"SCIENCEOFOIL:FROM FORMATIONTOEXTRACTION"

By LYOIDAH KICONCO
GEOLOGIST to AfricanCentreforMediaExcellence(ACME) 10TH APRIL2012

PRESENTATIONOUTLINE
1. Definitions 2 FormationofPetroleum 2. 3. PetroleumSystemElements 4 The 4. Th petroleum t l V Value l Chain Ch i 5. InstitutionalandRegulatoryFramework 6. Expectationsfrom f the h Media d 7. Challenges 8. Conclusions

PETROLEUM

Thisisahydrocarbon y (H&C), ( ),g generated bynaturalmechanismsandmanifests o of o Solid, So d,liquid qu dor o gastoyield y e d inform fuels.

9April,2012

PETROLEUMGEOLOGY

Thisisstudyofhydrocarbon , formationinthesubsurface, necessitiesforitsformation, migration,entrapment& sustainableexploitation exploitation.
9April,2012

SEDIMENTARYBASIN
™Siteswherep petroleumisformedby ychemicalreactions fromsedimentarybiogenicprecursormaterial,whereitis redistributedbymigrationviapermeablepathways,and whereitisdumpedandstoredinthereservoirrocksor dissipatedanddestroyedbychemicalreactions ™Anygeographicalfeatureexhibitingsubsidenceand consequentinfillingbysedimentation sedimentation.Asthesedimentsare buried,theyaresubjectedtoincreasingpressureandbegin theprocessoflithifaction.
9April,2012

OIL AND NATURAL GAS FORMATION
™Crude oil-oily flammable liquid consisting a variety of chemical compounds that are produced in sedimentary rocks of organic matter. ™Natural N l gas iis a hydrocarbon h d b consisting i i of f mainly i l methane h that h is i produced in sediments and sedimentary rocks during burial of organic matter

™Petroleum P l Ͳ crude d oil iland dnatural lgasͲ arefound f din i certain i  layersofrockthatareusuallyburieddeepbeneaththesurfaceof theearth.Inorderforarocklayertoqualifyasagoodsourceof hydrocarbons,itmustmeetseveralcriteria.

OIL AND NATURAL GAS FORMATION
™HC formation occurred through a process that took millions of years ™Biotic remains of tinny plants and animals that lived over millions of years in aquatic environment ™Through years, these plants and animals die and are buried by layers of sediments and water ™Microorganisms fed on the decomposed material in a process called biogenesis ™More layers build up and bury the materials deeper and deeper beneath the earth ™Enormous pressure from these layers combined with the pressure from deeper in the earth’s crust essentially cooked the biotic materials within certain rock layers to form the crude oil and natural gas we have today.

OIL AND NATURAL GAS FORMATION
™The oil seeps upwards through porous rock as a result of pressure of the overlying layers. It does this until it hits a non porous layer and collects like so. ™Exploration geologists are looking out for anticlines and put a drilling rig and find O&G. ™For, F while hil petroleum t l was b being i f formed, d cataclysmic events were occurring elsewhere. Great earthquakes opened huge cracks, or faults, in the earth’s earth s crust. crust Layers of rock were folded upward and downward. Molten rock thrust its way upward, displacing surrounding solid beds into a variety of shapes Vast blocks of earth were shoved upward shapes. upward, dropped downward or moved laterally. Some formations were exposed to wind and water erosion and then once again g buried. Gulfs and inlets were surrounded by land, and the resulting inland seas were left to evaporate in the relentless sun. Earth’s very shape had been changed.

OIL AND NATURAL GAS FORMATION
™Asthegreatweightoftheoverlyingrocksandsediments pusheddownward,thepetroleumwasforcedoutofits birthplace. ™Itbegantomigrate.Seepingthroughcracksandfissures, oozingthroughminuteconnectionsbetweentherock grains,petroleumbeganajourneyupward. ™Indeedsomeofiteventuallyreachedthesurfacewhere itcollectsinlargepoolsoftarorasoilseeps. ™However,somepetroleumdidnotreachthesurface. I t d its Instead, it upward dmigration i ti wasstopped t dby b an imperviousorimpermeablelayerofrock.Itlaytrappedfar beneaththesurface.Itisthispetroleumthattoday’’s oilmenseek seek.

