it has been used for more than 60 years in municipal drinking water, food processing and industrial cooling applications. Process water in oil and gas operations is treated to prevent the growth of bacteria and other organisms to maximise the performance efficiency of wells and minimise issues such as souring, fouling and corrosion. It allows for precise dosage, requiring the use of much smaller quantities of biocide compared to other treatment options and is EPA drinking water approved, providing greater environmental sustainability. Using this DuPont chemical compound, the water used on pressure pumping can be treated on-site and reused, the company sources said.

JSP’s online verification system JSP HAS INTRODUCED a unique online checking system for each and every one of its Mk Evolution safety helmets. JSP is the first PPE manufacturer to offer this exciting new tool, which enables quick and straightforward tracing and validation of its products and their DNA. JSPCheck allows end users to verify the authenticity of their JSP head protection in less than two minutes. It gives the wearer complete confidence in the origin and quality of their helmet. JSPCheck uses the helmet's unique individual manufacturing barcode to access the full product traceability system operated throughout JSP’s production cycle. Each barcode reveals everything about the helmet’s DNA, including materials used, machine settings, batch control and testing information, as well as pinpointing the place, date and time of manufacture of the helmet to the second, making every JSP helmet unique with its own personal identity.

Performing the JSPCheck is quick and easy. The user simply enters the helmet’s model, colour, serial number and date of manufacture – all readily available moulded into the underside of the peak or on the manufacturing barcode – on to JSP’s dedicated website www.jspcheck.com. After clicking ‘verify’, they will receive JSP’s response in their inbox in less than one minute. The check can be performed on any PC, laptop, tablet or smart phone from anywhere in the world. JSP has total control over the production of all its safety helmets and operates a strict batch testing system. www.oilreviewafrica.com

ORA 1 2014 Innovations Extra_Layout 1 03/03/2014 17:14 Page III

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Technology

ORA 1 2014 Innovations Extra_Layout 1 03/03/2014 17:14 Page IV

Microseismic surface acquisition system

UPS system solutions for offshore platforms

SCHLUMBERGER HAS INTRODUCED the MS Recon highfidelity microseismic surface acquisition system. This new system for surface and shallow grid microseismic surveys provides improved imaging of the hydraulic fracture geometry by optimising the microseismic signal quality. “The new microseismic surface acquisition system addresses the challenges of detecting small microseismic signals emitted during hydraulic fracturing at the surface and near-surface locations,” said Joseph Elkhoury, vice president and general manager, Microseismic Services, Schlumberger. “The MS Recon system improves signal-to-noise ratio during acquisition enabling the detection of many more microseismic events than conventional systems. This provides our customers with a better understanding of their stimulation operations, allowing them to optimise completion

AN UNINTERRUPTIBLE POWER supply (UPS) is mandatory on oil rigs First and foremost this is because, for safety reasons, the signal lighting must be operational at all times. Complete blackouts or malfunctions in the mains power supply, such as frequency fluctuations or overvoltages caused by lightning strikes, must be safely bridged on oil rigs. Above all, functioning signal lights are not only essential for smooth operation on the rig, but also for the safety of all nearby ships and aeroplanes. Therefore, the position lights must not fail under any circumstances. The chargers for UPS batteries must be able to function in extreme heat when installed in the MENA region. R Stahl provides UPS for hazardous areas which ensure the safe operation of systems that require 100 per cent availability. The company provides solutions for such environments, placing battery chargers in the largest of its available CUBEx enclosures and utilising several special features to ensure heat dissipation. These include a patented cold plate technology, a heat sink attached to the side of the enclosure and a stainless steel fan for hazardous areas with a motion monitoring function. Forced cooling is controlled and monitored by an intelligent control system. Explosion protection for Zone 1 is ensured by a special feature which is unique to R Stahl UPS Systems: an integrated UPS guard monitors the functions of the battery charger and the batteries, which are also installed within the zone. R Stahl is able to implement very compact, weight-optimised systems within limited installation spaces on offshore platforms. All outside metal parts of the seawater-resistant CUBEx enclosures are made from SS316 stainless steel. This material requires no further surface treatment for uses in maritime environments. R Stahl offers adaptable UPS units that are assembled from a modular design kit and also provides a wide range of explosion-protected enclosures.

The MS Recon high-fidelity microseismic surface acquisition system.

design and potentially increase production.” The microseismic system features an industry-first proprietary geophone accelerometer and ultra-low noise electronics to produce the widest range of signal detectability in the industry. The nodal-based wireless acquisition system also provides customers increased flexibility in designing and deploying the surface and near-surface arrays. GPSsynchronised data are acquired continuously and transmitted to a real-time operations support center, providing customers with data processing and expert interpretation.

