Mobile Edition
Print
Get the Mag
Weekly UpdatesThe Shell-Led Group: The biggest oil producing JV, the Shell-led group has about 85 oil and gas fields in 48 blocks. NNPC recovers the idle fields held by Shell and the other foreign firms, and offers them to indigenous companies (indies). Shell Petroleum Development Co. (SPDC) in the week to Aug. 8 was producing 400,000 b/d, down from 825,000 b/d in August 2007, but has a capacity of 1.02m b/d.
SPDC has borne the brunt of attacks by militants on oil installations in delta during the past five years which have cost it and the Nigerian government tens of billions of dollars in oil revenues. Most of SPDC's shut-in capacity now is in the west of the delta. It has faced many problems in the delta, including the abduction of staffers by local militants.
SPDC in June 2007 began a number of cost lowering measures, including job cuts, to combat rising costs and falling oil income caused by production outages. This is an austerity programme to end-2010 (see background in omt6NigrFieldsAug6-07).
SPDC holds 30% in the JV. Shell D'Arcy was the first major to pioneer Nigeria from 1936 and to put this country on the map of oil producers in 1958. Shell, the operator of the JV, plays many other roles. Most important among these roles are the following:
The CEO Omiyi acts as spokesman for all foreign majors involved in the six oil producing JVs and thus his views are taken seriously by Abuja. Omiyi and his predecessor Ronald van den Berg have been warning Abuja since late May 1999 that failure to meet cash-calls by NNPC would result in a drastic reduction of work and staff, with the JV's capacity to fall as a result.
On behalf of the group, Shell supplies most of Nigeria's natural gas to industry and the power sector. A Shell priority is a set of projects to collect and utilise associated gas and end flaring in its areas in 2010.
SPDC has an expensive multi-faceted plan to resolve numerous communal problems in the oil-rich areas, including projects to improve the environment in the delta. It has faced complex problems and violence in Nigeria since it came to this country.
NNPC holds 55% in the JV. This was reduced from 60% when a cash-starved NNPC was forced to cede 5% to Elf (which now is part of Total). In return, the French firm increased its share in funding the group's expensive development plan.
Total holds 10% in the JV. Total (Elf) leads another producing JV in Nigeria (see gmt6NigrFieldsAug10-09) and its local unit has good knowledge of the country's geology, Elf having found major oil reserves off Angola. Total is also a partner in the Shell-led NLNG venture (see gmt7NigrGasExpAug17-09).
Agip holds 5% in the JV and is a partner in the NLNG venture. It leads a JV with NNPC producing light/sweet crudes from a number of fields. Agip also produces crude oil elsewhere in Nigeria under a PSC in partnership with NPDC.
SPDC's production system consists of two regional units, with each led by a high-powered executive: the Eastern Division has the capacity of 520,000 b/d of the Bonny group of crude oils; and the Western Division which can produce another 500,000 b/d of the Forcados group. Most fields in the two units are onshore, with some extending to the shallow-water off the Niger Delta.
The Eastern Division has seven groups of fields yielding light/sweet crudes blended into Bonny Light and heavier ones blended into Bonny Medium. They include Nembe and its satellites (cap 250,000 b/d); Cawthorn Channel and satellites (100,000 b/d); Ekulama and satellites; Imo River; Kolo Creek; Adibawa; and Etelebou. Bonny Light and Medium are exported from the Bonny island terminal.
The Western Division has six groups producing crude oils for the Forcados blend exported from the Forcados terminal, including Estuary South Bank and satellites (100,000 b/d); Jones Creek; Otumara; Olomoro; Sapele; and Egwa.
Bonny Light, 37.6? API with 0.13% sulphur, is a gasoline-rich blend also known as Nigerian Light. Bonny Medium (Nigerian Medium) is rich in gasoil and gasoline: 25.7? API with 0.24% S. Forcados, 30.5? API with 0.2% S, is particularly rich in gasoil. The three blends are popular among European, US and Asian oil refiners.
A big number of discoveries made by Shell since 1985, after it introduced the 3-D seismic system in Nigeria, were developed quickly to replace small fields found in the late 1950s and early 1960s. Some of the large fields have since kept producing. A number produced at higher rates because Shell found Fms beneath them. Shell in July 2007 announced an important oil find, saying the Agatha onshore well "tested up to 5,000 b/d of oil". It said the discovery had the potential to increase production in that mature exploration area.
