Total will continue with its exploration in offshore SA

Years of work will determine the extent of the commercial prospects for SA, with the energy sector potentially benefitting.
Gas-to-power technologies are regarded as having the flexibility needed to complement intermittent renewable energy supply and meet demand during peaking hours. Image: Shutterstock

A ‘leopard’, a ‘catfish’ and ‘bullfrog’ are mooted as ways to secure South Africa’s energy needs.

The leopard, or rather the Luiperd-1, is the next well that will be drilled 175km off the southern coast of South Africa by French oil company Total. The company made the Brulpadda gas condensate discovery in Block 11B/12B of the Outeniqua Basin last year.

Total had planned to drill new wells in the area this year but in May the oil major and Norwegian offshore drilling contractor Odfjell Drilling, whose drilling rig ‘the Deepsea Stavanger’ was contracted for the multi-well drilling programme, agreed to pause these plans for an indefinite period because of ongoing restrictions caused by the Covid-19 pandemic.

The rig was initially expected to be deployed to South Africa in the first quarter and now Canadian oil company Africa Energy has announced that the rig is making its way from Norway to South Africa to begin drilling work on Luiperd-1 from September.

Energy mix

Although the exact reserves of Luiperd-1 are far from being determined, the discovery may increase the viability of SA’s ambitions to have a sustainable energy mix.

“Luiperd is the largest prospect in the Paddavissie Fairway and has been derisked by the nearby Brulpadda discovery and subsequent 3D seismic work,” said Garrett Soden, chief executive of Africa Energy.

The area in block 11B/12B is operated by a partnership between Total, which holds a 45% working interest, and Qatar Petroleum International Upstream LLC and CNR International South Africa Limited, which have 25% and 20% respectively. Africa Energy holds 49% of the shares in Main Street, which has a 10% participating interest in the block.

Read: SA says has up to 60 tcf of offshore gas potential

Total plans to drill four other prospects in the area, including Luiperd-1. It has been reported that the entire turbidite (deposit) could hold one billion barrels of oil equivalent.

South Africa’s Integrated Resource Plan, which provides a blueprint for the country’s intended energy mix over the coming decade, shows a reduction in the amount of power that the country will produce using coal as the role played by less carbon-emitting technologies increases.

As more renewable energy is brought into the mix the document notes that gas-to-power technologies will provide the “flexibility” to complement renewables.

This will however not be in the near future; the plan indicates a requirement of 1 000 megawatts (MW) in 2023 and 2 000MW in 2027.

In addition to creating partnerships with neighbouring countries such as Mozambique to procure natural gas and enhance regional integration, the Brulpadda discovery is highlighted as an area of “enormous potential and opportunity”.

Policy bottlenecks

Niall Kramer, an independent consultant and former chief executive of the SA Oil and Gas Alliance (Saoga), agrees, saying not only could this have a significant impact on the country’s energy market but it could potentially benefit state-owned oil company PetroSA whose gas-to-liquids refinery in Mossel Bay will reportedly run out of natural gas by December 2020.

Moreover, Kramer said this also has the potential not only to spur more offshore activity and exploration by other major oil and gas companies but also to push the government to make the policy environment more attractive for investors.

“Otherwise, they’ve got very attractive opportunities [in] places like Guyana, where there’s proven oil, and the government relations, the bureaucracy and hurdles, become a lot simpler for them to get through,” said Kramer.

Read: Total sees South African drilling return as fuel network expands

Kramer added that there are other countries such as Mozambique, Angola and Nigeria that are “hurting” due to the sudden collapse in the oil price and would have “real incentives” to make it easier for explorers and producers to come to them.

“We haven’t built a budget based on oil or gas revenues but others have, so they are going to be very hungry.”

The regulatory and legislative environment for the upstream oil and gas sector has been in limbo since the 2013 publication of the Mineral and Petroleum Resources Development Amendment Bill, which was finally withdrawn in 2018 after years of wrangling between government and industry.

The draft Upstream Petroleum Resources Development Bill was published in 2019 and the public consultation period ended in February. It now needs to be put before parliament, which is in the grasp of the immediate concerns of the Covid-19 pandemic.

Initial attempts by Total to drill in the block were abandoned in 2014 due to the harsh high-current operating conditions in that part of the ocean. Odjfell’s Deepsea Stavanger, designed to work in such challenging environmental conditions, is the same drilling rig used for the Brulpadda well.

“For them to put that kind of significant resources behind developing a rig for those specific conditions, I see that as a strong signal, that they are very bullish about this,” said Kramer.

Not that much of a ‘game-changer’

Energy expert and a mechanical engineering PhD student at the university of Stellenbosch, Steve Clark, said while it’s positive that Total is proceeding with its exploration in the area and this could bode well for the oil and gas industry in South Africa “we should not oversell it because this is not going to change South Africa”.

Clark, who conducted an analysis on the potential of the field after Total announced the Brulpadda find, said should all the prospects result in one billion barrels of oil equivalent this would mean six trillion cubic feet of gas.

“That really is not a lot,” said Clark, explaining the gas field discovered offshore in Mozambique is 150 trillion cubic feet.

“It’s a nice find but it’s probably not the game-changer that Mozambique was.”

Clark said it could take Total two years and drilling several more wells to determine the volume of the resource to a comfortable level of certainty and whether there’s a case for commercial production.

Odfjell said in July 2019 that the Deepsea Stavanger multi-well drilling contract would cost around $145 million to $190 million (R2.5 billion to R3.2 billion) plus incentives, and the drilling programme is expected to take between 180 and 280 days.

Clark said it could be 10 years before there is any gas from the field.

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This is another game changer along with the Helium find in the free state. Future prospects in South Africa are getting very exciting along with the Africa Free Trade Agreement. Investing in South Africa is a winner!

Helium is in demand. The helium potential of the Wits basin has been known for a long time. These 2.8Ga sediments a thought to have trapped the ancient atmosphere, then rich in helium, which has been augmented by alpha decay of uranium and its daughter decay products.

This could be a game changer indeed. However, there is one important factor not mentioned in the article – a stable government. Similar discoveries elsewhere did not lead to prosperity for the population at large. Angola, Nigeria, Libia and Venezuela are just some examples. Our government has a well documented inclination for corruption and there are no signs of curtailing it yet.

Well, yes, however the article does hint at your point:

‘Kramer said this also has the potential not only to spur more offshore activity and exploration by other major oil and gas companies but also to push the government to make the policy environment more attractive for investors.

‘“Otherwise, they’ve got very attractive opportunities [in] places like Guyana, where there’s proven oil, and the government relations, the bureaucracy and hurdles, become a lot simpler for them to get through,” said Kramer.’

Tree-huggers assemble.

End of comments.

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