A Review of the Nigerian Energy Industry

Eland Oil in final testing of Opuama export line

OML-40-Opuama-field26 January 2014, Port Harcourt – Eland Oil and Gas Plc has entered the pre-commissioning and testing phase of its restoration work on its facilities in Nigeria.

The current work involves the testing of the final section of the 12-inch export line of the Opuama oil field.

This is coming on the heels of the completion of the restoration work of the production facilities at the oil field.

Eland Oil plans to commence production at the onshore OML 40 licence soon, after the successful completion of the pre-commissioning and testing.

The Opuama facility had been shut down for seven years, with the company originally expected to complete restoration of the facility and export pipelines in October, last year. The company said the restoration work was taking place in a challenging environment and pushed the completion date back to the end of 2013.

Eland said it has been working with the field operator to replace corroded infield flowlines, refurbish the production flowstation and repair the oil export pipeline, replacing all corroded and damaged sections.

Once the work is completed, it is hoping to start drilling an initial six developed wells at the field. The company also is waiting for a rig currently being used by Conoil Plc, but said in October that it should get it early in 2014.

Eland also said in October that it expects to be producing in excess of 2,500 barrels of oil a day from two existing wells in the field by the end of the year. It then expects output to increase by about 3,000 barrels a day for each subsequent new well drilled during 2014.

Said Andrew McGeary at Northland Capital Partners: “Management remains a key attraction to Eland and its patience is likely to be rewarded with further opportunities in country.”We expect the pace to pick up this year.

First, production will trigger the drawdown of the company’s US$22 million debt facility to enable development drilling that will also be supplemented by reinvestment of production cash flow.

“The company may take a cautious approach to drilling back to back deviated wells and this may also take longer given the pace so far demonstrated by the national operator NPDC (Nigerian Petroleum Development Company). Even so, we expect Eland to exit this year with significant production volumes”.

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