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Ghana’s coming
oil boom
Masahudu Ankiilu Kunateh, Ghanadot
Accra, March 11, Ghanadot - “Oil can often prove the undoing
of many nations. Ghana is at the threshold of great things
in the oil industry. Let us approach the find with sobriety.
Government will continue to continue to consult widely over
the coming months as it prepares an organic and
comprehensive matter plan”. These are the words of former
President of Ghana, H.E. John Agyekum Kufuor, at the opening
of the National Forum on Oil and Gas Development in Accra ,
February 25, 2008.
“Oil fever” has gripped Ghana since the first major oil
discovery in the country’s history was announced in June
2007. Since that time, Ghana has rapidly emerged as an oil
industry hotspot. While there has been some oil exploration
over the past century, with a trickle of oil produced in the
Saltpond field, it has only been in the past decade that
serious efforts have been made.
A successful drilling campaign by relatively small oil
companies willing to take a risk has resulted in Ghana’s
first large-scale, commercially viable oil field.
The Jubilee field, named for the fact that it was discovered
in the same year the country celebrated 50years of
independence, may reach a production level of 120,000 barrel
per day (bpd) by 2011. (Ghana’s current consumption of oil
is 40,000 to 60,000 bpd, almost imported.)
Former President Kufuor stoked Ghana’s oil fever by
proclaiming at the end of 2007 and again in early 2008 that
the country had oil reserves of 3 billion barrels, a figure
greeted with skepticism by oil industry experts. Now, with
further exploration and data, the oil industry publication
Upstream said in December 2008 that the 3 billion figure
“raises eyebrows today as companies pile up in to drill up
their share of the oil bonanza”.
Depending on oil prices and future production levels, Ghana
could soon see more than $1billion added to government
revenues each year, according to conservative estimates by
the German Technical Cooperation Organisation (GTZ). Even
much lower estimates will easily eclipse current revenues
from mining (largely gold) exports.
It is important to point out that, Ghana’s life as an oil
producer may be relatively short-20-30 years-and the country
must move rapidly to beef up its legal and administrative
framework to meet the significant managerial,
administrative, political, and financial challenges the oil
rush presents.
Ghana ’s birth as an oil producer coincides with a political
transition-with a new presidential administration, cabinet
ministers, and parliament installed in January 2009.
The country’s oil rush is anchored by the significant
Jubilee field, which straddles two oil blocks in the deep
Atlantic waters offshore from Western Ghana, approximately
63 kilometres from the coast and 132kilometres southwest of
Takoradi.
The Cape Three Points block is led by an American company,
Kosmos Energy, which signed a contract for the block in
2004. The neighbouring Deepwater Tano block, led by the
Anglo/Irish Company Tullow Oil, covers the other portion of
the Jubilee field discovery.
Exploratory drilling by Kosmos and then Tullow in 2007 (the
Mahogany and Hyedua wells) and further appraisal wells have
confirmed the significant size of the discovery, estimated
by Tullow at between 600million and 1.8 billion barrels of
oil-“a world class sweet oil field”. (Oil from Jubilee is
light, sweet oil that is projected to sell at parity with
the Brent oil market benchmark price.)
Results announced in December 2008 by Tullow suggest that
proven reserves-now at 600million barrels-could eventually
reach more than 1.2billion barrels. The field is also rich
in gas, with estimated 800 billion cubic feet of gas in the
field as a whole.
In December 2008, Tullow announced positive results of the
Hyedua 2 well in the Deepwater Tano block, which may upgrade
the geographical size and reserve estimate for the field.
Reports indicate that a possible field size of 1billion
barrels. (This is roughly equivalent to the Doba oil project
in southern Chad -a project developed by ExxonMobil and
partners at an investment of $4.7billion, including an
export pipeline.)
For both Kosmos and Tullow, the Jubilee field is huge for
the life of the company. For Tullow, a Financial Times Stock
Exchange (FTSE) 100 publicly traded company based in London
, the Jubilee field, coupled with a find in Uganda , has
made the company a medium-sized company to watch. After
positive results from the Hyedua 2 and Mahogany 3 wells, the
company’s shares led sharp rises in the FTSE 100.
Also, the US Company Anadarko Petroleum Corporation, a large
and experienced player in the industry, has a stake in both
blocks that cover the Jubilee field. The E.O. Group is a
Ghanaian company with a 3.5% ownership stake in the West
Cape Three Points block. The Directors of E.O. Group include
Kwame Bawuah-Edusei , Ghana ’s current Ambassador to the US
, and George Yaw Owusu, also the country manager of Kosmos.
Both men were honoured by then-president Kufuor with the
Order of the Volta medals in 2008 for their involvement in
the Jubilee find.
Because the Jubilee field straddles two blocks governed by
two petroleum agreements, the oil companies involved and the
Ghana National Petroleum Corporation (GNPC) have had to
develop a “unitization agreement” to develop a joint
contractual framework and geographically delimit the Jubilee
field area.
Instructively, beyond the Jubilee field, there is active
exploration and licensing interest in Ghana ’s offshore
areas, much of this spurred by the 2007 discovery.
Both Kosmos and Tullow, along with their partners, are doing
further exploration outside of the unisation area. Kosmos
has high hopes for a find outside the Jubilee field-in fact,
the Jubilee field discovery came as a surprise, as it was
not the primary target in the West Cape Three Points block.
Kosmos, Chief Executive Officer, Musselman told African
Energy during an October 2008 visit to Ghana that “We have
been able to identify a couple of areas with the attributes
as Jubilee field, and we have a high degree of confidence of
making another find as big as Jubilee”.
In October 2008, Kosmos said the company would sink five
wells in the coming 200 days in the Jubilee field, spending
up to $100million in the process. Tullow drilled a
successful exploration well-Ebony 1-in the shallow water
Tano license area.
Anadarko’s CEO has said, “The partnership expects to be
active in the area in 2009 and anticipates drilling
development, appraisal, and at least three additional high
impact exploration wells, including Tweneboa, Teak, and
Onyina”. The drilling of Tweneboa was planned to begin in
January 2009.
Other exploration wells have been drilled or are being
planned for the Keta block and the South Deepwater Tano
block.
Ghanadot
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