The future of oil production in Nigeria
|January 30th, 2019|
|tags:||fossil fuel, Niger-Delta, Nigeria, oil production, Shell|
Well, when it comes to oil producing companies like Shell, Total, Exxon or Chevron, the future of oil exploration in Nigeria is offshore, in the Gulf of Guinea. Already today, about half of the crude oil produced in the west african country comes from deep-sea drilling. According to the state-owned Nigerian oil promotion company, the share is set to increase to two-thirds by 2022.
The French energy giant Total, the world's fourth-largest oil producer with $ 155.8 billion in revenue, has invested 3 billion US-Dollars to built a special drilling ship ordered at the South Korean shipyard Samsung Heavy Industries specifically for deepwater drilling in the Nigeria‘s Egina field, some 200 km off the coast. This floating, production, storage and offloading (FPSO) vessel now is the largest ship of its kind ever built. In the first half of 2019, when production in Egina is scheduled to begin, the pipelines of the 44 undersea oil wells Egina consists of will be bundled on this vessel. The oil field is expected to supply up to 200,000 barrels of crude oil per day, while the FPSO vessel has a storage capacity of 2.3 million barrels, according to "Gcaptain magazine".
Royal Dutch Shell, the world's second-largest energy group with $ 305.1 billion in revenue, is also stepping up its activities in Nigeria, despite the difficulties and lawsuits it faces as a result of devastating environmental damage from production in the Niger Delta. The deep-sea oil field Bonga, which was tapped in 2005 and lies about 120 km off the coast, was Nigeria's first ever oil field deeper than 1,000 m. In 2014, it was expanded to include the adjacent Bonga North West field. The FPSO Vessel, which Shell uses for this purpose, is only marginally smaller than that of the competitor Total and allows the Dutch company to pump out the fields Bonga and Bonga North West in parallel. Bonga delivered a total of 763 million barrels by 2017; with Bonga North West, according to Shell, an additional 65,000 barrels per day are produced.
Meanwhile, all the other major oil producers are now active not only in the Niger Delta, but also off the coast of Nigeria. The fields Bosi and Owowo, both discovered by Exxon but not yet developed. The Nsiko field, which Chevron has claimed and whose exploitation at over 2,400 m of depth is particularly challenging. The field Zabazaba-Etan of the Italian ENI group, whose development is currently on hold.
Nearly two million barrels of crude oil are currently being produced in Nigeria per day. The value is set to double by 2020 according to the Nigerian government.
Therefore, the regulatory and legislative obstacles that are currently delaying developments of new offshore fields are to be adapted. “Deep-water drilling will replace onshore as the bulk of Nigeria’s oil production and revenue,” said Cheta Nwanze, head of research at Lagos-based risk advisory SBM Intelligence, in an interview with Bloomberg. “The fiscal terms are much better than onshore as of today and this implies that, in addition to less concern about security, international producers get a bigger share of the pie.”
In 2018 alone, 85 oil spills were reported in the Niger Delta, according to Reuters. Around 9,000 barrels of Shell oil Nigeria were lost in 2017 due to tapped pipelines, which equates to a loss of approximately $ 180 million in damage per year, let alone the damage to the environment caused by leaking oil.
But even if the energy giants gradually shift their oil production from the Niger Delta out to the high seas, the risk of devastating oil spills and severe environmental harm will not at all disappear. The spectacular case of the Deepwater Horizon plattform in the Gulf of Mexico in 2010, when an estimated 800 million barrels of crude oil were leaked into the sea, causing one of the worst environmental catastrophes in history, should serve as a dire warning. Deepwater Horizon at the time of the disaster drilled at a depth of 5,500 meters, of which 4,000 meters were digged into the ground below the seabed. The fact that the industry leader BP was unable to stem the catastrophe shows emphatically that deep-sea drilling carries immense risks that are hardly calculable, let alone manageable.
However, the oil companies drilling in Nigerian waters seem to be unimpressed by these risks and obstacles. And in addition, the need to switch from fossil fuels to renewable energy in the face of the onset of climate catastrophe doesn‘t seem to concern the directors in their boardrooms yet. None of the companies mentioned in this report has yet responded to a request from FAIRPLANET regarding investment in renewable energy in Nigeria.
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