A Review of the Nigerian Energy Industry

Oil Discovery in Chad Basin: Opportunities & Challenges

*Women drawing water from Lake Chad for domestic use.
*Women drawing water from Lake Chad for domestic use.

Kunle Kalejaye

07 January 2017, Sweetcrude, Lagos — Towards the end of the third quarter of 2016, the Federal Government gave the Nigerian National Petroleum Corporation, NNPC fresh thrust to intensify exploration activities in the country’s frontier basin, with specific concentration in the Chad basin having explored the region for some decades without any success in oil discovery.

Frontier basin is a basin where the exploration activities have not been carried out or a basin with short-term exploration activities and a significant volume categorised as undiscovered.

The country’s frontier basins include Chad, Anambra, Bida, Dahomey, Gongola/Yola and the Sokoto basins, as well as the Middle/Lower Benue Trough.

The marching order came 30 years after past governments had spent $340 million in search of oil in the northern region without commensurate result.

Industry analysts reasoned that NNPC’s plan to resume ex­ploration activities in the Chad Ba­sin may not be a viable option for an economy in recession, at least, in the short and medium term.

However, the move by President Muhammadu Buhari’s government to resume exploration activities in the Chad Basin is aimed at building up the nation’s depleting proven oil reserve because as of 2011, there were 37.2 billion barrels (5.91×109 m3) of proven oil reserves in Nigeria but the volume plummeted to 28.2 billion barrels at the height of militant attacks on oil infrastructures in 2016.

In addition, stakeholders in Nigeria’s petroleum industry are of the opinion that the country’s plan to increase its oil reserves to 40 billion barrels by 2020 maybe a mirage if the downward trend in locating new finds in the country continues and is not revered. They noted that the need to achieve the 40 billion barrels reserve by 2020 is further exacerbated by intense competition from other African countries that have attracted exploration dollar, with laudable investment showcase aimed at providing them with a footprint on the oil patch.

Some stakeholders who spoke with Sweetcrude Reports at the 34th Annual International Conference and Exhibition of the Nigerian Association of Petroleum Explorationists, NAPE in 2016 argued that in the Niger Delta where there are mature oil and gas provinces, most of which are ‘easy finds’, have been explored or constrained primarily by community/security related disruptions, and perceptions of investors’ unfriendly operational terms, adding that Nigeria’s frontier basin offers a diversity of opportunities to meet the 2020 target.

Besides building up the country’s oil reserve, another reason for the push for oil discovery in the Chad Basin is discoveries made in neighbouring countries in basins with similar structural settings with Nigeria. These discoveries including: Doba, Doseo and Bangor all in Chad amounts to over two billion barrels; Logone Birni in Southern Chad and Northern Cameroun, over 10 billion barrel; and Termit-Agadem Basin in Niger totals over one billion barrels.

The push for oil discovery in Chad Basin got an icing on the cake when the Group Managing Director of the Nigerian National Petroleum Corporation NNPC Dr. Maikanti Baru disclosed that the federal government will provide incentives to investors who are willing to invest in oil and gas exploration in the country’s frontier basins.

Although the NNPC GMD did not specify what government will offer, he noted that government would be willing to make provisions for incentives for such prospective investors.

Baru also urged the Nigerian Association of Petroleum Explorationists, NAPE to play a key role in promoting a public-private partnership structure in the exploration of some of the green frontier basins stating that NNPC will commence drilling in early 2017.

Availability of 3-D Seismic Data
NNPC Group General Manager, Frontier Exploration Services, Dr. Mazadu D. Bako who was a keynote speaker at the 34th NAPE Pre-Conference Workshop in 2016 said the country has now acquired 3,550 sq. km of 3-D seismic data for processing and interpretation in addition to the already acquired 6000km of 2-D data that is currently being reprocessed.

Dr. Bako who spoke on the theme: ‘Stimulating Upstream Investments in Nigeria’s Frontier Basins’ said the Residual Magnetic map of the Sokoto/Bida Basins exhibit the structural characteristic of divergent wrench fault system that created several well defined “pull-a-part-basin” noting that the Southern part of Sokoto basin is the deepest with 2,500 meters and most prospective among northern Sokoto and Bida basins.

He explained that the over 600,000 seismic section and 30,000 well logs are currently being scanned and vectorised in good time for the eventual drilling noting that before now, 23 wells had been drilled with two of the wells, Wadi-1 and Kinasar encountering non-commercial gas.

Commenting on the investment opportunities in the Chad Basin, Dr. Bako said some of the potential hydrocarbons traps have been mapped with 2D/3D Seismic and high resolution magnetic, boosting investor’s confidence of possible strike of commercial oil.