REQUIREMENTSFORHYDROCARBONFORMATIONAND ACCUMULATION • SedimentaryBasin ¾ Temperatures ¾ BurialDepth>3km ¾ OrganicMatter ¾ Pressures andtime • Source S rock k • Reservoirrock • Cap C rock/seal k/ l

9April,2012

REQUIREMENTSFORHYDROCARBONFORMATIONAND ACCUMULATION

S di Sediment ti input t

Organic matter
Sedimentary basin

+O2

- O2

Preserved organic matter changes into a source rock k with ith increased i d sediment di t input, compaction and burial.

9April,2012

PETROLEUMSYSTEMELEMENTS
Geographic Extent of Petroleum System Extent of Play Extent of Prospect/Field O
Stratigraphic Extent of Petroleum System

1. Petroleum

Source rocks
O
2. Reservoir

O

rocks
Essential Elements of Petroleum System

Seal Rock Reservoir Rock Source Rock Underburden Rock Basement Rock Top Oil Window Top Gas Window

Se edimentary Basin Fill

Overburden Rock

3 Traps 3. T p 4. Seals 5. Migration i i 6. Timing

Pod of Active Source Rock
Petroleum Reservoir (O) Fold-and-Thrust Belt (arrows indicate relative fault motion)
(modified from Magoon and Dow, 1994)

PETROLEUMSYSTEMELEMENTS
Source Rocks Sedimentary y rock containing g organic g material, , which under heat, time and pressure was transformed to liquid or gaseous hydrocarbons. Source rock is usually shale or limestone. Reservoir rock ™ Any rock that has sufficient porosity and permeability to permit the storage and accumulation of crude oil or natural gas under adequate trap conditions, and to yield the h d hydrocarbons b at t satisfactory ti f t flow fl rate t upon production. d ti ™ Sandstones, limestones and dolomites are the most common. Also so in fractured actu ed igneous g eous a and d metamorphic eta o p c rocks. oc s

PETROLEUMSYSTEMELEMENTS
Good reservoir rocks must have porosity and p permeability y z Porosity z A measure of the openings in a rock, openings i i in which hi h petroleum l can exist i z Porosity is the ratio or the pore volume of the bulk rock material
z Permeability y

Aporeisasmallopenspace

Property of a porous medium to transmit fluids when a pressure gradient is imposed. i the i.e h poresof fthe h rock kmustbe b connected d togethersothathydrocarbonscanmovefromone poretoanother

Connectedporesgivearock permeability

PETROLEUMSYSTEMELEMENTS
Petroleum Traps ™Any y barrier to upward p movement of oil or g gas, , allowing g either or both to accumulate. ™It includes a reservoir rock and an overlying updip impermeable cap cap. ™A trap is basically a geometry of a reservoir rock rock. ™Classified into two basic types: yp structural traps p and stratigraphic traps. Structural traps are traps that are formed because of a deformation in the rock layer that contains the hydrocarbons such as fault traps and anticlines anticlines.

PETROLEUMSYSTEMELEMENTS
Ananticlineisanupwardfoldinthelayersofrock, muchlikeanarchinabuilding.Petroleummigrates intothehighestpartofthefold, fold anditsescapeis preventedbyanoverlyingbedofimpermeable rock Afaulttrapoccurswhentheformationsoneither sideofthefaulthavebeenmovedintoaposition thatpreventsfurthermigrationofpetroleum. g p traps p aretraps p thatresultwhenthe Stratigraphic reservoirbedissealedbyotherbedsorbya changeinporosityorpermeabilitywithinthe reservoirbeditself. itself E.g. E g atiltedorinclinedlayerof petroleumͲbearingrockiscutoffortruncatedby anessentiallyhorizontal,impermeablerocklayer.

