Impact on oil, gas engineering operations, project viability in Nigeria due to increased US fossil fuel exploration

Abstract

The global oil and gas industry is deeply interconnected, with policy shifts in one region often influencing operations and economic conditions elsewhere. The recent executive order signed by U.S. President Donald Trump to expand fossil fuel exploration in America has significant implications for engineering operations and project viability in Nigeria’s oil and gas sector. This paper examines how increased U.S. production affects funding availability, technological advancements, supply chain stability, and cost optimisation strategies for Nigerian engineers. Using industry data and expert insights, this study provides a comprehensive analysis of the evolving landscape and its engineering challenges.

Introduction

The oil and gas industry is subject to fluctuations driven by geopolitical, economic, and technological factors. With the U.S. ramping up its fossil fuel exploration and production, engineers in Nigeria’s oil and gas industry face new operational challenges. These include shifts in global investment patterns, disruptions in the supply of critical engineering equipment, and the need for cost-efficient operations to remain competitive.

Impact on Project Funding and Investment

One of the most immediate consequences of increased U.S. oil production is its influence on global investment flows. Historically, Nigeria has attracted significant foreign direct investment (FDI) in its oil sector, but the emergence of the U.S. as a major producer could divert investment away.

Foreign Investment Trends

According to the Nigeria National Petroleum Company Limited (NNPCL), FDI in Nigeria’s oil sector declined from $3.2 billion in 2015 to $2.3 billion in 2020 (NNPCL, 2021). Meanwhile, data from the U.S. Energy Information Administration (EIA) shows that American oil production increased from 8.8 million barrels per day (bpd) in 2016 to 12.2 million bpd in 2019, reducing its dependency on imports (EIA, 2020).

Implications for Engineering Operations

• Project Delays: Reduced foreign investment could stall major upstream projects, affecting employment and engineering contracts.

• Local Content Challenges: Engineers may need to rely more on locally manufactured equipment due to reduced access to imported tools and technology.

• Increased Competition for Capital: With investors favouring U.S. oil projects, Nigerian engineers may have to demonstrate higher efficiency and cost-effectiveness in project execution.

Equipment and Technology Access

The availability of oilfield equipment and drilling technology plays a crucial role in engineering operations. With the U.S. expanding its domestic oil sector, supply chain disruptions could arise, particularly for specialised equipment such as:

• Subsea Production Systems

• Directional Drilling Tools

• Reservoir Simulation Software

According to a report by Rystad Energy (2022), over 60% of advanced drilling tools are sourced from North American manufacturers. If the U.S. prioritises domestic use, Nigerian engineers might experience delays in acquiring such equipment, affecting project timelines and efficiency.

Engineering Strategies to Mitigate Impact

• Local Equipment Manufacturing: Increasing investment in local manufacturing of oil and gas components.

• Technology Partnerships: Forming alliances with Asian and European suppliers to diversify equipment sources.

• Process Optimisation: Leveraging automation and digital twin technology to improve asset performance with existing resources.

Operational Cost Adjustments

With increased U.S. production putting downward pressure on global oil prices, Nigerian oil firms may need to adjust their operational strategies to remain viable. The break-even price for Nigeria’s offshore projects averages $30–50 per barrel, while U.S. shale oil producers can sustain production at $25–40 per barrel (Wood Mackenzie, 2021).

Cost-Saving Approaches for Engineers

• Lean Engineering Practices: Reducing material waste and improving process efficiencies.

• Enhanced Asset Integrity Management: Using predictive maintenance to minimise downtime.

• Alternative Energy Integration: Exploring gas-to-power solutions to reduce diesel dependence in field operations.

Conclusion

The increase in U.S. fossil fuel exploration presents significant challenges for Nigerian oil and gas engineers. From project funding constraints to equipment shortages and cost pressures, engineers must adapt by embracing innovative technologies, optimising operations, and fostering local capacity development. By addressing these issues strategically, Nigeria’s oil and gas sector can remain competitive in the evolving global energy landscape.

Mr. Onasanya Oluwasegun is a seasoned Mechanical System Specialist with over 15 years of experience in the oil and gas industry, specialising in equipment maintenance, process safety, and operational excellence. Passionate about innovation, he has also contributed to research on adaptive AI automation systems for intelligent living.