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Oil and gas activities in Ghana

BY: Prof. Kwamina Panford

 

On December 15, 2010, Ghana became an oil and gas-producing country when the “first oil” was inaugurated at Jubilee Field. Prior to inaugurating the first oil, the nation announced the discovery of commercial quantities of oil and gas at what is dubbed Jubilee Field 1 on June 17, 2007. 

This discovery, one of the largest in the last decade in Africa, was made by the Jubilee Partners, namely Tullow, Anadarko, Kosmos, E&O Group, Sabre Oil & Gas and Ghana’s own national oil company, the Ghana National Petroleum Corporation (GNPC).

Jubilee field reserves

The reserves of Jubilee Field 1 are estimated to be between 800 million to over one billion barrels of oil and 120 mmscf/day of associated gas with a projected production span of 20 years.

This field is 64 kilometres offshore and over one kilometre below sea from Cape Three Points. This field is close to Ghana’s border with Cote d’Ivoire in the Tano Basin, Ghana’s most western oil field in the Gulf of Guinea and the Atlantic. By air, Jubilee Field is 45 minutes and by sea, five to six hours from Takoradi, the Western Regional capital city.

With a peak production target of 120,000 barrels of oil per day (bopd), it is estimated that average yearly national revenues from corporate taxes, royalties, GNPC’s carried and participating interests and other payments could be approximately USD 1 billion. Jubilee, which begun producing on November 28, 2010, produced 45,000 bopd in 2010 and at the end of 2011, reached 80,000 bopd. 

Jubilee’s development

One feature of Jubilee 1 is that it is one of the world’s fastest well-tracked developments. It took 40 months from discovery to production (June 2007 to November 2010).

The industry’s average is six to seven.  At the time of writing this piece, Jubilee had not reached the peak production level due to problems associated with some of the wells. Because some of the wells were dry and the first oil was inaugurated late in 2010 and unfavourable fiscal arrangements, Ghana has not earned the over  US$ 1bn that was projected. 

According to the Public Interest and Accountability Report of 2011, Ghana’s total revenue from  oil and gas by the end of 2011 was US$441 m, while the front page of the Daily Graphic of July 9, 2012 showed that  by mid  2012, total revenues were US$903m. 

Production before Jubilee Field

Before June 2007 (when Ghana announced the discovery of commercial quantities of oil and gas) the country had limited experience with oil and gas production. Interest in the country’s oil and gas dates back to the 1890s when some exploration was done in the inland Tano Basin.

The development of interest in oil coincided with the introduction of both cocoa cultivation and industrial gold mining. Thus after 120 years when the first oil prospecting occurred, Ghana had its first full year of commercial oil production in 2010 - 2011.

Jubilee Field was preceded by other EDP activities in Ghana. Before the 1970s, in the onshore Tano area, a few barrels of oil were produced. However, the closest the country got to commercial production was  in 1970 when an Amoco-led consortium discovered oil in an offshore field near Saltpond (72 miles from Accra and 18 miles from Cape Coast).

The Saltpond field was brought into production by Agri–petco with a maximum output of 4,000 bopd. The field was shut down in 1984 due to decline in production. With rising world prices and increased demand for oil, in 2000, the GNPC and Lushann Internit resumed production which is estimated at 700 bopd. Besides, GNPC produced 62,000 barrels of oil from a South Tano field, 20 km north of Jubilee Field.

The oil was from a well test to appraise the potential of a field which Philips Petroleum discovered in the 1970s.

Other oil companies 

Not all oil companies that operated in Ghana were western multinational oil companies (MNOCs). Before the 1966 military coup which  toppled the Kwame Nkumah Government, Soviet oil and gas companies searched for petroleum  mostly in the onshore Voltarian Basin. After the coup, the Soviet companies left with the exploration data they had accumulated.

Type of petroleum from Jubilee Field

In the expert opinion of  Robert Adjaye, an engineer, petroleum specialist and the Director of the Petroleum Skills Development Institute (PSDI Accra), oil from Jubilee Field 1 is both light and sweet. It is the preferred type because it is easy to refine — it is premium, light and sweet. 

The lightness of crude deals with its gravity attributes and the sweetness is measured by the presence or absence of sulphur and hydrogen. Because of the Jubilee Field’s high quality crude it has been nicknamed “the Mercedes Benz” of oil crude. This should make Jubilee Field’s crude easy to refine in Ghana if the nation goes ahead to do so.

Ghana’s petroleum potential

It is worth nothing that other than the Jubilee Field, Ghana has tremendous potential in O/G. So far, the oil produced in the Tano Basin has come from one out of many fields that are in the discovery, appraisal and development phases. One of the most important discoveries which is being developed is a cluster of wells referred to as TEN.

TEN is made of Tweneboa, Enyera and  Ntomme Complex whose plan of development was expected to be approved by Ghana’s Ministry of Energy & Petroleum  (MoEP) by the third quarter of 2012. 

If development and production plans materialise, Ghana could become one of the big oil and gas producers  in Africa. It is projected  that in  five to 10 years, the country may produce as much as half a million bopd plus 300 mmcf/day of natural gas. 

Now the big question Ghanaians have to answer is what happens to this potential if we do not plan quickly to use them wisely to benefit most of our citizens. 

The author teaches at Northeastern University, Boston, MA. He is also a visiting Scholar/Professor at the Institute for Development Studies, University of Cape Coast where he has worked on petroleum and public policy since 2009.