Unique Seaflex facilitates underwater lift for Lundin FPSO mooring retrieval UNIQUE SEAFLEX, A Unique Maritime Group company which is one of the world’s leading integrated turnkey subsea and offshore solution providers has facilitated one of the most complex underwater lift projects. The project was carried out for Lundin Tunisia BV in approximately 300 metres of water. Lundin Tunisia BV is a 40 per cent stakeholder in and operator of the Oudna field 80 km offshore Tunisia. Abandoned by Shell in the mid-80s when relatively small discoveries in relatively deep water were still considered unviable due to lack of pipeline infrastructure, with the advent of the FPSO came a new way to make such fields viable. Oudna was accordingly demothballed a decade or so ago, and serviced until recently by the FPSO Ikdam. At end of the field’s viable lifecycle, the problem arose of how best to decommission the FPSO - and in particular how to take care of the delicate operation of disconnecting several hundred tonnes worth of moorings without incident. After a series of technical discussions between Lundin and Unique Seaflex, it was determined that a combination of 41 different-sized parachute-style Air Lift Bags (ALBs) up to 50t in size were needed to be installed on the moorings to reduce their tension to a manageable level. The deck-mounted linear winch was rated to 450t, but because the three mooring anchors were extremely well embedded in the sandy seabed, the effective tension on the chafe chain

IV Oil Review Africa Issue One 2014

would have increased by an estimated 1.5 to two times the original 400t. The use of Unique Seaflex ALBs allowed the deck-mounted linear winch to pull on the chafe chain so as to slacken the connection to the Ikdam deck hook. The connecting shaft was then pulled out from the wren hook and by doing so, freed the chafe chain thus allowing the mooring system to gently be lowered on a wire, thereby detensioning the system. Once released, the chafe chain was transferred to a nearby AHTV which held the de-tensioned mooring system whilst the Ikdam FPSO disconnected. Along with the fleet of ALBs, Unique Seaflex also supplied all the heavy duty shackles and lifting slings as well as an air inflation/deflation system and a topside technician to oversee the operation and ensure the safest and most efficient use of the package of equipment. Commenting on this occasion, Graham Brading, managing director at Unique Seaflex who was instrumental in leading the Unique Seaflex effort on this project proudly said, “Whilst we do supply standard buoyancy products to solve standard buoyancy problems, Unique Seaflex is always dedicated to bring out world-class solutions when clients describe their operational challenges and ask us to work with them to develop methods which will deliver them the best possible technical, operational and commercial outcome.”

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ICT

BP in Cairo is using free space optics (FSO) for reliable high-speed connections between its various offices. However, as Vaughan O’Grady explains in the second part of his discussion of the subject, the need for ever-higher volume and faster links — from both businesses and consumers — is driving growth across all forms of communications media.

From the wellhead to

the rooftop: part two I

N THIS TWO-PART discussion of wireless communications we have focused on free space optics (FSO), which uses infra-red laser technology to transmit data. It’s a technology that BP is using to transmit high-speed data between a number of its offices or buildings in Cairo. In this case the advantages of FSO over other wireless technologies — it is usually licence-free and spectrum is uncongested — outweigh the disadvantages — most notably the need for line of sight transmission. In any case line of sight can be achieved by installing equipment on rooftops from which data can be transmitted across a largely unimpeded space. Nor are thick fog or heavy snow — which can limit FSO — likely in much of the Middle East and Africa.

All a matter of physics Equally important, FSO is not affected by rain, which can be a problem for a number of technologies (readers of our features on satellite communications may remember that Ka band can be interrupted by West Africa’s monsoons). It’s all a matter of physics, which is why no wireless technology is totally reliable and also why companies like Wireless Excellence work with a number of them. As Stephen Patrick, the CEO of Wireless Excellence Limited, a leading designer and manufacturer of professional wireless products for a wide variety of applications, says, “There isn’t just one technology that just works and one that doesn't.” Wireless Excellence, through its local partner, supplied the FSO system that BP uses. However, while FSO may be the ideal choice for wireless, why did BP not go for wired? Fibre, for example? “Fibre is a perfect medium,” Patrick agreed. “When it’s installed and not interrupted you have a piece of glass that carries gigabits, even, terabits.” The trouble comes when you have to dig the street up — and get permission to do so. The upfront costs can be huge. And if you move offices what do you do with the cable? If you’re using FSO, of course, you just take your boxes and reinstall them. Patrick added, “Apart from the disruption caused to traffic and other street users, there will be pre-existing underground services, ducts, drains and other pipes which have to be worked around. And there is always the very real risk that subsequent work by other providers digging in the same locations may break.” Of course, Patrick adds, “Diverse resilient media is always a good thing to have in any network – wired or wireless.” That is, if the rooftop connection

84 Oil Review Africa Issue One 2014

Line of sight can be achieved by installing equipment on rooftops from which data can be transmitted across a largely unimpeded space.

