News from globeandmail.comTHE NEW CRUDE FRONTIERMonday, May 10, 2010As energy sources decline elsewhere, oil firms are turning to the vast potential of Africa. SHAWN McCARTHYOTTAWA -- GLOBAL ENERGY REPORTERAs energy sources decline elsewhere, oil firms are turning to the vast potential of Africa. Canadian Natural Resources is spending $260-million to develop its stake in West Africa's growing offshore oil production. And the Calgary company has property off South Africa where it intends to conduct what it calls a high-risk but potentially high-reward exploration.Known more for its oil sands focus, CNRL has steadily ramped up production in West Africa as part of its strategy to leverage expertise gained in the North Sea, and to replace declining production in that aging field.The Canadian company began pumping oil last year from its Olowi field, 20 kilometres off Gabon's coast, and is adding additional production platforms this year. It will also do some drilling to replace expected declines on two fields, Baobab and Espoir, off Ivory Coast.The African projects are among the company's most profitable. Last year, CNRL boosted its West African crude output by 23 per cent to more than 32,000 barrels per day, though it expects production growth to flatten out in the coming years."Every company I know of is active in West Africa," said Fadel Gheit, New York-based analyst with Oppenheimer & Co.And the West African offshore will attract even more attention - and exploration dollars - if the U.S. drives up the cost of drilling in the prolific Gulf of Mexico by imposing new regulations in response to the devastating April 20 blowout of BP PLC's Deepwater Horizon well."With more stringent environmental rules [expected] in the U.S. after this Gulf of Mexico disaster, that will help West Africa," Mr. Gheit said.Houston-based Anadarko Petroleum Corp. and the U.K.'s Tullow Oil PLC reported significant finds in Uganda, and off the coasts of Ghana, Ivory Coast, Liberia and Sierra Leone, where companies hope that offshore developments could rival some existing fields further south.Anadarko has also struck natural gas off Mozambique, in East Africa, while exploration companies are touting Kenya and even Somalia as prospective oil and gas producers.Off the coast of Ghana, Anadarko has made two discoveries - Jubilee and Tweneboa - that have led the industry to conclude the deep water north of the Gulf of Guinea holds major crude oil fields. Some geologists believe West Africa was once part of the same geological formation that includes the oil-rich Gulf of Mexico and offshore Brazil, and that there may be vast deposits in the ultra-deep offshore.While there have been many promising discoveries, Africa remains a relatively modest player in terms of actual energy reserves, accounting for less than 10 per cent of the global total. In the sub-Saharan region, only Nigeria and Angola have world-class reserves.Super-major Exxon Mobil Corp. spent a quarter of its capital and exploration budget in Africa last year, or $6.2-billion (U.S.), just slightly behind spending in Asia and the Middle East. The lion's share of Exxon's efforts is going to Angola and Nigeria. The two OPEC members each produce about 2 million barrels per day and represent major sources of imported oil to the U.S. and China. Exxon expects to add 127,000 barrels per day in production in Angola over the next three years, and 82,000 barrels in Nigeria. After 2012, it is planning four more projects for a net addition of 117,000 barrels per day in Angola, and 328,000 in Nigeria. However, Nigeria has seen its production fall by 16 per cent - or more than 400,000 barrels per day - since 2005 as violence and civil conflict in the Niger Delta has impaired operations. Angola, over that same time span, boosted output by more than 600,000 barrels a day, and has become the second-largest source of imported oil to China and a significant source for the U.S.you can imagine - even more to come |
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