PETROLEUMSYSTEMELEMENTS
Seal Animperviousorimpermeablebedcappingthereservoir. Migration Movementofgeneratedhydrocarbonsfromthesourcerocktothe reservoirrockinatrapthroughconduitssuchaspermeablebeds, fractures,andfaults. Timing ™Relationshipbetweenthetimeoftrapformationandtimeof h d hydrocarbon b generation. ti  ™Goodtimingisforthereservoir,trapandsealtobealreadyinplace beforethesourcerockgenerateshydrocarbonsandmigrationstarts. ™Thisissometimescalledthe““criticalmoment””

SECURINGLICENSE/LEASE
z Afterselectingalikelyarea,therighttodrillmustbesecured

before b f drilling d illi canbegin. b i  z Thisusuallyinvolvesleasingthepetroleumrightsofthedesired fromtheowner(GovernmentforUganda Uganda’’scase). z Conditionsforacquiringthelicence arespecifiedinthe petroleumlegislationandagreements(PSAs).Thesemayinclude: z Signaturebonus z Royalty z Production P d ti sharing h i z Tax z E.t.c Etc

DRILLING
z z

z

z

z

Once an area has O h b been selected l t d and d th the right i ht t to d drill ill th thereon has been obtained, actual drilling may begin. The most common method of drilling in use today is rotary d illi drilling. R Rotary t d drilling illi operates t on th the principle i i l of fb boring i a hole by continuous turning of a bit. The bit, is attached to the drill stem, composed of hollow l lengths th of f pipe i leading l di to t the th surface. f As A the th hole h l gets t deeper, more lengths of pipe can be added at the top. The drilling fluid, also known in the industry as mud, it is actually t ll a prepared d chemical h i l compound. d Th The drilling d illi mud di is circulated continuously down the drill pipe, through the bit, into the hole and upwards between the hole and the pipe to a surface pit pit, where it is purified and recycled recycled. The flow of mud removes the cuttings from the hole without removal of the bit, lubricates and cools the bit in the hole, and prevents a blow out which could result if the bit punctured a high pressure formation.

DRILLING
™The Th cuttings, tti which hi h are carried i d up by b the th drilling d illi mud, d are usually continuously tested by the petroleum geologist in order to determine the p presence of oil. ™The final part of the hole is what the operating company hopes will be the production hole hole. But before long long, the formation of interest (the pay zone, the oil sand, or the formation that is supposed to contain hydrocarbons) is penetrated t t d by b the th hole. h l It is i now time ti for f a big bi decision. d i i The Th question is, "Does this well contain enough oil or gas to make it worthwhile to run the final p production string g of casing g and complete the well?"

OILPRODUCTION
• Once an accumulation O l ti of f oil il has h been b found f di in a porous and permeable reservoir, a series of wells are drilled in a predetermined pattern to effectively drain this "oil oil pool" pool . Well spacing is usually determined by the distance gy will move commercial q quantities the reservoir energy of oil to individual wells. The rate of production is highest at the start when all of f the th energy from f the th dissolved di l d gas or water t drive d i is i still available. As this energy is used up, production rates drop until it becomes uneconomical to operate although significant amounts of oil still remain in the reservoir. y recovery y methods such as steam injection j Secondary or water flooding where Water or steam are injected into the reservoir in certain wells in order to renew a 9April,2012 part of the original reservoir energy

SALEOFOIL
• Oncetheoilisoutofthegroundand i the into h holding h ldi tanks, k it i mustbe b sold. ld • Inmostcaseseachholderofaworking interesthastherighttotakehis portionofproductioninkind, therefore, h f make k his h ownarrangements foritssale. • Sometimes,however,alltheholders ofaworkinginterestofawellenter intothesamearrangementwiththe samebuyeroftheoilproduction. 9April,2012

PETROLEUM VALUE CHAIN
LICENSING EXPLORATION DEVELOPMENT PRODUCTION UPSTREAM

TRANSPORTATION REFINING GASPROCESSING

MIDSTREAM

DISTRIBUTION MARKETING SALES

DOWNSTREAM

PETROLEUM VALUE CHAIN (2)
UPSTREAM
Acquisition of concession Find and prove Commercial hydrocarbons Start Production Restoration of sites

Pre-bid

Exploration And Appraisal

Field Development

Production

Decommisioning

Risk Assessment studies

Seismic and exploration drilling

Production drilling and construction

Production, maintenance and transportation

PETROLEUM VALUE CHAIN (3)
Pre-bid
Acquisition q of acreage g
Data acquisition and packaging z Promotion at petroleum conferences and other fora z Application z Petroleum Act z Work programs –PSA z Negotiations-Ministry N ti ti Mi i t Energy E /Petroleum, /P t l Ministry of Finance, Ministry of Justice z Award of the licence
z