Fields in the Forcados group are Tunu which went on stream at end-1995 and Kanbo and Ogbotobo which went on stream in 1998. Finds since 1990 have added over 1.4bn barrels to the JV's proven oil reserves and there have been several gas discoveries. They include Gbaran-4, found in 1990, which was the biggest discovery in Nigeria for ten years, with 400m barrels of oil and 500 BCF of gas. A re-evaluation of seismic data and well results from big fields is a constant process, as in the case of other major operators.
Shell has been spending $9 bn in Nigeria under a plan from 2007 through to end-2010 on its JV, PSC ventures, the LNG export system and gas utilisation projects to end flaring. Shell has revamped both the Bonny and Forcados terminals. It has modernised its network of pipelines.
Shell's shallow water EA field in the western delta resumed production in early April 2006 after being shut for security reasons in mid-February. But later in that year it evacuated EA after attacks by MEND. In April 2009, as it was trying to restore EA's production to 130,000 b/d, MEND warned it will attack the field, which forced the major to stop its work there.
EA, in the Gulf of Guinea, went on stream in late 2002 at its FPSO vessel, 'The Sea Eagle' - then described as the third largest in the world. During violence in April 2003, Shell took the unusual step of advertising in local newspapers to highlight threats to attack this vessel by "criminal elements", who it said were planning to set fire to 'The Sea Eagle'. EA, on OML-79, was found in 1965.
EA's capacity is 140,000 b/d of oil and 100 MCF/d of gas. EA crude is light - 38? API - with less than 0.1% S. The partners in EA are Shell (30%), NNPC (60%), and Total (10%).
Shell's deep-water Bonga field began producing at end-2005, reaching 225,000 b/d in April 2006. But in April 2009, it was hit by MEND despite the field being 120 km off the coast, with its output cut to 154,000 b/d. Bonga is estimated to hold recoverable oil reserves of 700m barrels.
Bonga can produce up to 250,000 b/d of oil and 150 MCF/d of gas. Shell is the operator (55%) in this $3.5bn JV, partnered with ExxonMobil (20%), Agip (12.5%), and Total (12.5%). The field is serviced by a 2m-barrel FPSO vessel. The operator of this is Shell Nigeria Exploration and Production Co. (Snepco).
Bonga South-West, found in May 2001 and containing 1bn barrels of recoverable oil, went on stream in late 2008 at a capacity of 120,000 b/d and a peak of 150,000 b/d.
Part of Bonga South-West extends to Chevron's Aparo oilfield on OPL213, and this should be on stream in 2012 with at 175,000 b/d.
Shell's Bonga North should be on stream in 2011 at 100,000 b/d.
In August 2008, Shell planned to bring online its Gbaran/Ubie field (220,000 b/d), located off of the eastern delta.
Shell's other main PSC prospects under deep water include the Bolia field in OPL219, being developed for a 50,000 b/d capacity, and the Doro gas field. Shell's partners in these are ExxonMobil, Agip and Total. The Bolia-1X discovery well, drilled under 1,100 metres of water 110 km offshore, in January 2002 flowed at 6,000 b/d. Doro, under 1,000-1,200 metres of water some 120 km offshore, was found in 1999.
Later Shell was found that Doro extended to Statoil's OPL218, where the Norwegian company had found the Nnwa gas field in 1999. The two are being developed jointly by Shell and StatoilHydro. Statoil's partner in OPL218 is Chevron's affiliate, Texaco Nigeria Outer Shelf Ltd.
Shell Nigeria Gas is marketing natural gas in the country. In January 2003 Shell and Nigerian Gas Co. (NGC) connected 30 industrial firms in the Agbara/Ota areas of Ogun state to their system. Five gas utilisation projects needed to cut Shell's flaring will not be complete until 2010, a fact it blames on inadequate NNPC funding of the JV and cost over-runs.
Shell on June 8, 2009, reached an out of court settlement with the families of Nigerian Ogoni activist Ken Saro-Wiwa - who was killed by hanging in 1995 by the then military dictatorship - and other activists. It agreed to pay a total of $15.5m to these families.
Shell has since returned to Ogoniland, where it was producing almost 30,000 b/d before violence forced it to leave in 1993.
FEED