The future of deepwater drilling in Nigeria: Challenges and opportunities for Engineers

Introduction

Beneath the riches purged from Nigeria’s vast oil resources is a masterful art of drilled deepwater reserves, which serve as a significant component of the country’s petroleum industry. Even while the industry has been dominated by onshore and shallow-water operations, which have quite kept the industry afloat for a long time, it still struggles with hideous challenges such as issues related to oil theft, malicious oil setup explosions, and environmental degradation. These challenges have created a stumbling shift in deepwater drilling, a venture considered a priority for both the government and oil companies because of the significant and untapped value it presents.

In this article, the current state of deepwater drilling will be analyzed, citing case studies of remarkable projects and relevant statistics that reflect the challenges and future opportunities the venture presents to engineers. It will underscore the critical need for engineers to cover up space by identifying these challenges and proffering long-term solutions in order to fully harness the potential of Nigeria’s deepwater resources.

Current State of Deepwater Drilling in Nigeria

Nigeria is tagged the giant of Africa for several reasons, and while some believe it’s as a result of the country’s overwhelming population, the critical ones hold that it’s because of her rich potential in both natural and human resources. In 2021, Nigeria and Angola were the two African countries with a high rate of oil production, particularly with impressive deepwater operations, which ultimately contributed to the significance of the overall oil output.

In Nigeria, some notable deepwater fields include Agbami, Akpo, Bonga, and Erha, each playing a crucial role in sustaining Nigeria’s oil production levels. The Bonga Field, for instance, commenced production in 2005, having its location deep down the depths of the Niger Delta River by around 1,000 meters. This deepwater field is operated and managed by Shell, occupying a 55% stake in partnership with ExxonMobil and Total S.A.

Considered one of Nigeria’s leading deepwater ventures, Bonga boasts impressive developments like the deployment of a Floating Production Storage and Offloading (FPSO) vessel, marking a significant technological milestone. The Bonga Field is set for more growth since Shell announced in December 2024 that it will fully invest in the Bonga North project, which is aimed at sustaining oil production levels with an estimated recoverable resource exceeding 300 million barrels of oil equivalent and a projected peak production of 110,000 barrels per day by the decade’s end.

Other fields, like the Agbami Field, are also deepwater assets with potential reserves of about 1 billion barrels of oil, reaching a peak production of 250,000 barrels per day in 2009.

Challenges in Deepwater Drilling

• Technical and Operational Challenges

Complex Geology: Deepwater reservoirs often feature intricate geological formations, which require advanced seismic imaging and drilling technologies. For example, the E2000 reservoir in the KC Field of the Niger Delta is the largest reservoir for SPDC. A year after it began production, it reached a peak output of 43,500 barrels of oil per day, showcasing both the potential of deepwater reservoirs and the complexities involved in their development.

Drilling Difficulties: As drilling progresses to greater depths, it becomes more likely to encounter formations that are challenging to drill. It is essential to proactively identify and characterize these formations to implement effective strategies for overcoming drilling challenges.

• Environmental and Regulatory Challenges

Environmental Risks: Deepwater drilling carries significant environmental risks, including the potential for oil spills that can severely impact marine ecosystems. The 2011 Bonga oil spill, which released around 40,000 barrels into the ocean, serves as a stark reminder of the environmental hazards linked to deepwater operations.

Regulatory Landscape: Successfully navigating Nigeria’s regulatory framework requires ongoing collaboration with government agencies to ensure compliance and obtain necessary approvals for deepwater projects. Recent events, such as the Nigerian government’s endorsement of Shell’s $1.3 billion sale of onshore assets to Renaissance Africa Energy, highlight the dynamic regulatory environment that companies must skillfully navigate.

• Economic and Fiscal Challenges

Investment Climate: Securing huge capital investments is essential for deepwater undertakings. ExxonMobil’s plan to invest $10 billion in Nigerian offshore oil operations underscores the magnitude of financial investment involved and reflects the degree of profitability anticipated from deepwater undertakings.

Fiscal Policies: The financial feasibility of deepwater projects is significantly affected by the production sharing contract format and royalty regimes. Research indicates that the royalty regime of the Deep Offshore and Inland Basin Production Sharing Contract positively and significantly impacts the government’s interest in the short and long runs but negatively impacts the contractors’ share.

Opportunities for Engineers

• Technological Innovation

 Innovative drilling technologies developed and applied can help to solve operational difficulties and improve efficiency in deepwater environments. Combining digital tools and automated systems will maximize monitoring and control, thereby improving operations through safer and more efficient control.

• Sustainable Practices

 Engineers may create and put into use strong environmental management systems to stop leaks and reduce environmental impact. Investigating the integration of renewable energy sources into offshore activities can help lower carbon emissions and align with the world’s sustainability objectives.

• Capacity Building

 Investing in local engineers’ training and development helps to transmit expertise and develop the home workforce, thereby guaranteeing the sustainability of deepwater projects.

Conclusion

Nigeria’s deepwater drilling sector is undeniably overwhelming. It’s a landscape rife with several endearing opportunities. Yet, despite these opportunities, there are challenges that engineers are advised to tackle, leveraging technological advancements, adhering to stringent environmental standards, and fostering local expertise to navigate the complexities of deepwater operations.

Mr. Oluwasegun Onasanya is a seasoned oil and gas professional with extensive experience in Nigeria’s upstream sector. Currently serving with one of the leading multinational oil corporations (Chevron), he has built a reputation not just for operational excellence but also for his insightful commentary on industry trends. Recognized as a thought leader in the energy space, Mr. Onasanya is passionate about driving innovation and efficiency in the sector.

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