PETROLEUM VALUE CHAIN (4)
EXPLORATION
z z

Search for petroleum accumulations Methods include gravity, magnetic, geological mapping, seismic and drilling Ends when reservoir(s) have either been found or not

z

Finding includes: z Identify presence of hydrocarbons in the subsurface
z z z

Establishing contents (oil and/or gas) Establishing ability/ease to flow Establishing the extent of distribution

APPRAISAL

PETROLEUM VALUE CHAIN (5)
PRELIMINARYGEOLOGICALANDGEOPHYSICALDATA
Surface geological mapping of the area Acquisition of gravity and magnetic data
30 E 31 E 32 E

30° 2°30'

30°15'

30°30'

30°45'

31°

31°15'
- 1 60

31°30' 2°30'
- 170
- 190
B'

±
LEGEND
Rift valey sediments: soils and marines Pleistocene volcanic rocks Ecca series shales (Karro) Mityana Series Singo series: conglomerates, sandstone & subordinate shale Bunyoro series & Kyoga series: Shales, arkoses & quartzites Kibalian System(presumed): Amphibolites. Madi series: shists, quartzites marbles and gneisses Karagwe-Ankolean system Buganda-Toro system Mirian gneisses: flaggy gneisses, affected by the mirian tectonism in W. Nile Granites Undifferentiated Gneisses Banded gneiss of Aruan tectonic age in West Nile

S "

MOYO
S "

NIMULE

Gravity anomaly mGals

2°15'

S " S "

ARUA U
0
- 13 0

- 140

- 12

ARU
- 110
S "

- 18

B

0

GULU

- 120

- 21

0

1°45'

-120

Cataclastites

Volcanic bodies interpreted from aeromagnetic data
Lake International boundary Depth to basement contours in 1000's m. Railway Major Road Faults

&

- 14 0

&

S "

HOIMA
-15 0

-150

-130

-120
-1 30
- 1 20

1°15'

0

&

River Oil seeps Waki-1 well Town

%
S "

- 1 40

&
S "

-12

-1 40
- 210

FORT PORTAL
S "

MUBENDE

- 15 0

S "

KASESE

0°45'

0

- 15

" S

0120 - 11-1

- 16

MASAKA

- 10

0

0

S "

ISHASHA
S "

S "

BUSENYI
S "

MBARARA

RUKUNGIRI
S "

NTUNGAMU

30°

30°15'

- 12 0

-150
- 150

- 14

-1

40

0

10000

0

10000 20000

metres Arc 1960 / UTM zone 36N

30°30'

30°45'

31°

31°15'

30

&

-1 60

-1

&

1°30'

S "

-1

- 1 60

%

MASINDI

- 14 0

-160

- 18

0

40

& --& &

-1

Granites

80

-1

S "

40

&& -

- 13 0

- 120

MAHAGI

- 220
- 15 0
- 12 0

31°30'

0 - 16

-212 -189 -178 -169 -162 -156 -149 -143 -136 -128 -118 -101

2°15'

- 1 30

- 180

00 -2

-1

50
-2 0 0
60 -1 - 1 70

- 13 0

- 13 - 14 0 0

1°45'

- 180

- 20 0

1°30'

- 130

1°15'

- 1 40

1° 0°45'

- 1 20 - 130 - 1 40

PETROLEUM VALUE CHAIN (6)
SEISMIC SURVEYS • • Most common assessment method 2D or 3D. Pulses of acoustic energy – Land: L d vibrations ib ti or explosives l i – Water: air guns Distinguishes different rock strata through their reflective characteristics. characteristics Reflected energy measured by receivers.

• •

PETROLEUM VALUE CHAIN (7)
DRILLING

™ Exploration ™ Appraisal

PETROLEUM VALUE CHAIN (8)
DEVELOPMENT

Preparing a reservoir for production z Includes drilling wells for production z Preparing facilities for collection, processing and disposal
z

FDP components
Resource base z Production facilities z Transport options z Market and sales options z HSE and d risk i k analysis l i z Cost analysis z Economic evaluation z Project execution
z

PETROLEUM VALUE CHAIN (9)
PRODUCTION

Removal of petroleum from a subsurface reservoir to the surface z Preparing petroleum for transportation and/or refining (separation, gauging & storing)
z

