The good news that crude oil has finally been discovered in commercial quantity in Northern Nigeria, after years of futile search, holds the promise of strengthening the economy of the region and giving the oil industry a national spread.
For decades there oil and gas industry has been localized in Southern Nigeria, mainly in the South south zone, which has the largest deposit of oil and gas.
The Nigerian National Petroleum Corporation (NNPC) announcement that it had discovered hydrocarbon deposits in the Kolmani River II Well on the Upper Benue Trough/Gongola Basin, was expectedly greeted with excitement, given the fact that oil and gas remains Nigeria’s ‘golden egg.’
Also yesterday, the corporation signed a $2.5 billion pre-payment agreement with the Nigeria Liquefied Natural Gas (NLNG) company for upstream gas development projects for the supply of gas to NLNG Train 1 to 6.
Acting Group General Manager, Public Affairs, Mr. Samson Makoji revealed both developments in two separate statements, explaining that “preliminary reports indicated that the hydrocarbon discovery consisted of gas, condensate and light sweet oil of American Petroleum Institute (API) gravity “ranging from 38 to 41 found in stacked siliciclastic cretaceous reservoirs of Yolde, Bima Sandstone and Pre-Bima formations.”
The statement said the corporation resumed the search for crude oil up north when President Muhammadu Buhari came into office in 2015. Drilling of the Kolmani River II Well was flagged-off in a colourful ceremony by Buhari on February 2, 2019.
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Makoji stated that NNPC acquired 435.54 kilometres-square (km2) of 3D seismic data over Kolmani prospect in the upper Benue trough in the Gongola basin.
He noted that this was to evaluate Shell Nigeria Exploration and Production Company (SNEPCo) Kolmani River 1 Well discovery of 33 billion standard feet (BCF) of gas and explore deeper levels.
“The well was drilled with ‘IKENGA RIG 101’ to a total depth of 13,701 feet encountering oil and gas in several levels. A Drill Stem Test (DST) is currently on-going to confirm the commercial viability and flow of the Kolmani River reservoirs,” said Makoji.
He further stated: “On Thursday 10th October, 2019, at 18:02hours, one of the reservoirs was perforated and hydrocarbon started flowing to the well head at 21:20hours in which the gas component was flared to prevent air charge around the rig.
“Computation of hydrocarbon volume is on-going and will be announced in due course.”
According to him, the corporation has also acquired additional 1183km2 of 3D seismic data over highly prospective areas of the Gongola basin with a view to evaluating the full hydrocarbon potential of the basin.
Makoji said: “NNPC has deployed world class cutting-edge technologies including surface geochemistry, ground gravity/magnetic, stress field detection, full tensor gradiometry aerial surveys to de-risk exploration in the frontier basins.
“The NNPC plans to drill additional wells for full evaluation of the hydrocarbon volume in the Gongola basin.”
Buhari, had during the spud-in ceremony of Kolmani River II, stated the commitment of the federal government to the exploration for oil and gas in the frontier basins in the entire length and breadth of the country.
The basins, according to the NNPC, included the Benue trough, Chad basin, Sokoto and Bida basins.
The President stated that attention would also be given to the Dahomey and Anambra basins, which have already witnessed oil and gas discoveries.
The NNPC said the discovery of oil and gas in commercial quantity in the Gongola basin would attract foreign investment, generate employment for people to earn income and increase government revenues.
On the gas deal with NLNG, the NNPC said the six trains of the NLNG currently have a production capacity of 22 metric tons per annum (mtpa), with an expected capacity expansion by eight metric tons per annum through its upcoming Train-7 project.
Makoji explained that the agreement would help to resolve issues around gas supply to NLNG’s existing six trains.
Speaking yesterday at the signing ceremony, the Group Managing Director of NNPC, Mallam Mele Kyari charged shareholders of the NLNG to intensify efforts towards expanding the production capacity of the company beyond Train 7 so as to take advantage of developments in the global LNG market.
The GMD, who spoke on the significance of the agreement, said it would help to resolve the issues around gas supply to Trains 1–6, stressing that there was need to fast-track action on the process of bringing more trains onstream.
“Here at NNPC, we are thinking beyond Train 7; if your ambition is Train 7,” Kyari said.
He noted that though NLNG had been a huge success as a company, it should go beyond its current achievements and initiate other viable projects capable of generating better return on investment.
“Actually, our thinking should be on what else we can do or what other projects we can work on as quickly as possible to take advantage of the enormous potential in-country. There is also the need for us to take advantage of what is happening in the global market and do things very differently. There are opportunities there and our company must move into those locations and we must move fast,” he declared.
The NNPC helmsman said the pre-payment gas supply agreement was a milestone which aligned with the federal government’s aspirations of monetising the nation’s enormous gas resources, protecting the Federation’s investment in the NLNG, ensuring full capacity utilisation (22mtpa LNG and 5mtpa NGLs) of Trains 1-6 plants, generating employment, and providing new vistas of growth opportunities in the nation’s LNG sector.
Earlier in his address, the Managing Director of NLNG, Mr. Tony Attah, stated that the signing of the gas supply pre-payment agreement was a significant step towards ensuring the company’s business sustainability and competitiveness.
He called for support to ensure that the Final Investment Decision on the Train 7 Project was taken this year without fail, adding that the project was no longer an ambitious one in the light of developments in the global LNG market.
