Marginal Field Development: Best Practices & Lessons Learned

Transcription

1 Marginal Field Development: Best Practices & Lessons Learned by George Osahon Director, Petroleum Resources Ministry of Petroleum Resources, Nigeria SOCIETY OF PETROLEUM ENGINEERS 37 TH NIGERIA ANNUAL INTERNATIONAL CONFERENCE & EXHIBITION (NAICE 2013)

2 Outline Introduction Legal framework for marginal field development programme Major thrusts of decree 23 of 1996 Outcome of 2003 marginal field awards Incentives Current Status Challenges and Remedies Emerging Opportunity Conclusion 2

3 Introduction - Lease Administration was originally structured in favour of IOCs Access to the assets by Indigenous/ Independent Operators was very difficult. IOCs left significant Oil & Gas Resources un-appraised/unproduced many years after discovery for several reasons including the industry creaming phenomenon The Petroleum (Amendment) Decree No. 23 0f 1996 was enacted to award such fields as marginal to Indigenous Companies. Consequently, Guidelines for the Farm-out and Operation of Marginal Fields were prepared in 2001 In 2003, twenty four fields were awarded to 31 Companies These fields are presently at various stages of development with 9 already producing

4 Legal Framework For Marginal Field Development Programme Petroleum (Amendment) Act,

5 Major Thrusts of Farmin Act No 23 of 1996 Promote indigenous participation and build indigenous capacity in the upstream sector Provide alternative sources of funding for exploitation of hydrocarbon resources Increase production capacity through accelerated development of discovered reserves Increase the oil and gas reserves base through aggressive exploration Encourage capital inflow. Gainfully engage the pool of the high-level competent Nigerians in the petroleum industry. Create employment opportunity for Nigerians. 5

6 2003 Marginal Fields Award Structure S/N FIELD FARMOR OML FARMEE TERRAIN 1 Asuokpu/Umutu Shell 38 Platform Land 2 Asaramatoru Shell 11 Prime Energy (51%) / Sufolk Swamp Petroleum (49%) 3 Atala Shell 46 Bayelsa Oil (100%) Swamp 4 Eremor Shell 46 Excel E&P (100%) Swamp 5 Ibigwe Shell 16 Walter Smith (70%) / Morris Land Petroleum (30%) 6 Ofa Shell 30 Independent (100%) Land 7 Oza Shell 11 Millenium Oil (100%) Land 8 Qua Ibo Shell 13 Network Oil & Gas (100%) Land 9 Stubb Creek Shell 14 Universal Energy (100%) Swamp 10 Tom Shot Bank Shell 14 Associated (51%)/ Dansaki Pet Offshore (49%) 11 Tsekelewu Shell 40 Sahara (51%) & AOG (49%) Swamp 12 Uquo Shell 13 Frontier Oil (100%) Swamp

7 2003 Marginal Fields Award Structure S/N FIELD FARMOR OML FARMEE TERRAIN 13 Ororo Chevron 95 Guarantee Oil / Owena Oil Offshore 14 Akepo Chevron 90 Sogenal (100%) Offshore 15 Ogedeh Chevron 90 Bicta (100%) Offshore 16 Ajapa Chevron 90 Britania U (100%) Offshore 17 Dawes Island Chevron 54 Eurafic (100%) Swamp 18 KE Chevron 54 Del-Sigma (100%) Swamp 19 Oriri Chevron 88 Goland (100%) Offshore 20 Ekeh Chevron 88 Movido Offshore 21 Umusadege Elf 56 Midwestern Oil & Gas (70%) / Land Suntrust (30%) 22 Obodugwa / Obodeti Elf 56 Pillar Oil (100%) Land 23 Umusati/Igbuku Elf 56 Energia (55%) / Oando (45%) Land 24 Amoji/Matsogo/Igbolo Elf 56 Chorus (100%) Land

8 Other Marginal Field Awards Awards of Okwok field in 2006 and Ebok field in 2007 to Oriental Energy were made to compensate company for lost part of its OML 115 to Equatorial Guinea due to boundary adjustment Ogbelle field was awarded to the Niger Delta Petroleum Resources Limited in The company was the first beneficiary of marginal field in the country In 2010, Otakikpo and Ubima fields were awarded to Green Energy Ltd and Allgrace Energy Ltd respectively as part of a lingering award process that commenced in 2004

9 Applicable Fees in the 2003 Award Exercise Application Form N 50,000:00 Processing Fee - N 100,000:00 Signature Bonus 150,000 USD Data Purchasing 2,000 USD 9

10 2003 Marginal Fields Incentives s/n Incentive Marginal Fields Non-Marginal Fields 1 PPT* 55% 65.75% 2 ITA 20% 5% (Onshore) 3 Production Commingling Allowed Not Allowed 4 Fiscal Terms (Royalty) % > 18.5% 5 Royalty 5,000 5,000-10,000 10,000 15,000 15,000 25, * PPT is disallowed by FIRS as it was not amended by the Act of Parliament 10

11 Scorecard of Marginal Field Initiative Out of the marginal fields, nine have started production The nine producing fields are: -Umusadege (Midwestern Oil & Gas) -Umusati (Pillar Oil) -Ibigwe (Waltersmith) -Egboma (Platform Petroleum) -Obodugwa / Obodeti (Energia Petroleum / Oando) -Ajapa (Britania-u) -Ogbelle (Niger Delta) -Ebok (Oriental Energy) -Uquo (Frontier) 1 st Marginal Gas Operator 11

12 Summary of Achievements ( ) ITEM REMARKS Number of Producing Fields 9 Initial Reserves as at MMbbl New Reserves as at MMbbl Oil Production Rate 60,000 bopd Gas Processing 150 MMscf/d 12

13 Contributions to the Nation s Reserves TOTAL CRUDE (OIL + CONDENSATE) RESERVES DISTRIBUTION 1.61% 4.86% 22.67% 70.86% TOTAL GAS (AG + NAG) RESERVES DISTRIBUTION 1.50% 6.25% 14.52% 77.73% JV PSC SR MF TOTAL CRUDE RESERVES = Billion BBLs JV PSC SR MF TOTAL GAS RESERVES = T scf The Marginal Field Program has shown a lot of promise and would be expected to play a bigger role going forward 13

14 Skewed Production Distribution PRODUCTION DISTRIBUTION BY CONTRACT TYPE 2.1% 6.3% 32.8% 58.8% JV PSC MF SR 14

15 Other Salient Benefits of the Marginal Field Program Integrating value Producing crude oil Monetizing gas Small scale refining Unlocking stranded molecules through deployment of new technologies Creating opportunity for employment and empowerment Better handle of local communities

16 Emerging Opportunities in the Marginal Field Initiative Assets are sub-economic and hardly bankable Timely agreement with lease holders Funding Capabilities Costs Community problems Clusters of contiguous fields to aid materiality DPR facilitation and update of guidelines Good assets attract investors More jobs; competitive EVPs Sharing; collaborating Amnesty programme 16

17 Conclusion The Marginal Field Programme may not have evolved as intended but it has made its mark on the industry landscape Substantial volumes added to the nation s oil and gas reserves and production mix Challenges inherent in Marginal Field operation will be continually analyzed and intervention carried out as necessary Suitable enablers will be introduced in future Marginal Fields Bid Round 17

18 Thank you 18