PETROLEUM VALUE CHAIN (10)
B) MIDSTREAM 1. TRANSPORTATION

T Transport t Methods: M th d • • • • Pipeline Trucks Rail Water

PETROLEUM VALUE CHAIN (11)
2. Refining
•• Crude

oil is converted into several products. • Products depend on both type of Crude and size of refinery

Full refinery in Trinidad and Tobago with capacity to refine 160,000bopd

PETROLEUM VALUE CHAIN (12)
C) DOWNSTREAM

Downstream involves; •Marketing Marketing of refined products, •Transportation and distribution of the products

REGULATORYANDINSTITUTIONAL FRAMEWORK
REGULATORYFRAMEWORK
PetroleumExplorationandproductioniscurrentlygovernedby; 1. ExistingLaws ™ ThePetroleum(ExplorationandProduction)Act,CAP150,LawsofUganda,2000 2 Policies 2. ™ TheEnergyPolicy,2002 ™ TheNationalOilandGasPolicy2008 3. Regulations ™ ThePetroleumExploration(Conductofexplorationoperations)Regulations1993 4  Production 4. P d ti Sharing Sh i Agreements A t (PSA) ™ WorkPrograms ™ Fiscalregimes g (Rentals, ( ,stateParticipation, p ,profit p oilshare, ,Costrecovery yetc) ) 4.Environment,Wildlife,Waterstatutesandguidelines

REGULATORYANDINSTITUTIONAL FRAMEWORK
NATIONAL OIL AND GAS POLICY

‘Use Use the country country’s s oil and gas resources to contribute to early achievement of poverty eradication and create lasting value to society’

Provideaframeworkfor:
¾ Efficientpetroleumresourceexploitationandutilisation ¾ Useofoilandgasactivities,resourcesandrevenuesto createlastingvaluetoUgandasociety ¾ Emphasizesvalueaddition

REGULATORYANDINSTITUTIONAL FRAMEWORK
NATIONAL OIL AND GAS POLICY CONT’D

Implementation p of Policy y has Commenced; ;
¾ Drafting of new petroleum legislation to operationalise policy ¾ Supporting pp g the introduction of training g courses focusing g on petroleum industry like BSc Petroleum Geoscience at Makerere, Uganda Petroleum Institute Kigumba. ¾ Feasibility F ibilit Study St d and dpromote t establishment t bli h tof fa mediumscalerefinery. ¾ Communication Strategy is being designed. designed ¾ Close Monitoring of biodiversity being undertaken. ¾ New institutions are being formulated.

REGULATORYANDINSTITUTIONAL FRAMEWORK
INSTITUTIONALFRAMEWORK
MINISTRY OF ENERGY AND MINERAL DEVELOPMENT
Minister of Energy and Mineral Development
Minister of State for Energy Minister of State for Mineral Development

Electricity Regulatory Authority (ERA)

Permanent Secretary
Uganda Electricity Generation Co. Ltd. Uganda Electricity Transmission Co. Ltd. Uganda Electricity Distribution Co. Ltd. Kilembe Mines Rural Electrification Agency (REA)

Directorate of Energy and Mineral Development (D/E&MD)

Finance and Administration Department

Energy Resources Department

Petroleum Supply Department

Petroleum Exploration and Production Dep’t
Administration Geology Div. Geophysics Div.

Geological Survey and Mines Dep Dep’t t

Sectorial Planning / Policy Analysis

Administration Geology Div.

Geology Div. Laboratory Div Mines Div. Geodata Div.

Resource Centre

Geophysics Div.

REGULATORYANDINSTITUTIONAL FRAMEWORK
PETROLEUM EXPLORATION AND PRODUCTION DEPARTMENT (PEPD)
COMMISSIONER U1 ASSIST. COMMISSIONER (Geology) ASSIST. COMMISSIONER (Geophysics)

U2

PRINCIPAL GEOLOGIST (Development & Production

PRINCIPAL GEOLOGIST (Exploration)

PRINCIPAL GEOPHYSICIST PRINCIPAL GEOPHYSICIST (Seismic & Wells) (Gravity & Magnetics)

U3

SENIOR GEOLOGIST (Well Site)

SENIOR GEOCHEMIST

SENIOR GEOLOGIST (Exploration)

