Ajienka: There are good prospects in inland oil exploration

Professor Joseph Ajienka

Professor Joseph Ajienka

Professor Joseph Ajienka, former Vice Chancellor of the University of Port Harcourt, is a specialist in petroleum production engineering. In this interview with KELVIN EBIRI, he stressed that there is the prospect of discovery of new oil and gas fields, if effort is intensified to understand the geology of the country. He observed that if the country had been consistent in exploring for new oil fields, the story would have been different.

After spending over $340 million and N27 billion in three decades in search of oil crude oil in the Lake Chad region, is it still worthwhile to continue exploration activities here?
Let me just give some historical perspective; by the time oil was discovered in Oloibiri in the early 50s, exploration had gone on all over the country for 50 years, right from a German company to Shell Darcy. Exploration had been carried out in Western to the Eastern parts of the country. The issue here is not whether they should continue to explore there. If I were to show you the map of Africa you would have seen that in areas where people thought there were no oil and gas, oil and gas had been found. In East Africa, South Sudan of course, you know that in the Lake Chad area oil has been found on the other side. So, there is hope that there are prospects there. Even within the country, in what geologists call the Anambra basin, exploration is going on. The issue is not just about the Federal Government, all they need to do is to give oil prospecting licence to companies to prospect and once they discover oil, then they give them mining licence. Speaking technically, exploration can go on.

Before this time, people thought there was no oil offshore Lagos, today oil has been found. Oil has been found in Ghana and in some countries in the West Africa sub-region and East Africa too. The thinking is that once we understand the geology properly, and explore for oil and gas, if they don’t find oil and find gas, that is an advantage.

Why has it taken so long to discover oil in commercial quantity in the Lake Chad basin?
Well, it depends on the knowledge of the geology. Like I said, it took over 50 years before oil was discovered in Oloibiri.  Many years ago, nobody would have thought that there was oil in Kenya and other countries. But today, oil has been found as geology is improving, people are getting better understanding. And that is why you don’t discard anything. You can as well say why are people still exploring deep offshore and so on.  Most cases you don’t just discover oil like that. It takes a lot of efforts, but in the area of Lake Chad, on the other side, oil has been found. So, it is a question of understanding the geology. In South Sudan, oil has been found. You can see that around those areas oil has been found here and there. I don’t know the intensity of exploration that has gone on in the Lake Chad basin. It is possible that they have being exploring and stopping at some point. If exploration had been consistent with a lot of intensity, perhaps the story would have been different. I really don’t know how much had been spent on exploration and how many companies had been involved, but I think speaking technically, there is nothing wrong exploring for oil and gas in any part of the country.

In an era of strident call for diversification of the economy, why the renewed interest in further exploration adventure?
We will still focus on hydrocarbon for a long, long time. If you look at production operation, there is what we call the primary production, secondary and tertiary production.  Primary production will probably give you about 25 percent of the reserve you produce there. Secondary production will give you more. While in tertiary you are aiming to recover about 75 to 80 percent. In Nigeria, what we have done is essentially what we call primary production. We have not got to secondary production, apart from just maintaining pressure and so on. There is a lot of hope. Crude oil, of course you know is needed for energy, for transportation etc., but beyond that, from the petrochemical side of it, literally everything you see these days is made from petroleum.

Even if we are to diversify, we have not even met our local refinery need in Nigeria, in Africa. There will be a lot of scope for the use of crude oil in the value chain. Even if tomorrow people discover an alternative fuel for transportation for instance, then crude oil will be used for petrochemical industry. Even the fertilizer industry will still depend on crude oil. It will never be a waste at all. If you look at what has happened to coal, which we have a lot of reserve, the moment we found oil we literally abandoned coal and now are facing oil, but people in Canada, China are still using coal to drive their industry. We must ensure that we utilise our resources efficiently. That we want to diversify our economy does not mean that we should abandon the oil industry.

The oil industry has its own reserve target. The target was to have 40 billion crude oil reserve and 200 trillion standard cubic feet of gas reserve and so on. Because of the activities in the Niger Delta, we have not been meeting our target and the more reserve you find, the stronger you are in the global economy. For instance, Russia is a gas superpower. Qatar is a gas superpower. Saudi Arabia is an oil superpower. This is because of the reserve they have and the level of investment they have created for their economy. I don’t think we should abandon the oil and gas industry, the goose that laid the golden egg because we want to diversify the economy.

