Wood McKenzie: Newly Discovered TotalEnergies N’Delta Oil Field Could Hold 400m Barrels of Oil

•May emerge Nigeria’s biggest shallow water find in a decade

Emmanuel Addeh in Abuja

TotalEnergies’ recent oil discovery at Ntokon in the Niger Delta is likely to be Nigeria’s biggest shallow water discovery in a decade, Wood Mackenzie, a research and consultancy group in the global energy industry has revealed.

Wood Mackenzie’s Director of Upstream Research, Gail Anderson, in a statement quoted by Rigzone, added that the find “shows that there is still plenty of running room in the shallow water Niger Delta”.

In the statement, Wood Mackenzie revealed that it estimates the field could hold resources in the range of 300 million barrels of oil equivalent to 400 million barrels of oil equivalent, based on analogous net pay of shallow water discoveries in the Tertiary Agbada formation of the Niger Delta, and above-average recovery from high quality reservoirs.

“Assuming 320 million barrels of oil equivalent of reserves, a wellhead platform development of 60-70 meters water depth with up to 30 wells and a multi-phase pipeline to Ofon could achieve first oil in 2029,” the firm stressed.

“This would generate a healthy Internal Rate of Return (IRR) of 24 per cent, based on the current concession terms, with the understanding that the Joint Venture (JV) will not convert to the Petroleum Industry Act (PIA) fiscal terms,” Anderson added.

Wood Mackenzie highlighted in the statement that its analysis notes that filling the Ofon facilities and the oil terminal will significantly cut emissions intensity, “while a ready-made gas export route will make Ntokon a zero-flare development”.

It added: “This demonstrates the advantages of shorter-cycle tie-backs over more expensive stand-alone developments for both cost savings and lower emissions,” but warned that “there are challenges” mainly that “Nigeria is not known for short lead-times, particularly where JV projects are concerned,”

According to Wood McKenzie, Ntokon will provide a test in the face of stiff global competition to see if all interested parties could quickly progress lower-cost, lower-carbon projects and allow Nigeria to kick-start desperately needed investment and recover its declining production.

Just over a  week ago, TotalEnergies announced the Ntokon oil and gas discovery on OML 102 offshore Nigeria.

The Ntokon-1AX discovery well encountered 38 meters of net oil pay and 15 meters of net gas pay, while its side-track Ntokon-1G1 encountered 73 meters of net oil pay, in well-developed and excellent quality reservoirs, TotalEnergies said in a statement posted on its website.

Ntokon-1G1 tested successfully up to a maximum rate of about 5,000 barrels per day of 40° API oil, the company added.

It is planned to be developed through a tie-back to the Ofon field facilities on OML 102, which are located 20km away, TotalEnergies highlighted in the statement.

“The Ntokon discovery opens a promising outlook for a new tie-back development,’’ the President of Exploration and Production at TotalEnergies, Nicolas Terraz, said.

“After the start-up of production of the Ikike tie-back on OML 99 in 2022, this new success in the area further demonstrates the potential of nearby exploration to create value within our low cost, low emission strategy,” he added.

OML 102 is operated by TotalEnergies EP Nigeria with a 40 per cent interest, alongside partner, the Nigerian National Petroleum Company Limited (NNPC) , which holds the remaining 60 per cent stake.

Back in July last year, TotalEnergies announced the start of production from the Ikike field in Nigeria. The Ikike platform is tied back to the existing Amenam offshore facilities through a 14km multiphase pipeline, the company revealed in that statement, adding that it would deliver peak production of 50,000 barrels of oil equivalent per day by the end of 2022.

“TotalEnergies is pleased to start production at Ikike, which was launched a few months before the Covid pandemic, and whose success owes a lot to the full mobilisation of the teams,” the Senior Vice President of Africa Exploration and Production at TotalEnergies, Henri-Max Ndong-Nzue, said in a company statement at the time.

“By tapping discoveries close to existing facilities, this project fits the company’s strategy of focusing on low-cost and low-emission oil projects,” Ndong-Nzue added.

Last month, TotalEnergies announced the renewal of the production license on the OML 130 block in Nigeria for 20 years.

OML 130 block contains the “prolific” Akpo and Egina fields, which came into production in 2009 and 2018, respectively, TotalEnergies highlighted in that announcement, adding that, in 2022, production amounted to 282,000 barrels of oil equivalent per day.

 Nearly 30 per cent of that was gas sent to the Nigeria LNG plant, “notably contributing to Europe’s energy security”, TotalEnergies pointed out in the statement.

The production start-up from Akpo West, a short-cycle project, is expected by the end of 2023, according to the company, which outlined that the block also contains the Preowei discovery, which it said is to be developed by tie-back to the Egina FPSO.

“Through the OML 130 license renewal, TotalEnergies is pleased to continue its contribution to the development of Nigeria’s oil and gas sector,” Ndong-Nzue said in the statement.

“This 20-year extension will enable us to move forward with the FEED studies on the Preowei tie-back project which aims to valorize a discovery using existing facilities in line with company’s strategy focusing on low-cost and low-emission assets,” the TotalEnergies SVP added.

TotalEnergies Upstream Nigeria Limited operates OML 130 with a 24 per cent interest, in partnership with CNOOC (45 per cent), Sapetro (15 per cent), Prime 130 (16 per cent), and the NNPC as the concessionaire of the PSC.

The recent discovery by the company may be another confirmation that Nigeria remains a lucrative destination for oil and gas in investors despite the much-talked-about inclement business environment in the country.