SENIOR GEOPHYSICIST (Seismic & Wells)

SENIOR GEOPHYSICIST (Gravity & Magnetics)

U4

PETROLEUM ENGINEER (2)

GEOLOGIST PALYNOLOGIST GEOLOGIST ORGANIC GEOCHEMIST (Basin Evaluation) (Well Site) (2) (2) (2)

GEOPHYSICIST (Seismic & Wells) (2)

GEOPHYSICIST (Gravity & Magnetics) (2)

PERSONAL SECRETARY

SENIOR LABORATORY TECHNICIAN U5

SENIOR GEOLOGICAL ASSISTANT

SENIOR GEOPHYSICAL TECHNICIAN

SENIOR GEOPHYSICAL TECHNICIAN

LABORATORY TECHNICIAN GEOPHYSICAL TECHNICIAN (2) GEOLOGICAL ASSISTANT LABORATORY ATTENDANT GEOLOGICAL ATTENDANT GEOPHYSICAL TECHNICIAN (2)
STORES ASSISTANT GR 2

STENO SECRETARY

U6

U7

COPY TYPIST

U8

SURVEYING OFFICE DRIVER/MECHANIC ATTENDANT WATCHMAN (2) ATTENDANT (9) COXSWAN (2) (2) (4) Scale Approved Posts Filled Posts Vacant Posts U1 3 3 0 U2 U3 4 5 3 3 1 2 U4 U5 18 2 16 1 2 1 U6 U7 4 3 3 3 1 U8 Total 21 60 13 45 8 15

NB Posts indicated in boxes are to be filed by staff seconded from Ministry Headquaters. GR- Grade

REGULATORYANDINSTITUTIONAL FRAMEWORK
FUNCTIONS OF PEPD • Creation of value from petroleum activities by:
¾

Initiating Policy and Legislation for the sub-sector of petroleum exploration and development Promotion of petroleum exploration Participation in contract negotiations before award of licenses Monitoring and regulating the work of oil companies licensed in the country Undertake U d t k national ti l capacity it building b ildi for f the th upstream t petroleum t l sub-sector

¾ ¾ ¾

¾

REGULATORYANDINSTITUTIONAL FRAMEWORK
z

Other Key Players
Ministry of Finance, Finance Planning and Economic Development ¾ Ministry y of f Justice and Constitutional Affairs ff ¾ Uganda Revenue Authority ¾ Auditor General’s Office ¾ Bank of Uganda ¾ National Environment Management Authority (NEMA) ¾ Uganda Wildlife Authority (UWA) ¾ Directorate of Water Resource Management (WRMD) ¾ General public
¾

CHALLENGES
Experiences from some producing d i countries t i oil and gas

™ ™ ™ ™

PoliticalandSecuritychallenges Environmentalchallenges g Lesionsfromproducingcountries ExpectationsfromStateSecurityAgencies

POLITICAL AND SECURITY
1 TERRITORIAL DISPUTES 1.

NORWAY, RUSSIA TO RESTART BARENTS SEA DISPUTE TALKS • The disputed Barrents Sea area covers an area of 173,000 km2 Estimated to hold vast resources estimated ti t d at t 40 billion barrels of oil equivalent Untouchable U t h bl f for exploration l ti and development for the last 30 years Fuelled F ll d b by political liti l desire d i to t control natural resources
Disputedzone

POLITICAL AND SECURITY
TERRITORIAL DISPUTES CONT’D

NIGERIA, CAMEROON SIGN NIGERIA AGREEMENT ENDING DECADESOLD BORDER DISPUTE • • • • Share the 1,000 mile oil rich Bakassi peninsula in the Gulf of Guinea Reserves estimated at 24 billion barrels of oil Have been at war for control of the resources for over one decade In 2002, World Court ruled at the Hague in favour of Cameroon

POLITICAL AND SECURITY
ARETERRITORIALDISPUTESLIKELYFORUGANDA?
z

S f Shifting S Semliki C Course
¾ ¾

Lack of GPS Coordinates Some references may no longer exist since 1915 when the treaty was signed between Belgium and UK establishing the border

z

Invisible boundary along Lakes Albert and Edward
¾

Sophisticated positioning equipment i t may not t allay ll f fears of f the other parties Difficulties of agreeing the boundary after discovery of oil
A boat on Lake Albert