Is there possibility of agriculture replacing crude oil as a major foreign exchange earner for the country?
Well, we need to diversify to agriculture, but agriculture requires a lot of resources for investment and the resources will come from oil and gas. What has happened is just that the value of oil went down because of several factors occasioned by more discoveries, alternative hydrocarbon resources and all that. You need the resources from oil and gas to help you diversify to agriculture. But, the utility of oil and gas is far much more than anybody can think now. Recently, there is a new industry developing. Some people in Norway discovered that you could turn gas into animal feed. A lot of other industries will evolve out of the oil and gas

Shouldn’t it have been more strategic to focus more on gas instead of crude oil discovery?
When they explore, they are looking for oil and gas. Every time we explore, we are looking for oil and gas. If we find gas reservoir, we take it and book it that we have found a reservoir here. For now, what is happening with the level of gas flaring is such that we produce more gas than we need. If the LNG continue to expand and we have more LNG plants to service local industries, then you will find out that we will use up all the associated gas. What we are now using is a lot of more associated gas, as a result of oil production. Once the associated gas is used, then we now go for gas reservoirs and begin to produce the gas. For now, most of our gas reservoirs are not being produced because we have a lot of associated gas. In exploration, every drilling we undertake, what we are looking for is oil and gas. When we find the gas, if we don’t need it immediately, we keep the gas and produce oil.

What are the prospects of discovering more crude oil in Benue trough, Kwara and other parts of the country?
Geologists are doing a lot of work. A lot of work has been going on to understand the geology very well. What is certain is that where there is no oil, the likelihood of getting gas is there. And so, all the sedimentary basins, the Anambra basin, Benue area and all that, the possibility of having gas if there is no oil, is there. And this is why a lot of exploration will go on to discovering all these reserves. I know that somebody in University of Port Harcourt did some study on the Anambra basin. You may have also read that around the Ebonyi area they discovered oil and gas sometimes ago, but maybe not in commercial quantity.

The possibility for more discoveries is here if we are able to learn from what has happened in East Africa. Less than 30 years ago, oil was just found in the Gulf of Guinea. Today, in the whole of East Africa they are finding oil reserves. So, the prospects are there. Discovery has to do with the way petroleum forms, which the geologists are studying. There was an academic lecture given by Prof Chidi Ibe, recently at the Federal University of Petroleum, Warri, where he showed clearly that the more we understand the geology, the more we can discover.  People thought that oil formed somewhere and migrated to the Niger Delta. People are now beginning to think that it may not necessarily have migrated from where you thought was the source, but that it may have formed around the same locality where it is found. The more we understand our geology, the more we are going to discover and the better for everybody.

Why has Nigeria with almost 60 years of active oil and gas activities, not benefitted maximally from this sector?
That has to do with political economy and governance. From petroleum engineering point of view, we are have come a long way. We have understood the production of oil and gas. If you look at the country for instance, the problem had always been refined products, not the primary production area. Nigerians have been trained and that is why at the Institute of Petroleum Studies, University of Petroleum, we have moved from training petroleum engineers to training engineers for the downstream sector where we look at modular refineries, so that we can produce a lot more refined products. If we focus our attention on proper utilisation of resources, training and diversification of the economy, of course, we will benefit maximally from the production of oil and gas. But to abandon a particular sector of the economy because you have found oil, that is the undoing of the country. Like I told you about coal, it is part of some countries energy needs. They are still exploring for coal, but we have coal, the moment we found oil we left it. So, our coal is lying there.  The moment we found oil, we have abandoned our agriculture. Today, the global economy is forcing us to rethink and this why we need to ensure that every sector of the economy is developed properly to maximise the benefits of other sectors.

Considering the security challenges in the Niger Delta and other parts of the country, won’t this be hinder investment in fields that may be discovered?
That is a major factor. But those that want to invest may not necessarily be the major international oil companies, but as you know, a lot of national oil companies have been licensed and operating. They should be interested in exploration or production activities in those areas. The moment we begin to build modular refineries, investment in new places where oil will be found will be a lot easier. For instance, if you discover oil in the Anambra basin, instead of you to think of exporting that oil, you can begin to build modular refineries here and there and the local economy will become vibrant.

I believe any company that will have to operate in new areas where oil will be found would have learnt from the Niger Delta experience and begin to do things properly to avoid community crisis, taking into consideration the sustainable development of those communities. I believe that new operators will benefit from the experience in the Niger Delta, so that wherever we discover oil, we have the proper template for development of the host communities and also the value chain, refining and marketing of the product in the oil state where they are discovered. The international oil companies are going deeper offshore and are even trying to sell off their onshore oil fields to marginal oil producers because of the crisis they have been facing in the Niger Delta, but, I think those are business decision that they have to take to protect their investment, but it does not stop new players coming in to operate.

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