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Further finds needed in Ghana's offshore

Exploration and production projects are being fast-tracked

Last September's resolution of a maritime border dispute between Ghana and Côte d'Ivoire has triggered a flurry of offshore activity both on existing developments and in the acquisition of new acreage. But more exploration is needed if the country is to continue expanding oil and gas production.

The proposed entry of ExxonMobil into deepwater exploration, announced in February, is perhaps the most significant manifestation of renewed interest in the Ghanaian offshore. Having had to abandon efforts to acquire a stake in Tullow's Jubilee field project in 2010, the supermajor now wants in again, lining up a petroleum agreement for the Deepwater Cape Three Points block, once held by Lukoil. By early April, the government was still considering approval for the deal, which it said would be fast-tracked.

Deepwater Cape Three Points is located about 90km (56 miles) off the coast, covering some 1,480 sq km, with water depths of 1,550-2,850m. The US company will hold an 80% stake in the licence.

Exxon was also rumoured to be interested in Hess's operator stake in the Deepwater Tano/Cape Three Points (DWT/CTP) block, but that was snapped up by Norway's Aker Energy, also in February. That deal, worth around $100m, is also awaiting government approval. Aker Energy is taking a 50% stake in the block, which covers some 2,000 sq km and is estimated to hold 2C resources of 550m barrels of oil equivalent, with potential for another 400m barrels, according to the firm.

The DWT/CTP deal is significant because the acreage abuts Ghana's maritime border with Côte d'Ivoire. The boundary is now legally fixed following a ruling by the United Nations-backed International Tribunal for the Law of the Sea (ITLOS) in September, bringing to an end a lengthy dispute between the two countries.

"The ITLOS decision removed an extra layer of above-ground risk in Ghana," said Tunji Alli, a West African regional analyst at consultancy Wood Mackenzie. Uncertainty surrounding the border dispute had held up a number of investments in the western part of offshore Ghana. With the issue resolved, the taps have been released.

Revitalised project

Hess's efforts to develop its DWT/CTP discoveries were delayed partly by the border dispute, but also by low oil prices after 2014 and, more recently, by the company's decision to sell its African assets. Hess had formally put its development plan for DWT/CTP on the backburner just before it sold to Aker Energy.

But the acquisition has revitalised prospects for the project. Aker Energy said it expected to provide its own development plan to the government in the second half of 2018, with oil possibly flowing by 2021. The Norwegian firm has said it wants to implement a fast-track first phase, targeting around 400m barrels.

At the time of the acquisition, Aker's chief executive Oeyvind Eriksen likened DWT/CTP to the Johan Castberg development in offshore Norway, as both could break even at an oil price of less than $35/b.

While Aker Energy is a new face in Ghana, Kjell Inge Røkke, its controlling shareholder is not. In 2014, his company TRG—which owns half of Aker Energy—acquired a stake in South Deepwater Tano, a 3,500-sq-km block that lies directly to the south of DWT/CTP, through an investment in Petrica Holding. If seismic being acquired there yields exploration targets, the company expects to tie them in to any development on the neighbouring block.

Greater Jubilee proceeds

Other developments are also moving ahead. In October, the government approved the Greater Jubilee Full Field Development Plan, according to operator Tullow Oil. That established a price for gas sales and paved the way for fresh drilling in the first half of 2018, which aims to bolster reserves and maintain output from the country's first major oil project.

Jubilee currently produces oil via a 120,000-b/d floating production, storage and offloading facility. However, repairs to the FPSO's turret bearing, which enables the vessel to rotate around the drilling equipment as weather conditions change, have affected production over recent months, keeping it below 100,000 b/d in the latter part of 2017.

Having received the green light, Tullow wasted little time in securing a rig to do additional drilling around Jubilee, as well as on the nearby Tweneboa-Enyenra-Ntomme (TEN) project, also operated by the UK-based company, which started producing in 2016.

Thus far 11 of the 24 production wells planned for the TEN development have been drilled, but the others have had to wait for the ITLOS ruling, given their proximity to the disputed border. Now, Tullow and partners led by Kosmos and Anadarko hope to boost output rapidly.

550m boe—Estimated reserves in the Deepwater Tano/Cape Three Points

The Maersk Venturer rig is offshore Ghana, with the first target for a production well in the Ntomme section of the TEN development. The partners are still deciding on the drilling order for wells to follow in either Jubilee or TEN, depending on production requirements. Tullow has said it expects oil production from the TEN fields to average 64,000 b/d in 2018, up from around 56,000 b/d in 2017. The field's FPSO, the John Atta Mills, has a capacity of some 80,000 b/d.

Meanwhile, Eni's $8bn Sankofa field development in the Offshore Cape Three Points acreage, is the latest to come on stream. The 45,000 b/d project started producing oil in mid-2017 and is also expecting gas output of up to 180m cubic feet a day from late 2018. Start-up for gas is dependent on the completion of an onshore receiving facility and a pipeline.

For Ghana, this fresh gas supply can't come fast enough. The country has suffered gas shortages for years, due to unreliable pipeline supply from Nigeria, which has impacted output from gas-fired power stations and industrial users. At present, the Jubilee field is the only major domestic source of gas—the FPSO can process 160m cf/d. But output from Sankofa, as well as future supply from TEN and the Greater Jubilee development, could help Ghana to become self-sufficient in gas.

Exploration hiatus

Despite the heightened development activity, the government needs to open up fresh acreage to oil and gas exploration. The last exploration well not tied to commercial developments was drilled back in 2014 on what was then Hess's acreage.

Currently, licensing is not carried out via an open bidding process. Exxon's acreage was awarded via direct negotiations between the government and the company. While the country's recently updated petroleum laws state that acreage should be awarded by open, competitive tender, the framework to do so is still being implemented. The government said direct talks with Exxon were, in any case, the best avenue for that block, due to the high risk, ultra-deepwater nature of the acreage, which had deterred investors previously.

However, open licensing rounds are likely to feature in future to stimulate exploration, though no concrete timetable to do so has been laid out. "A lot of the focus has been on the development projects. But there have only been four certified as commercial to date and Ghana needs to generate a backlog of potential new developments—an open licensing round would encourage that," said Wood Mackenzie's Alli.

Most exploration to date has been focused on the western side of offshore Ghana, where the big discoveries have been made by larger firms with deeper pockets. The eastern side, towards the border with Togo, remains relatively under-explored and is still largely the preserve of junior companies scraping together external financing to drill the occasional well. A substantial find could bring in more investment, but activity is likely to remain focused close to the hotspots in the west for now.

Key operated blocks in Ghana's offshore Source: Petroleum Economist
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