“The basin is part of the prolific Termit basin (Agadem),” he said, adding that the Benue Trough exhibit the same structural setting as the Doba and Doseo Basin in the Chad Republic.

For the Benue Trough, he said: “These Basins are charged with proven hydrocarbon system Kolmani well which discovered 33 billion barrels of crude oil. These basins contain large structural traps that were identified with 2D seismic, surface geochemistry and HRAM data.

“There are enough data available ranging from reconnaissance surveys, well data, Aeromagnetic Seismic etc.”

However, the 2016 Aret Adams Award recipient, Dr. Joe Ejedawe informed Sweetcrude Reports that the 3D data of the Chad Basin should be properly analysed stressing that the sweet spots of the basin should be discovered and focused on.

“Workflow of the basin should be done, followed by evaluation, and then the sweet spot can be identified. This is a scientific process and not political,” he said.

Dr. Ejedawe noted that the search for oil in the Chad Basin should not be characterised by sentiment but it is work that requires a lot of economic and sound professional handling.

NNPC acquired 3D Seismic Data Seven Years Ago
Contrary to the news in 2016 that NNPC acquired 3D Seismic data for processing and interpretation in aiding oil discovery in the Chad Basin, the acquisition was made seven years ago in 2010 under the former Minister of Petroleum Resources, Mrs. Alison Madueke.
The former Minister made the call for aggressive oil exploration in the Chad Basin but listed the challenges of the Basin in Nigeria Oil and Gas Technology Conference, NOG 2010 held in Lagos.

In her exacts words she said: “”Though it is too early to be categorical, there is a possibility that we may find oil in commercial quantity in the Chad Basin because of the discoveries of commercial hydrocarbon deposits in neighboring countries of Chad, Niger and Sudan which have similar structural settings with the Chad Basin. Therefore it is prudent to aggressively explore the Chad Basin for possible hydrocarbon deposits.

“Already the NNPC’s New Frontier Exploration Services Division which is leading the charge for the crude oil find in the entire Inland Basins is acquiring 3,550 sq km of 3-D seismic data for processing and interpretation in addition to the already acquired 6000km of 2-D data that is currently being reprocessed.”

Before the acquisition of 3-D Seismic Data, NNPC had used 2-D Data to drill 23 wells with two of the wells, Wadi-1 and Kinasar encountering non-commercial gas.

Therefore, the acquisition of 3-D data in 2010 ushered a ray of hope for oil discovery in the Chad Basin.

Challenges in the Chad Basin
Geoscientists who spoke with Sweetcrude on the sideline of 2016 NAPE conference said there are challenges militating against oil field development in the Chad Basin, which is hinged on integrity and mapping of oil wells.

They explained that the formation in these basins make it difficult to estimate appropriate levels of oil wells and the prospect areas.
To maximise resources deployed in these basins, however, they suggested that it is necessary to deploy intelligent well appraisal systems, transmission of real-time well data to specialists across the globe which will involve Broadband capacity technology.

Studies have also indicated that the Ni­gerian end of the Chad Basin has little potential for commercial oil deposits and would require a huge expenditure in addition to security challenges in the zone. In an era of low crude oil prices, findings suggest that international oil companies would be very unwilling to commit resources to drill in the North, particularly as prospects of commercial finds look largely slim.

“While there are about 37 billion barrels of proven oil reserves and about 187 trillion standard cubic feet of gas in the South South of Nigeria, what we want to explore in the North is an unproven reserve of about 2.3 billion barrels of oil reserves and about 14.65 trillion standard cubic feet of natural gas available for four or more countries in the Chad Ba­sin,” the study asserted.

“If you do the cost benefit analysis, you can see that it is not viable in the short and medium term,” said Henry Boise of the Petroleum Economics, Management and Policy Researcher at Emerald Institute for Petroleum and Energy Economics, Policy Strategy, University of Port Harcourt.

In addition, the renewed search for hydrocarbon deposits in the Chad Basin would entail extensive probing of some allocated and non-allocated oil blocks in the region to establish the magnitude of the de­posits which would involve huge investment from the public treasury.

Prospects of oil finds in Chad Basin
Dr. Joe Ejedawe informed Sweetcrude Reports that it would be a good thing for Nigeria if oil is discovered in the Chad Basin due to the consistent security issues in the Niger Delta.

As NNPC is poised to commence drilling in the Chad Basin in the part of January 2017, it is, however, uncertain about the outcome of the exercise.

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