ECP spoke with Stewart Maxwell, Technical Director of Aquaterra Energy, about mobilizing in-country capabilities in Nigeria, as operators compete for 57 marginal assets in the country’s ongoing bid round.
As Nigeria prepares to award 57 marginal fields as part of its ongoing bid round, what are the primary technical challenges associated with achieving first oil production?
Nigeria is a very mature oil and gas market, in terms of its people and capabilities. As a result, the challenges that operators will face are not necessarily associated with what they are trying to achieve, but rather that there are 57 others trying to achieve the same thing, at the same time and within a tight timescale. While there are strong indigenous engineering houses and fabrication yards, Nigeria is entering its marginal field round off the back of a suppressed market. A number of fabrication yards have been mothballed, or in some cases, shut down. Operators will be trying to reactivate those yards, retain both local and expatriate talent and maximize in-country capabilities. In other words, the challenges will be more logistical and capacity-oriented, rather than technically-oriented.
With the Department of Petroleum Resources granting just two years to bring marginal fields online, what strategies can operators employ to adhere to this timeline?
Two years would be a tight timeframe anywhere. As a reference, one of the projects that Aquaterra Energy did in the Gulf of Paria offshore Trinidad and Tobago was a very small platform in shallow water, which was 10 months, from signing a purchase order to installing some steel work. Moreover, fabrication took place in Louisiana, in which the U.S. oil and gas industry is built for a fast turnaround. In sub-Saharan Africa fabrication is slower due to the industry relying on importation. What may take four or five months to fabricate in the U.S. or Arabian Gulf could easily take a year in Nigeria. Moreover, most of the 57 blocks in this round are in relatively shallow waters no deeper than 100 meters, which requires drillable jack-ups. There are not many jack-up drilling rigs sitting in West Africa at the moment. As a result, Nigeria will likely need a commitment from some of the larger drilling companies, equipment suppliers and drilling contractors that are willing to take the risk, mobilize something in the area and accept the challenges that will arise.
Angola is also in the process of a marginal bidding round. How would you assess the competitiveness of Nigeria’s marginal resources on a regional scale?
When it comes to the Nigerian marginal development round, in some cases, it’s only marginal for Nigeria. A number of the assets that are on offer – which could produce up to 40,000 barrels a day – would be considered large-scale developments in the North Sea, for instance. Secondly, all sub-Saharan countries have some degree of local content requirements within their oil and gas operations – and Nigeria is probably one of the stricter – so that work is placed with local companies and not everything is done outside of the country and imported. While it is up to individual governments to set in-country content environments, there has to be a balance between creating opportunities to develop local skills and attracting foreign investment. All international companies have limits on their staff levels, their capabilities and the opportunities they can chase. If operating in a country becomes too difficult, then the company has to look elsewhere for oil and gas opportunities. There is no issue with local content, training or in-country fabrication, as long as those requirements are benefitting the population and providing opportunities across the board.
What is the future of African exploration in the age of the energy transition and mounting pressure to adopt “green” policies?
While renewable systems in wind, solar and hydropower will continue to develop in West Africa, the continent is such a vast landmass that the need for hydrocarbon development will remain, and even the most optimistic power estimations see hydrocarbons being used to some extent over the next century. A lot of people equate oil and gas production with use for gasoline or electricity, but natural gas is also used for fertilizer production, plastic feed stocks and other indirect inputs. There will still be a driver for that. Furthermore, for many countries, their hydrocarbon potential is a critical way of generating cash and economic growth. For example, Norway converted its hydrocarbon production throughout the 1970s and 1980s into a Sovereign Wealth Fund that continues to benefit the country to date.
How can engineering and manufacturing solutions help deliver on decarbonization objectives?
When thinking of the oil and gas decarbonization, no stage can be ignored. From design to installation, every aspect should be optimized to meet Environmental, Social and Governance ambitions. A good example would be our Sea Swift, modular conductor supported platform, which is designed with up to 30% less steel than off-the-shelf jacketed options and thereby incurs lower manufacturing and shipping emissions. Installation via jack-up removes the need for heavy-lift barges, which are highly emissions-intensive due to fuel consumption, especially if they must travel long-distances between projects. The Sea Swift platform is modular and can be fabricated in-country no matter the size of the fabrication yard. This both reduces transportation emissions and brings increased economic benefit to local markets. It can be fully powered by renewable sources, such as wind and solar. This eliminates the need for traditional diesel generators for power, significantly reducing emissions including those associated with the maintenance and logistics for refueling visits to the platform. When equipped with our monitoring technology, maintenance trips are also reduced, as the platform will only require personnel visits when alerted via onshore systems.