Out-Law News 2 min. read

First oil produced from Nigeria’s Bonga North West project

Shell’s deep-water subsidiary in Nigeria, Shell Nigeria Exploration and Production Company Ltd (SNEPCo), has started oil production from the first well at the Bonga North West deep-water development off the Nigerian coast.

Shell’s upstream international director Andrew Brown said the development is “good news for Nigeria, as it is a new source of oil revenues and strengthens Nigeria’s deep-water expertise, a key driver of economic development”.

The Bonga project, which began producing oil and gas in 2005, was Nigeria’s first deep-water development in water depths over 1,000 metres. Oil production from the first well began on 5 August and “represents a significant step forward for the project”, SNEPCo said.

Oil from the Bonga North West sub-sea facilities is transported by a new undersea pipeline to the existing Bonga floating production, storage and offloading (FPSO) export facility. SNEPCo said: “The Bonga FPSO has been upgraded to handle the additional oil flow from Bonga North West which, at peak production, is expected to contribute 40,000 barrels of oil equivalent per day, helping to maintain the facility’s overall output.”

The Bonga FPSO is one of the world’s largest such facilities. It is 300 metres long and is the height of a 12-storey building. The FPSO receives crude from production wells on the seabed and the oil is processed onboard, stored and then sent to a single point mooring buoy anchored nearby that is used to load it onto tankers for export. When fully laden with oil, Bonga weighs 300,000 tonnes and is held in place by 500-tonne anchors linked by 20 km of mooring lines.

Four oil producing wells and two water injection wells in the Bonga North West development will be connected to the FPSO.

The Bonga field, which covers an area of 60 square kilometres, lies 120 kilometres offshore in the Gulf of Guinea. The field also supplies gas to the Nigeria Liquefied Natural Gas (LNG) Company Limited at Bonny Island, from where it is exported as LNG to European and global markets.

SNEPCo said the Bonga North West project is part of its “long-standing commitment to developing deep-water engineering skills in Nigeria”. The company said investments it has made with project partners to date include upgrades of local contractors’ facilities and providing specialised training for Nigerians to work in the energy industry.

SNEPCo, which was formed in 1993 to develop Nigeria’s deep water oil and gas resources, operates the Bonga project and holds a 55% stake. The other project partners are Esso Exploration & Production Nigeria (Deepwater) Limited (20%), Total E&P Nigeria Limited (12.5%) and Nigerian Agip Exploration Limited (12.5%) under a production sharing contract with the Nigerian National Petroleum Corporation.

According to the US Energy Information Administration (EIA), Europe is the largest regional importer of Nigerian oil. In 2012, Europe imported 889,000 barrels per day of crude oil and condensate from Nigeria, accounting for 44% of total Nigerian exports.

The EIA also lists Nigeria as the largest holder of natural gas proven reserves in Africa and the ninth largest holder in the world. However, the EIA said “natural gas production is restricted by the lack of infrastructure to monetise natural gas that is currently being flared”.

EIA figures indicate that Nigeria flares the second largest amount of natural gas in the world, following Russia. Natural gas flared in Nigeria accounts for 10% of the total amount flared globally, but has decreased in recent years from 575 billions of cubic feet (bcf) in 2007 to 515 bcf in 2011, the EIA said.

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