BY BRIGHT JACOB
The waiting game is finally over as Nigeria, against all odds, discovered crude oil in commercial quantity in the seemingly unlikeliest of places, a border community between Bauchi and Gombe states, in Northern Nigeria. And though the news of the discovery was exhilarating and evoked a feeling of nostalgia for the corresponding period the “black gold” was discovered in Oloibiri, Bayelsa state, the project, initiated three years ago by the Muhammadu Buhari administration, was almost stripped bare because of the pessimism over the erroneous belief that the geologic formation in northern Nigeria was nothing similar to what obtained in the Niger Delta region.
Crude oil has been a blessing and rightly so, too, a curse to the giant of Africa. With all the revenues it generates, life should have been rosier for oil-producing communities, in particular, and Nigerians, in general. Instead, it is the associated restiveness in those communities that continue to hold the nation’s economy to ransom and make headlines.
Nonetheless, it is an incontrovertible fact that crude oil has played major roles in either boosting or reviving the economies of oil and gas-producing countries in the world and could be a tool used for bragging rights on the negotiation table.
In October 2019, the Nigeria National Petroleum Company Ltd announced the discovery of crude oil, gas, and condensate in the Kolmani River region, a landlocked area, at the border community between Bauchi and Gombe states. After that announcement, suggestions were rife about the FG politicising crude oil exploration. Three years down the line, that announcement has yielded fruits that would likely restore Nigeria’s status as the biggest exporter of the commodity in Africa.
On November 22, 2022, the President inaugurated the commencement of commercial oil production in the North. On that milestone occasion, the Commander-in-Chief said, “We are pleased with the current discovery of over 1 billion barrels of oil reserves and 500 billion cubic feet of gas within the Kolmani area and the huge potential for more deposits as we intensify exploration efforts.
“It is good to note that the discovery has now attracted investment for an end-to-end integrated development and monetisation of the hydrocarbon (crude oil and natural gas) resources.
“As a fully integrated in-situ development project comprising upstream production, oil refining, power generation and fertiliser, the project promises many benefits for the nation. This includes but is not limited to energy security, financial security, food security as well as overall socio-economic development for the country,” an elated Buhari said.
The President also gave his administration a pat on the back for attracting $3 billion to the project at a time there was apathy for financing fossil fuel projects. Interestingly, this kind of huge investment the president detailed has elicited the calls for producing communities to be given a 3 percent Community Development Fund, separate from the 13 percent derivation accruable to oil-producing states.
Sharing his thoughts with The Point, a senior lecturer in the faculty of Engineering, Department of Petroleum Engineering, University of Benin, Onaiwu Oduwa, said that the discovery of crude oil in commercial quantity took quite a while to achieve on the Nigerian side of the Chad basin because of the use of “outdated” exploration equipment.
According to him, it was after more sophisticated equipment was deployed that the discovery could be made. Onaiwu also commended the Federal Government for keeping faith in the project in the face of adversity.
“For some of us, the discovery was not a surprise. Like in the Chad basin….the Niger (Republic) side of the Chad basin had discovered oil long ago. That’s why the country is an oil-producing country.
On the Cameroonian side of the Chad axis, I think they have also discovered oil there. It was only the Nigerian side that we had looked for oil before now but didn’t find,” Onaiwu said.
Speaking further, he said, “So, what they (exploration companies) needed to do was to redirect their probe using better equipment. They were likely using old versions of seismic technology when they should have been using the latest ones, and the latest telemetric technology, geometric survey and others.
“So, it was just a matter of time. Because if a country like Ghana we never thought could have oil, and began to explore the same, why shouldn’t Northern Nigeria? So, we should commend the FG for keeping faith with the project, because they saw there were possible hydrocarbon deposits around the Benue trough and other areas in Nigeria,” Onaiwu added.
Addressing some of the other factors that contributed to the late discovery of oil in the North, Onaiwu said that drilling for oil in the North was highly politicised and it took the political will of the President to get the job done.
He also blamed the geological formation of the Kolmani region, which he said was “highly pressurised” and adversely affected drilling bits used for drilling wellbores in the earth’s crust. In contrast, Onaiwu said drilling in the South (Niger Delta region) wasn’t as arduous as experienced in the North.
Also, In his analysis, he noted that the formation was also “highly consolidated” and, thus, restricted drilling beyond 8 feet. He reiterated that it was the use of the “best technology available” that addressed these issues as it prevented instances where seismic records indicated a sealing fault where hydrocarbons may have been formed deep underground but would not be, after drilling commenced.
Shedding more light on the reported 1 billion barrels of oil reserves and 500 billion cubic feet of gas within the Kolmani area, Onaiwu said, “That’s just one axis of the Kolmani river. If they search in other axes, it will increase. That is why the license granted to the prospecting companies is still an Oil Prospecting License or OPL. So, they are still prospecting. When the companies fulfill all the conditions in the OPL, they can now apply for an OML (Oil Mining License).
