Drilling Contractors push for growth

As the Oil and Gas industry progresses a modest recovery from one of the more prolonged downturns in recent times, operators have begun cautiously rebuilding their drilling program inventory and rig activity levels.

The long-established African oil and gas producers are managing two distinct challenges at either end of the production spectrum: 1) increasingly complex and expensive new developments, and 2) low value depleted fields under late life investment or disposal.

In Nigeria for instance, data from the Department of Petroleum Resources paints a gloomy expose, indicating that the nation’s crude oil reserves of about 37 billion barrels, two per cent of which is being produced annually, will be depleted in 49 years. The reserves which stood at 37.45 billion barrels in 2014, fell to 37.06 billion barrels in 2015 and 36.74 billion barrels in 2016. It, however, rose to 36.97 billion barrels in 2017 and 37 billion barrels in 2018, the DPR data showed. The reserves depletion rate is a measure of 2018 total oil and condensate production divided by the reserves as of January 1, 2019, according to the DPR.

Last week, the Minister of State for Petroleum Resources, Chief Timipre Sylva, sounded the alarm bell saying the nation’s oil sector has worsened as the uncertain fiscal environment put a damper on the investments badly needed to ramp up oil production and increase reserves.

These worrisome concerns were the engaging issues in a two-day IADC Africa 2020 Drilling Conference and Exhibition, held on the 18th and 19th February in Accra, Ghana.

The  International Association of Drilling Contractors (IADC), a non-profit organization, as part of its 80th anniversary, embarked on a holistic overview of  the increasing complexity around Oil & Gas operations coupled with volatile oil prices which has continued to bring about fast-paced market changes from the prolific northern countries like Egypt, Algeria and Libya, to the more mature oil and gas markets in the western part of the continent like Nigeria, Angola and Ghana, all the way to the eastern side, including Kenya, Uganda, Mozambique and Tanzania where oil and gas exploration is still emerging.

At the conference, the drilling contractors community asserted opinions and  explored all aspects of drilling operations in vital regions, including ultra-Deepwater, sub-salt, emerging markets, HPHT, re-entry drilling for gas redevelopment, underbalanced and managed pressure operations, community development, training and competency, workforce development, logistics and security.

The association reckoned that in addition to multiple opportunities and challenges unique to Africa, many parts of the continent will struggle to grow or even maintain their economies in the face of declining oil and gas revenues. At the same time, pressure on performance of the drilling sector will surely intensify.

But to Hisham Zebiam, Vice President, Eastern Hemisphere, IADC, this is a misconception which should be corrected. The truth, according to him, “Hydrocarbons power our homes, our vehicles, and our lives. No feasible alternatives exist for vital petroleum products including petrochemicals and lubricants. We have increasingly seen developments in carbon capture technology, taking emitted carbon to be sequestered or used in a company’s operations.”

Mr. Zebiam said “Oil and gas provide two-third of the energy consumed in the USA. Global oil and gas consumption are expected to grow significantly in the coming decades, particularly in the developing world. Oil and gas energize lives and are vital to economic and population growth.” 

The Eastern Hemisphere Vice President supported his argument with increasing demand figures.

According to him, the U.S. Bureau of Labor Statistics, the U.S. Oil & Gas Extraction (Mining) industry will need to hire 45,000 additional workers (and replace all workers that leave the industry) in order to sustain industry growth through 2028. In addition, he said “India’s oil and gas sector is likely to require around 25,000 additional professionals in the next five years due to business growth and retirement or attrition in the sector. This is equivalent to around 48% of the current employee strength. The upstream sector is expected to see the maximum shortfall, with a requirement for 7,600 employees in the next five years because of high attrition and retirement.”

In his update remarks, Chuks Enwereji, Chairman, IADC Nigeria Chapter, shared these views. To him, the capacity and capability to “rise, meet these challenges and still embrace fresh opportunities from onshore to ultra-Deepwater” are fundamental and deserve immediate attention. He however, literally doused tension and raised optimism to an assuring level through the Nigerian testimonial.

He presented that as of last count, rigs in Nigeria have attained an encouraging level of 38 even as he stated that “2019 ushered significant increase in work opportunities for drilling contractors and service companies.”

Association membership size, he stated, has grown from 27 members in 2018 to 38 active members in 2019, representing 41 percent increase. As a step towards an all-inclusive growth strategy, the association has consistently kept tab on the operational modes of members by creating “more collaborating opportunities amongst members including distribution of rig count information.” Chuks added that the association continues to engage regulatory agencies in reviewing and solving industry issues where they exist.

However, Mr. Enwereji maintained that these developments are not without challenges. He solicited for government’s friendly policies and cautioned on over regulation. He urged members to be more prepared in the pursuit of innovative strategies in rig operations to stay in business. He urged the investing international community to show more interest in Nigeria because according to him, there are still lots of oil and gas opportunities in the country.

The involvement of Petroleum Engineering students of Kwame Nkrumah University of Science and Technology flows directly with the association’s belief in building sustainable human resource future for the industry. Nicholas Kofi, Lead EHS Advisor, Tullow Oil affirmed this belief by his company’s policy that offers scholarship to students as well as mentorship program “Catch them young and they will be yours forever,” he said.

The conference was concluded with a commitment by members to focus on emerging opportunities in Africa by taking lessons learnt from advanced producing countries. These lessons will support local content development as part of measures to mitigate distinct challenges of complex-expensive new developments and low value depleted fields.

In attendance for this august event were representatives from Nigeria Department of Petroleum Resources (DPR),  Ghana Petroleum Corporation, drilling experts from the United Kingdom,  United States of America, The Netherlands, Denmark, Norway, United Arab Emirates, Egypt, Spain, France, South Africa, Senegal and Luxemburg.