West Africa's new oil province
Fresh ideas on west Africa's geology could open up a new oil province stretching across four countries, Martin Quinlan writes
KOSMOS Energy discovered the Jubilee oilfield in an unpromising deep-water area off western Ghana in June 2007. This summer, Anadarko Petroleum – which had worked closely with Kosmos, a small US firm, on the Jubilee well – discovered hydrocarbons with the first deep-water well drilled in equally unpromising Sierra Leone. Linking the two finds, more than 1,000 km apart, is a new interpretation of west Africa's petroleum geology.
The discoveries raise the prospect of a new oil province in the west African transform margin – an area between two tectonic plates – which extends nearly 1,500 km along the coast from eastern Ghana, across Ivory Coast and Liberia, and to the west of Sierra Leone (see Figure 1). In view of the size of the area and the number of prospects already identified, forecasts for the new province's potential extend skywards.
The west African offshore is far from undrilled – international majors and smaller firms have held, and relinquished, licences all along the coast since Nigeria's first discoveries were made, 50 years ago. But, according to Kosmos, they were looking for the wrong type of structure. The company – set up by the geological team of Triton, after that firm was acquired by Hess, and backed by private-equity houses Warburg Pincus and Blackstone – makes a speciality of its original thinking on geology.
Kosmos says most explorers looked for structural traps because they can be identified most readily from seismic surveys. But the area's structural traps tend to be small and most of them have already been drilled, so Kosmos decided to search-out more subtle traps – stratigraphic traps, in which oil is held in place by changes in the porosity and permeability of overlying rocks, and combination traps with stratigraphic and structural features. The firm also wanted to concentrate on deep water because reservoirs would be in upper cretaceous rocks – of better quality than the lower cretaceous structures nearer the coast – and because that is where it thought the source-rocks lay.
Kosmos recognises this was a high-risk strategy – but it found the Jubilee field with its first well, Mahogany-1, drilled into a stratigraphic trap in a large turbidite fan system, in upper cretaceous rocks. The structure is large, the wells are high-flowing and a fast-track development programme is targeted to produce first oil at the end of 2010 (see p18).
With the strategy validated, Anadarko – a partner in Jubilee and, because it had a drillship available, the driller of the Mahogany-1 well – searched its own licences for similar cretaceous fan structures. In the summer it drilled Sierra Leone's first deep-water well into the Venus structure in its SL6/07 licence, announcing in September a discovery showing a net hydrocarbons zone nearly 14 metres thick. Interests are Anadarko, 40%, Repsol, 25%, Woodside, 25%, and Tullow Oil, 10%.
"With Jubilee on the east and Venus on the west, we have established bookends spanning around 1,100 km," Anadarko said. The firm has operating or participating interests in 10 licences in Sierra Leone, Liberia, Ivory Coast and Ghana, and says it has identified more than 30 prospects and leads to follow up. Geologists say the transform margin's turbidite fan systems can be tens of kilometres wide and hundreds of metres thick, giving the potential for very large fields.
In come the majors
Much of the transform margin area is held by small or medium-sized companies, with Anadarko and Irish-UK Tullow having the largest licensing positions over the four countries – but the majors have scented oil and are moving in.
Kosmos, which sees itself as a pure exploration company, is selling its holding in the unitised Jubilee field – and apparently is including its interests in the two licences surrounding the field, where several other discoveries have been made. ExxonMobil, BP and China National Offshore Oil Corporation (CNOOC), possibly in partnership with state-owned Ghana National Petroleum Corporation (GNPC), were vying for the interests at press-time.
The Jubilee area was also on Eni's radar, although the Italian firm had long since given up its own exploration work in Ghana. It acted quickly in September to take a significant position, acquiring majority interests in two licences to the east and southeast of Jubilee. Vitol had held the Offshore Cape Three Points and Offshore Cape Three Points South licences in a 90:10 venture with GNPC and made a discovery with its first well in that month. Sankofa-1A, drilled 38 km east of Jubilee, showed 33.1 metres of gas column and 3.2 metres of oil, in a Jubilee-type upper cretaceous structure.
Eni has taken over as operator for both licences, interests becoming Eni, 47.22%, Vitol, 37.78%, and GNPC, 15.0%. GNPC has the right to back-in for an additional 5% in the Offshore Cape Three Points licence, in which the discovery was made, and for an additional 10% in the other licence.
