PETROLEUM EXPLORATION AND PRODUCTION
Historically, the Nigerian petroleum scene
opened as far back as 1908, when a German com pany, the Nigerian Bitumen Corporation, was
attracted to what is now known as the south-west ern Nigerian Tar Sand deposit. After World War 1,
Shell-D'Arcy, a consortium of Shell and Royal
Dutch, resumed oil exploration in 1937, this time in
Owerri, on the northern frame of the Niger Delta.
On June 5, 1956, after drilling 28 wells and 25 core
holes, all dry, the new operator, Shell-BP, struck oil
at Oloibiri in what is now Bayelsa State.
Thenceforth, the Niger Delta became Nigeria's
bumper scene of feverish exploration and produc tion. From an initial output of 5,100 barrels per day
in 1956, the nation steadily rose to the sixth position
on the production chart of the Organisation of
Petroleum Exporting Countries. By the mid-1970s
Shell, the leading producer, had exceeded the one
million barrels a day production mark.
After over three decades during which the oil
industry was dominated by foreign companies, a
private indigenous oil company, Consolidated Oil,
recorded its first discovery, Bella - 1, in 1991. Since
1992, following the release of new concessions in
the Niger Delta to indigenous exploration and pro duction companies, the number of indigenous com panies has increased to 12. So far, out of some 870 oil fields discovered in Nigeria, only 120 fields
are currently producing. Most of the fields are not
producing because the country has to abide by
OPEC's production quota of 1.8 million barrels per
day to Nigeria. Violence in the oil-producing communities has also disrupted production, causing the
shut-up of most land and swamp wells. Production
is sustained by offshore fields.
Certain notable achievements and develop ments in Nigeria's petroleum exploration and pro duction ventures deserve to be highlighted. In order to raise the country's proven petroleum
reserves from 23 billion barrels to the target 25 bil lion barrels set for. 1995, the Federal Government
not only opened new acreages for exploration, but
also offered a package of fiscal incentives to petro leum companies. Among the incentives is the
reduction of petroleum tax to boost exploration in
the deeper offshore. Potential reserves in billion
barrels are estimated for the new blocks which hold
good prospects for smaller fields with less than 50
million barrels. Generally, in the Niger Delta, about
73 per cent of crude oil discoveries are in fields hav ing less than 50 million barrels of proven reserves.
The overall wildcat success ratio is 42 per cent.
However, in some years the success ratios of
exploratory and appraisal/development wells are
substantially higher (83.5 per cent in 1989).
Petroleum prospects in the offshore Niger Delta are
most attractive, with a potential 1.10 billion barrels
of crude awaiting discovery in recently awarded Oil
Prospecting Licences (OPLs). Oil Prospecting
Licences in the deeper Offshore (200-150m water
depth) have received highly competitive bids, which
extensive regional seismic and geochemical sur veys have shown to be quite attractive.
A new development in Nigeria's petroleum
prospecting is the unitisation scheme. Under this
arrangement, petroleum prospecting companies, in
order to reduce cost, conduct joint exploration and
development of undeveloped oil fields which strad dle their common concession boundaries.
Shell Petroleum Development Company (SPDC) of
Nigeria and Chevron Nigeria have formed such an
alliance. Apart from reducing operating cost, the
intention is to maximise the exploitation of adjoining
fields. The first SPDC-Chevron initiation scheme
involved Shell's Belema field and Chevron's
Belema North field, which are to be developed with
Shell as the operator, while utilising the facilities of
both companies. Under the Unitised Development
Statement of Principles of Co-operation, funds will
be contributed by both companies based on the
size of petroleum reserves found in each of the
companies' sector of the fields. The equity share of
production allocated will also depend on the
New exploration technology has also made
substantial impact on Nigeria's petroleum potential.
High resolution seismic technology involving
enhanced 2-D seismic and the advent of 3-D seis mic technology have revealed petroleum prospects
at greater depths than before. Consequently, sub tle traps and deep-seated structures have been dis covered which, in many cases, are larger reservoirs
than their shallower and more structurally complex counterparts. As a mature petroleum province such
on sophisticated tools are needed to increase
Also, Shell has successfully conducted 3- D seismic surveys over swampy terrain. Similar
improvements in drilling technology have been beneficial. Wells can now be drilled in less than half the
time it took in the fifties and sixties. Also, with Shell
blazing the trail, horizontal drilling is now possible in
Nigeria. This involves the use of top drive drilling
and flexible drill pipes. Drilling through deep temperature overpressured shale into deeper reser he voirs is now also feasible.
in Chevron has embarked upon secondary oil
on recovery from fields where the reservoir pressure is
too low to lift crude oil to the surface. Secondary
recovery is through the injection of water into the
reservoirs. In Delta South and Merton fields where
the natural pressures have declined, Chevron has conducted successful secondary recovery. The
Delta South Water Injection facility has raised the
of recoverable oil reserves by 51.8 per cent, while at
Mere, 485 million barrels (44 per cent of the original
crude oil in place) are available.
A major boost in crude production was the coming on stream of Mobil's Oso Condensate Project.
Discovered in 1967 by the then Mobil Exploration
Nigeria Inc., the predecessor of Mobil Producing
Nigeria Unlimited. The Oso field holds a gigantic
reserve of 500 million barrels of recoverable con K- densate, the Oso field is located in the NNPC/Mobil
Joint Venture Oil Mining Lease No. 70, some 35 km
offshore of Akwa lbom State in the eastern delta.
Joint venture finance agreement to develop the Oso
in field was concluded in April 1991, after long and
complex negotiations and detailed investigation.
Conservation of the associated gas that is pro ell duced from Mobil's fields is an important feature of
of the Oso project. About 100 km of a gathering
an pipeline system collects associated gas from
he Mobil's Edop, Etim, Inim, Ubit and Utue production
platforms to the Oso Gas compression platform.
Here, the low-pressure associated gas is com i's pressed and re-injected into the Oso reservoir,
thereby minimising gas flaring. The Edop field is
of the largest offshore platform in Nigeria, producing
165,000 barrels a day, with a daily production target
of 250,000 barrels. With the development of the
he Edop field, the complex stratigraphy of which could
he only be unravelled using 3-D seismic, the
of NNPC/Mobil Joint Venture will earn an additional 10
he billion dollars of revenue.
In spite of its enormous crude oil reserves and
substantial production by world standard, in 1992,
Nigeria spent about 216 million pounds sterling
importing heavy crude from Venezuela, at the rate
of 50,000 barrels per day. Heavy crude is needed
in the Kaduna refinery where it is used as base oil
for blending with products such as lubricants and
greases. Harnessing Nigeria's heavy crude from
some Niger Delta oilfields and especially from the Tar Sand deposit in Ondo State (with 31 billion barrels of heavy crude), Nigeria will avert this import expenditure.