Patience, appetite for risk required

Independents Find Africa Success

When it comes to international E&P action, Africa is a Big Deal these days.

In fact, a third of the world’s hydrocarbon discoveries since 2000 have occurred in Africa, according to Ian Cloke, Uganda exploration manager at Tullow South Africa (Pty) Ltd. in Cape Town, South Africa.

And perhaps a bit surprising, the companies involved in the Big Deal are not always the Big Majors.

Can you say “independents?”

“Hydrocarbon exploration in Africa dates back to the earliest part of the 20th century, when field geologists mapped the continent and identified numerous oil seeps indicating working hydrocarbon systems,” Cloke said.

“The first major oil and gas discoveries were made onshore in the mid-1950s in Algeria and Libya,” he noted. “Contemporaneously, oil was discovered onshore in Nigeria, Gabon, Congo, Cameroon and Angola, opening several new play fairways.”

The oil crisis of the 1970s in combo with technology advancements in exploration kicked off the next phase of exploratory activity.

The remote location of some of the resulting discoveries in places such as Chad, Ethiopia, Sudan and others caused them to be stranded until they could be connected to export routes via pipelines.

The following exploration phase commenced in the mid-1990s when improved drilling technology enabled the operators to go after prospects in water depths exceeding 300 meters.

“This phase continues through to the present day,” Cloke said. “The combination of excellent quality 3-D seismic data and AVO has resulted in success rates in excess of 50 percent as discoveries were made in the Miocene and Oligocene-age deepwater confined channel systems of Mauritania, Nigeria, Equatorial Guinea, Angola and the Nile Delta of Egypt.

“Onshore exploration continued apace close to export pipelines and in frontier areas such as Uganda,” Cloke added, noting that major oil companies dominated this period of activity early on.

Just Do It

It’s a different scene today.

Independents are seemingly all over the place, often successfully playing areas previously rejected by the major companies.

This was the case with the 2007 discovery of the huge Jubilee Field (nee Mahogany) in Cretaceous-age turbidites in Ghana.

The principal partners at Jubilee are Tullow, Kosmos Energy and Anadarko, with Sabre Oil & Gas and the EO Group also participating. Kosmos was the operator on the Mahogany #1 discovery well.

“The trend we found at Jubilee last year, all the big companies had rejected it, saying it’s too risky, no source rock,” Cloke said. “We put it together and just went after it.”

The payoff could be huge given that recoverable resources in the Jubilee Field are estimated to be more than 500 MMbo, with the ultimate upside pegged at perhaps 1.8 billion barrels.

When exploring this part of the world patience truly is a virtue – and it’s a luxury better afforded by the independents than the Big Guys.

Cloke emphasized it’s not unusual for negotiations to drag on for maybe five years or even longer before a project gets drilled.

Besides the need to be patient, one must be nimble as well.

The Jubilee discovery in greater than 1,500 meters of water had to be appraised within two months. Yet the participants were told there was a three-year wait for a rig.

“We went out and got a rig, just like that,” Cloke said. “That’s the ability of the independents to move quickly.

“You must be patient working here, but at the same time if things start moving fast, you’ve got to move – you’ve got to be able to sign the deal tomorrow,” he said. “You can’t take umpteen months to review a deal when it comes up.”

It appears likely there’s a raft of future deals just waiting to happen.

“We’ve barely scratched the surface of the continent, which is pretty well unmapped,” Cloke said. “If you just look at the areas rejected by major companies, there are incredible opportunities.”

AAPG member Brian Maxted, chief operating officer at Dallas-based Kosmos Energy, agrees.

“Unless the majors change their risk appetite, Africa will be the domain of small and mid-size independents who most of Africa will depend on for establishing new petroleum provinces,” Maxted said.

“We believe Ghana will be a multi-billion barrel petroleum province,” he continued, “and we believe others are waiting to be found, just requiring the technology skills and risk appetite.

“By definition, the plays we’re dealing with are high risk in the sense the source rocks as well as the reservoir rocks are not always understood and the traps tend to be subtle – not large structures, most of which have been drilled-out in Africa,” he said.

“They’re more stratigraphic plays and combination structural/stratigraphic plays, and Ghana is an example of that.”

Maxted, the Michel T. Halbouty Lecturer for the 2004 AAPG Annual Convention in Dallas, emphasized that it’s the limited understanding of source and reservoirs and the focus on high-risk traps that makes these areas less attractive to the majors looking for simple large prospects in proven areas that are few and far between.

They’re expensive to access and declining in numbers as places such as Angola and Nigeria begin to get drilled up.

Kosmos has an intense focus on West Africa, where it’s deliberately pursuing subtle stratigraphic/structural traps in the Upper Cretaceous and early Tertiary.

“That’s where we believe in West Africa most of the remaining potential lies to be found outside of the proven areas,” Maxted said.  

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Learn More in Cape Town

Ian Cloke, Uganda exploration manager at Tullow South Africa Ltd., will present a paper at the upcoming AAPG International Conference and Exhibition on “African Opportunities Past, Present and Future: An Independent Oil Company’s Perspective.”

Cloke’s paper will be presented at 9:20 a.m. Monday, Oct. 27, as the final talk in a four-paper plenary session titled “African Energy, Global Impact.”

Other talks in the session are:

“Evolution of the Margins Around Continental Break Up: Insights From the South Atlantic Margin.”
“Interplay of Basement Tectonics, Salt Tectonics and Sedimentation in the Kwanza Basin, Angola.”
“Learning by the Bit: Fifteen Years of West Africa Deepwater Exploration, Development and Production.”

Emphasis: International