Tullow is the operator for the Deepwater Tano licence, extending west from the Jubilee unitised area to the border with Ivory Coast and holding the Tweneboa discovery, and also for the Shallow-water Tano licence. South of Jubilee, Hess holds the large Tano Cape Three Points licence. To the south and east of that, Vanco is operator for the Cape Three Points Deepwater licence where the first well, on the Dzata prospect, was due to spud by the end of the year. Seismic work has shown at least nine prospects, Vanco says. Vanco holds 28.34%, joined by Russia's Lukoil with 56.66% and GNPC with 15.0%.
Lift for Ivory Coast
Off Ivory Coast, Vanco holds the key CI-401 area, the eastern border of which is only 5 km from Tweneboa and only about 25 km from the nearest part of Jubilee. The firm also operates the CI-101 licence, west of CI-401. West of this is the Tullow-operated CI-103 area, where "analogous Jubilee prospects" could be drilled next year. The UAE's Al Thani operates CI-105, further west.
Neighbouring Liberia has seen little exploration in recent times and its deep water is undrilled. The government held a licensing round in 2004 and awarded three blocks off the western part of the coast, now of great interest following the Venus find in adjacent Sierra Leone waters. Repsol took LB-17 and LB-16 and Woodside took LB-15, but, following farm-ins, all three licences are now held by Anadarko with 40%, Tullow with 25% and Repsol and Woodside with 17.5% each. Seismic has been acquired and was being interpreted last month.
Immediately over the border in Sierra Leone waters lies Anadarko's SL6/07 area, which was earlier held by a Repsol-Woodside venture – the two companies acquired several blocks in a licensing round in April 2002. The operatorship of another block awarded in that round, SL4, passed to Australia's Elixir in March 2008. The company has carried out seismic work but activities have been held up by a financial dispute with a partner, which led to arbitration this spring. Before Anadarko's, only two offshore wells, both in shallow water, had been drilled in Sierra Leone, both in the 1980s.
In addition to the companies mentioned, several small firms are understood to hold licences in the transform margin area – the list includes Afren and Young Energy in Ghana, and Edison, Afren, Oranto and Yams Petroleum in Ivory Coast. Yams, a local company, holds a large area immediately south of Vanco's CI-401, and, therefore, close to Ghana's discoveries. Many of these small companies are said to hold 100% interests and are likely to want farm-in partners before they drill, so a considerable amount of corporate activity is likely.
Activity in Guinea
Anadarko's Sierra Leone discovery also seems to have stirred activity in Guinea, its westerly neighbour, where a small US company, Hyperdynamics, holds a licence covering the entire offshore – an 80,000 square km area extending out from the coast by 150-370 km. The company, which apparently has no other operations, has been trying to find a farm-in partner and in October signed an outline agreement with the UK's Dana Petroleum. The agreement envisages Dana taking a 23% interest in the licence for $20m, and gives Dana the right to negotiate for an additional 27% if Hyperdynamics has not brought in another partner by the end of November.
Hyperdynamics has to relinquish 64% of its licence area by the end of the year. To determine the best parts to retain, the firm commissioned 9,000 km of 2-D seismic from Norway's Bergen Oilfield Services at a cost of $10m, and also an oil seeps study from TDI-Brooks, with work on both having started in October.
Oil and gas discoveries have been made in the shallow-water areas of Ivory Coast and Ghana – but, according to some geologists, the source-rocks for them lie under the deep waters of the transform margin. A few fields have been brought into production.
Off Abidjan, Ivory Coast, is the Espoir field, discovered and produced by Phillips in the 1980s before being abandoned. Canadian Natural Resources (CNR) redeveloped East Espoir with a floating production, storage and offloading (FPSO) vessel, restarting production in 2002 and connecting-in the West Espoir field in 2006. The two fields are capable of producing about 50,000 barrels of oil-equivalent a day, but output has been constrained this year by an FPSO upgrade.
Just south of West Espoir – but in water 970 metres deep – is CNR's Baobab, brought on stream through an FPSO in 2005. Baobab production built up quickly to 60,000 b/d, but then declined sharply as the result of well failures. CNR is redrilling and gravel-packing the wells.
West of Espoir are the Lion and Panthère gas and oil fields, also discovered by Phillips and now, after several changes of ownership, operated by Afren. The fields flow just under 1m cubic metres a day of gas and 1,500 b/d of liquids to an onshore processing plant. The Foxtrot gasfield, in which the state's Petroci has the largest interest, lands through the same pipeline. Afren holds another shallow-water licence to the east where it is evaluating three other early discoveries, Kudu, Eland and Ibex, for production.
In Ghana's shallow waters there is the Saltpond oilfield, which has passed through many hands since being discovered in 1970 and has failed to reach production expectations. It is now held by GNPC and flows about 600 b/d. GNPC also holds the North and South Tano offshore fields, which it plans to develop to flow small volumes of gas and oil.