In February, Total made one of the most important discoveries in the Brulpadda field offshore South Africa. Located on Block 11B/12B in the Outeniqua Basin, the French oil giant – which made a gas and condensate and oil discovery – predicts that the potential for the discovery of the net gas could hold 1.5 to 3 billion barrels.
Total plans to obtain 3D data of the area, which will help the company decide how many more exploration wells to drill. The South African government has vowed to give all the support it can to the project, as the discovery of oil and gas could reduce the country’s dependence on imported crude oil. The Brulpadda well results will be combined with the 3D seismic data ahead of the drilling program in 2020, which will include up to three exploration wells.
South Africa has become an interesting region for exploration and has a number of significant underexplored basins. Total’s Vice President Exploration Africa, Dr. Enzo Insalaco, believes that there is significant potential for exploration in the area. Because of this discovery, there will be an uptick in reservoir drilling and exploration.
“When you look at the fundamentals, you can see a scenario where there are a number of significant, relatively under-explored basins and many of the play fundamentals are present in these places,” he says.
This discovery has the potential to supply South Africa’s refineries for almost four years and significantly boost the country’s economy. This was not Total’s first attempt in the Outeniqua Basin. Total experienced difficulties in its first 2D drill and in 2014 it cancelled operations due to the rough currents, costing the company approximately $190 million. In its second attempt, which cost about $160 million, Total used a suitable rig for the operation and a weather forecasting system, together with an on-site specialist, to more accurately assess weather and ocean conditions.
During the process, Total conducted extensive logging records as well as samples of fluid, reservoir and source rock. The samples yielded satisfactory results, enabling the French supermajor to move forward in its evaluation of the discovery. Total owns 45% of the Brulpadda licensing rights, With the remainder held by Qatar Petroleum (25%), Canadian Natural Resources (20%), and Main Street (10%).
The regular 28% corporate tax on all taxable income from Brulpadda will be paid by Total and its partners. The Brulpadda find could yield $1 trillion for Total and its partners. All oil and gas companies producing gas in South Africa have to pay a royalty of approximately 5% on all gross sales of all oil or gas that they produce.
The Brulpadda find could have a massive boost to businesses in South Africa, including refining oil and other downstream activities, transport companies, marine services and catering supplies. Highly skilled and experienced engineers, extraction experts and Artisans, when production starts, both onshore and on the rigs.
If the gas is converted into power, it could provide an affordable and reliable source of energy that could boost manufacturing in the country. Sedgefield is closest to the find, however, Mossel Bay is the most obvious beneficiary, because it is the nearest hub to the find and it also hosts the PetroSA refinery.
South Africa imports a huge amount of oil, which is 15% of all total imports. If the country can produce more of its own oil, this would lead to the rand strengthening against the dollar, boosting the local currency across the globe.