Nigeria’s Petroleum-based Nation-building
Paul Michael Wihbey, President of Washington-based energy consulting firm GWEST, draws on his in-depth working knowledge of West Africa to report on Nigeria’s energy-driven upswing as well as its heavy oil industry’s promising Alberta connection
Liquefied Natural Gas: Algeria has traditionally been the dominant player in liquefied natural gas (LNG) on the African continent. However, the future of Africa’s LNG industry more likely rests with Nigeria, with its production potential of up to 74 million tons per year (MT/Y). Nigeria’s exciting LNG sector has been a magnet for more than $20 billion in investments over the past few years.
Refining: Privatization of Nigeria’s four dilapidated oil refineries with their estimated total capacity of over 400,000 bbl/d has been on the political agenda for several years, but the issue has made little headway. The country continues to import most of its refined fuel, which it ought to produce domestically. In July 2006, a consortium of wealthy Nigeria businessmen pulled out of a controversial multimillion-dollar deal to buy two of the refineries. According to a Yar’adua spokesman, the contracts awarded on the sale had not followed due process.
Exploration and Production: The strategic and technical changes in the oil and gas sector in the Gulf of Guinea have altered the E&P landscape. New technology has become more accessible and higher crude prices have brought higher returns on investment. Smaller, independent local companies have emerged that are ready to focus on opportunities with higher risk and lower production rates than would offer sufficient attraction to the international majors and supermajors.
Nigerian oilsands: The Afro-Alberta connection
Nigeria’s bitumen reserves are estimated at 15 billion barrels; likely bitumen coverage is 189 square kilometres. In southwest Nigeria, significant deposits have been found in the states of Ondo, Lagos, Ogun, Edo and Enugu. The oilsands belt, with its five distinct hydrocarbon types, lies on the eastern margin of a coastal sedimentary basin known as the Benin Basin, which extends from the Ghana-Ivory Coast border through Togo and Benin Republics to Western Nigeria.
The first attempt to commercialize bituminous deposits in Nigeria was by the defunct Nigerian Bitumen Corporation between 1908 and 1914. During the period, some 15 wells were drilled and considerable amounts of bitumen were produced; however, production stopped with the outbreak of the First World War. In March 2006, the Nigerian Ministry of Solid Minerals Development invited both local and international investors to express interest in and bid for two bitumen blocks.
Over the next 10 to 15 years, several billion barrels of incremental oil reserves will be added to the estimated yet-to-be-discovered 62 billion barrels of crude oil via the application of proven extra-heavy and heavy extraction technologies. According to Dr Egbogah, who is also Director of the Society of Petroleum Engineers, Africa Region, “development of these unconventional reserves will be predicated upon a broad spectrum of economic, technological, policy and environmental restraints. This will require the concerted efforts of both industry and national energy policy makers in order to maximize the benefits of unconventional hydrocarbon technologies and associated reserves for Nigeria. The spin off will be employment and higher income for more Nigerian families.”
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