¾

Pictures showing the meandering River Semliki that separates Uganda from DRC

POLITICAL AND SECURITY
2. SABOTAGE / CIVIL UPRISING

REBELLION THREATENS TO HALT OIL EXPORT IN NIGERIA
• • • Oil workers frequently kidnapped by unknown gunmen Even aboard modern platforms Movement for the Emancipation of the Niger Delta (MEND), demands a better share of oil resources Recent attacks taking a political dimension Civil strife is costing Nigeria 500,000 bopd in lost production, equivalent to US$ 25 million per day

• •

POLITICAL AND SECURITY
SABOTAGE / CIVIL UPRISING

OTHERS
• Rebellions in many African counties have dragged on for long because of the oil wealth
¾ ¾ ¾ ¾ Ivory Coast Angola Guinea Central African Republic (CAR) etc.

Sabotage is extremely costly, since the industry employs very expensive equipment and facilities

AproductionfacilityattheEspoir fieldin IvoryCoast

POLITICAL AND SECURITY
3. CORRUPTION

OIL WEALTH AND CORRUPTION AT PLAY IN CHAD’S REBELLION
• • Chad produces more than 160,000 barrels of oil per day The future of this fragile oil-producing nation in north-central Africa remains uncertain One of the basic factors behind the instability – an element that is central to many conflicts across Africa is the growing oil wealth Three years since the first barrel, public y nonexistent infrastructure are nearly

POLITICAL AND SECURITY
CORRUPTION CONT’D

Oil in most of Africa is synonymous with greed greed, theft, mismanagement, conflict, corruption, poverty and misery in all its forms. Have we learnt any lessons about what to avoid?

POLITICAL AND SECURITY
4. GOOD GOVERNANCE

z z

Not manifested in the oil and gas industry in Africa Governance is like a chain
– – –

A chain is as strong as the weakest link We are all part of the chain We share responsibility

z

Uganda has a unique opportunity to be an example to the rest of Africa of good governance in the oil and gas industry

POLITICAL AND SECURITY
5. EXTERNAL AGGRESSION

THE IRAQ CRISIS
• • • Iraq’s 112 billion barrels of proven oil reserves The world’s second largest, behind Saudi Arabia. Lack of investment and restrictions on imports of machinery and technology have taken their toll on the oil industry – which was also battered during the Gulf War. Allowed to export only a limited amount of oil under the UN’s oil-forfood programme.

POLITICAL AND SECURITY
6. TRANSPARENCY AND ACCOUNTABILITY

Experience has shown that where there has been Transparency and Accountability in the oil i d industry, the h N Nations i h have performed f d well ll i in other sectors as well.

POLITICAL AND SECURITY
7. DUTCH DISEASE

• •

The high Oil prices disrupted many economies Focusing on oil revenues and ignoring other sectors of the economy
• C Case of f Nigeria Ni i

Therefore: ¾ Let us Have Proper p p plans. ¾ Oil should support other sectors of the economy ¾ Create a special reserve fund with stringent conditions for its utilization

Case of Norway

It should be remembered that:

™

Oil is a non-renewable resource and we should Invest oil revenues wisely for the future

POLITICAL AND SECURITY
8. INSTITUTIONAL FRAMEWORK

• •

Policies, laws, regulations g and institutions need to be in place Many countries discover and some start producing oil and gas without the necessary institutional framework Chad used its mining law to negotiate petroleum agreements and has had to depend on other organizations (IMF/WORLD BANK) to manage the revenues

POLITICAL AND SECURITY
9. HIGH

OIL AND GAS PRICES

• Windfall petroleum prices have led some Governments asking to re-negotiate their contracts with oil companies E.g. g Venezuela, , Bolivia, , Algeria, g , UK, , France, , Russia etc.