A private fibre system just isn’t possible in Cairo. is undermined the underground connection probably won't be, and vice versa. But a private fibre system just isn’t possible in Cairo. In any case, BP has appropriate back-up for its FSO system in the shape of lower-speed leased lines, just to keep basic services ‘up’ should the high speed gigabit FSO network experience any downtime, such as planned maintenance. FSO also involves a financial incentive for a corporate customer. Rather than a lease on its balance sheet as an ongoing loss every month it is buying an asset. ”That’s a capital purchase,” Patrick explains. “They own the boxes — a tangible asset — which increases the net worth of company. Leased lines do not.” Of course what the BP offices are transmitting to each other may come to the FSO boxes from undersea cable, the PSTN’s own fibre links, a dedicated circuit, satellite, you name it. The point is that when it is passed in between buildings the wireless connection needs to be able to handle

high speed and high volume in order to cope with the sort of data that could be involved. With FSO you have up to a gigabit a second to play with. So, Patrick says, “What can a gigabit do for you?” Answering his own question, he continues, “It can connect thousands of people — not just a few people in a branch office. And these are big BP offices.” Would that include a high definition rich multimedia file or high-resolution photography of a wellhead? “You could share extremely rich multimedia content instantly without slowdown. That gigabit is the same speed that you have in your core switch in your network. It’s the same speed coming out of the server where that data is. We're not providing a bottleneck. So the user who’s in the building without the wireless is having the same speed experience as the guy who's at the other end of the wireless link.“

Demand for wireless alternatives growing Demand for wireless alternatives is unlikely to slow down. After all, everything now goes down one channel. “We used to sell products that had 100 megabits of data and a side channel of two megabits to the telephones. You knew from installation that one lot would be plugged into an

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ICT

S17 ORA 1 2014 ICF Feature_Layout 1 2/7/2014 2:37 PM Page 86

Ethernet switch for LAN and the second lot would be plugged into a phone exchange for the voice and those would be entirely separate systems. That’s no longer the case. “ Now voice (over IP), internet, CCTV cameras and more can all be bundled together. “In essence we’re the providers of transparent fat pipes and users use them for all sorts of diverse things but I think it’s fair to say that everything these days is being put down a pipe.” That doesn't just refer to the traffic but how it is managed and used; therefore quality of service [QoS: minimum requirements on all the aspects of a connection], security, VLANs, VPNs and various other needs may have to be accommodated.

Network operators facing huge challenge

The reality of modern communications: higher volume and faster links are essential.

And the amount of that ‘everything’ will grow. Patrick speaks of one East African mobile operator that coped fairly well with traffic volume for years, much of which could be backhauled comfortably around the network by a modest provision of wired or wireless link. Then the SEACOM undersea fibre optic link arrived and enabled high capacity communications. When people realised they could look at YouTube on their phones, bandwidth shot up, and congestion has followed. However, as Patrick says, “Globally, all network operators are facing a huge challenge: You can’t put the genie back in the bottle.” And that is the reality of modern communications: higher volume and faster links are

essential — and not just for mission-critical purposes of the sort BP can expect. Everyday consumers also want more from their providers. FSO, microwave, cellular, fibre and satellite and many other transmission media are all part of that provision in an increasingly connected world, whether for the oil and gas business or for the smartphone user on a street in Lagos or Cape Town. ■

Emerson launches enhanced reservoir modeling software EMERSON PROCESS MANAGEMENT has released Roxar RMS 2013, the latest version of its reservoir modeling software. RMS 2013 now comes with model driven interpretation capabilities and new, innovative solutions for seismic interpretation that are tightly linked to geological model building and provide users with a full seismic to simulation workflow. RMS 2013’s model driven interpretation enables users to not only create the geological model while conducting seismic interpretation, but also capture uncertainty during the interpretation. This ability to provide users with unique tools for quantifying geologic risk early in the interpretation process will lead to better decisionmaking and improved investment returns. Rather than creating one model with thousands of individual

measurements, with RMS 2013 modelers create thousands of models by estimating uncertainty in their interpretations. The software then generates statistically significant ensembles of models based on these probability distributions providing immediate value to the geoscientist. For example, uncertainty maps can be used to investigate key risks in the prospect or areas can be quickly identified for further study. By capturing uncertainty at the beginning of the geoscience workflow, operators gain the best possible picture of their subsurface risks. Kjetil Fagervik, managing director of Emerson’s Roxar Software Solutions. concluded, “RMS 2013 provides the user with a more complete representation of the data in less time.”

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