“Thus, the wells they drilled before were prospecting wells….maybe one or two. Now, they are trying to increase it to developmental wells. They’re going to drill more wells. Normally, they move from the exploratory section to the appraisal and then to the developmental section.
“During the appraisal, you will try to determine the area extent of the reservoir…how large it is. So, that will give you an idea of whether the reservoir is more than what you had anticipated. Because you might see a crude oil reserve that is more than what you arrived at during the exploratory section. Then as you do more developmental wells, the reserve will continue to increase.”
Expatiating on the landlocked scenario of the Kolmani area, Onaiwu said it would have been difficult to transport crude oil to the ports in the Niger Delta or Lagos from where it could be exported, as the laying of pipes would be capital intensive.
“In fact, they’re going to do a Full Hydrocarbon Value Chain, where you have a refinery with a petrochemical facility….and that is going to increase the revenue profile of the country”
According to Onaiwu, this was what led to the idea of adopting the Integrated In-situ Development project approach where the crude oil would not be exported, but refined locally.
“So, this entails building, in the vicinity of the oilfield, an oil refinery of up to 120,000 barrels per day capacity, a gas processing plant of up to 500 million standard cubic feet per day, a power plant of up to 300-megawatt capacity and a fertiliser plant of 2,500 tons per day.
“In fact, they’re going to do a Full Hydrocarbon Value Chain, where you have a refinery with a petrochemical facility….and that is going to increase the revenue profile of the country,” Onaiwu said.
He added that petroleum was a “ubiquitous” product and means “everything in life” because it was from it that items like perfumery, clothes, plastics, furniture, tyres, etc were derived. “So, if the refinery and petrochemical facility are working, that will create so many jobs in the country because, with the discovery, we are going to achieve the benefits of the value chain I talked about earlier,” he posited.
In addition, Onaiwu said FHVC would also put an end to the “crude oil swap deal”, currently practiced in the Niger Delta area, where barrels of oil are sent to some foreign countries, who refine and send only Premium Motor Spirit (petrol) back to us. “The only thing they bring back to us is PMS. What about the AGO (Automotive Gas Oil or Diesel) and DPK (Dual Purpose Kerosene) and the other products that would have made the economy richer?” he queried.
On the proposed 3 percent Community Development Fund, Onaiwu said the step would be one in the right direction as the communities will be “richer” for it. He said if the fund was judiciously used by the government, it would help curtail rural-urban migration and attract indigenes who left for greener pastures back to the communities. He added that the funds could also be used to grant scholarships to youths in the communities.
About the fund, Onaiwu said, “If, for instance, you have 10,000bpd from a community at $10 per barrel, that’s about $100,000. 3 percent will fetch you about $3,000 or more. That community will be richer for it. It is big money. And look at the volume that will be produced daily…multiply it by 365 days and you’ll appreciate what will accrue to those communities.
“And then imagine a community of about only 5,000 people…most of these oil-producing communities don’t usually have that size of people in them. If the government can use the money, not just to give some bunch of community elders….but to build critical infrastructures, the lives of the people will be better for it.
“Even rural-urban drift will change and people who left the communities would want to go back there because life would be better there. The money could also be used to award scholarships to the indigenes, and train them in modern ways of doing things,” he said.
On what the discovery could mean for the northern part of the country, Onaiwu said it proved beyond doubt that when anyone had a dream, he or she ought to pursue it. He also said the north would not want a repeat of the mistakes made in the Niger Delta. “You know we have destroyed our environment there by ourselves with all the illegal refineries everywhere,” Onaiwu said.
In addition, he said the Boko Haram menace or not, the North would allow the project to run in the expected way and he also praised the region for building better infrastructure than what was obtained in the South.
On the influence of the Petroleum Industry Act on the project, Onaiwu said it was of immense help. He said it was the PIA that birthed the new NNPC which was at the forefront and championed the drilling project, and since the organisation was now privately owned, the hitherto lackadaisical attitude of government workers had been thrown out of the window as the NNPC plc was now more profit-driven and focused.
Also, he said the PIA had become a guide to operators in the Petroleum Industry, as well as the International Oil Companies who had before now engaged in sharp practices. “Take note, all these years, we didn’t have an enabling law in the petroleum industry to guide operators. We were working at cross-purposes. The Department of Petroleum Resources will say this, and other agencies will say theirs.
“With the PIA, everything is well established now. The International Oil Companies that used to make so much profit from Nigeria, ripping Nigeria off…because there were no laws guiding the industry, can sit up now. They engaged in sharp practices….things they don’t do in their countries. The PIA is a big win for Nigeria,” Onaiwu concluded.