POLITICAL AND SECURITY
10. PIPELINES • • • Oil and gas transportation is often done through long pipelines Pipelines need to be protected against sabotage Right of way may have to be negotiated with neighboring countries hence the need for good relations

Tanzania gas pipeline construction

POLITICAL AND SECURITY

11. Need for communities not to cause insecurity y
In areas where the communities have been ignored, there have been:

Siphoning
Breaking/puncturing pipelines to siphon crude oil

POLITICAL AND SECURITY

b) Rebel activities c) Sabotage

ENVIRONMENTALCHALLENGES
OVERVIEW OF ASPECTS
The Oil and Gas Industry
z z z

Main Environmental Aspects
• • • • • • Air emissions (CO2, VOC, NOX, SOX) Mud and cuttings from drilling Produced water handling Hazardous waste Accidental oil spills groundwater Soil and g pollution

Exploration Production Refining and processing Transportation Marketing

z z

ENVIRONMENTALCHALLENGES

Flowtesting

OilspillcleanͲupoperation

Hazardouswaste Drillingmud Blowout

LESSONSFROMPRODUCINGCOUNTRIES
• • • • Boundary y disputes p
¾ The boundary needs to urgently be demarcated

Should attempt to solve oil and gas issues through Dialogue Handle all oil and gas issues in a transparent and accountable manner C ti Continue t to have h stable t bl politics liti and d good d security it
¾ Exploration workers kidnapped in Pakwach in 2005 by gunmen ¾ Attack ttac o on Kichwamba c a ba Technical ec ca Co College ege happened appe ed when e

drilling of TURACO-1 was being undertaken

LESSONSFROMPRODUCINGCOUNTRIESCont’’
We Ought to Manage our Expectations
• • •

Ownership of Resource Claims of shares by some districts Fuel prices

How cheap can it get?, Norway is the 3rd largest exporter yet petrol cost US$ 1.8

Suspicion and conflict likely
– –

District boundaries a new complication Radio talk shows show historical grievances and antagonism
Source: Daily Monitor

Thursday, July 13, 2006

EXPECTATIONFROMSTATESECURITYAGENCIES

Provision of security to oil and gas activities during exploration, development and production
– –

Activity location location, duration and number of participants Activities near DRC – Security ? Investment usually very high and time is costly
• • •

Knowledge of the petroleum industry
¾

Geological mapping and geophysical surveys (US$ 100,000 – 300,000) Seismic surveys (US$ 1 – 8 million) Drilling one well (US$ 3 – 12 million)

¾

A lot of equipment transported from Mombasa to the field, others come by air through Entebbe Participants include national and a large number of foreign workers

¾

All require security

¾

Participants aspirations may not always be in harmony with the aspiration of the country

EXPECTATIONFROMSTATESECURITYAGENCIES Cont’’ Cont
™

National Interest
¾

In securing and facilitating investments in oil and gas, its important to remember the overriding importance of national interest Large investments made by oil companies and the value l attached tt h d to t them th by b the th countries t i can lead l d to t compromising national interests and sometimes sovereignty

¾

In the amidst of any excitement, these needs to be anticipated and prepared for

EXPECTATIONSFROMTHEMEDIA
™

Dissemination of information to the public
™ ™ ™ ™

Regarding the activities Status of the licensing Challenges N d of Needs f th the sector t

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People p use information to create knowledge, g , “but not j just in the sense of data and facts but in the form of representations that provide meaning and context for purposive action” action This will ensure transparency and accountability in undertaking the activities

™

THEFUTURE
Thepast&present;Akeytothefuture. • Thepast:Atectonicblessing
» Source,Reservoir,Traps,Seals,Migration

• Thepresent: Ongoingsurveys&drilling
» OilCompanyinterests

• TheFuture:
» EconomicBoom,Ruraldevelopment,etc……. » OPEC » What Wh ifwehit hi agiant i Elephant El h like lik Iraq I orIran? I ?
9April,2012

CONCLUSION
1. 2.

Oiland/orgasisthelifebloodofmoderneconomies Managementoftheseresourcesneedtobetaken cautiouslybecausetheyarenonrenewable Thereisneedforappropriatedisseminationof informationtoallstakeholders Theroleofmediainensuringinformationdissemination cannotbeoverͲemphasised ““Knowledgeispower””letsshareittoempowerothers. Knowledgeisthemostimportantfactorofproduction andeconomicdevelopment Weallneedtoembracethegiftmothernaturehasgiven usandg guarditj jealously y

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LYOIDAH KICONCO
Msc, GeologyMsc, Geology gy-Petroleum Geology gy Msc, Msc , GeologyGeology-Hydrogeology Dip. Mgt of Petroleum Operations Bsc. Bsc . Geology, Geology Chemistry

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