Why Must GNPC Explore The Voltaian Basin?

The ongoing rumpus about the Ghana National Petroleum Corporation’s (GNPC’s) plan to undertake exploration, presumably seismic surveys and drilling, in the Voltaian basin is interesting, but should not be surprising to anyone who has followed the corporation’s development over the years. From the available press reports, the Board Chairman, a businessman/entrepreneur(?) is rightly looking at the issue from a purely business venture point of view and that is how it should be.

The Voltaian basin covers an area of about 158,000 square kilometres. To be able to do justice with even a reconnaissance 2-D seismic survey, it will require a minimum of about 20,000 kilometres of seismic, to attain a very coarse grid. For an area will varying infrastructure and difficult accessibility in many places, it will not cost less than $4,000 per kilometre for acquisition alone, judging from experiences elsewhere.

This does not include crew stand-by and downtime arising from communities protesting about encroachment of a burial or scared sites or about a survey line that passes through a built-up community, as usually happens in much of Africa and the developing world. The project itself, moving people, equipment and supplies around, will be a logistic nightmare.

At $4000 per kilometre, that is a minimum of $80m for acquisition alone. Considering the geology of the area, processing will be another $250 to $400 per kilometre, a minimum of $5m making a gross minimum of $85m for just a reconnaissance 2-D seismic survey, before interpretation. Even with the use of modern workstations, it will take a considerable number of man–months, taking staff from other projects, etc., to carry out the interpretation, assuming it is not contracted out to external consultancies, in which case it will be considerably more expensive.

Assuming that the exercise proves successful and unearths several leads, a more expensive and detailed 2-D or even 3-D seismic survey will be required to turn the leads into drillable prospects. Then a drilling programme must be put in place. Even for onshore drilling, a single well in the area will not cost less than $10m because of the logistics involved in moving a drilling rig, drill pipes and associated equipment to such an area.

A well in one of the prospects will either be a discovery or dry well. If it is dry, some useful geological information may be derived from the exercise, but follow-up exploratory drilling will be required to make it worthwhile. Will it be worth all that cost? If it is a discovery, there must be appraisal drilling and possible development, to continue to make the basin attractive to other investors, which will still require a lot more money.

The Ghana National Petroleum Corporation is wholly owned by the government on behalf of all the people of Ghana. The windfall that is obviously accruing to the corporation from the offshore production should benefit all the people of Ghana, not just a few individual consultants and contractors. The corporation must not be allowed to throw the windfall into risky ventures. The scenario described above is conservative and it could be much more expensive.

The corporation ought to be steered away from the socialist “state must do everything” mentality. At a time when the country is facing difficult economic challenges, every penny that comes to state coffers from whatever source, must be utilised judiciously.

Promoting the basin with existing data
There is adequate gravity, geological and satellite data coverage over the basin for the corporation to package and embark on road shows, to promote the basin to the international oil and gas community. Ethiopia, Kenya, Uganda and recently Chad, all had very rudimentary data when they began to attract international investment into their onshore basins. Chad in particular, had just 1959 vintage analogue gravity data when they began to invite the international oil and gas community to the country. It only produces 20,000 barrels of oil per day, but it has been able to attract multi-million dollar investment with the very little that it had by way of exploration data.

Ghana’s offshore production is more than 200,000 barrels per day. The results of Shell’s 1967 Premuase exploration well, the early 1960s Russian water drilling projects in the Daboya and Tamale areas, as well as salt winning in the Tamale-Daboya area should put the basin in good stead for promotion to the international community.

Exploration, particularly in virgin territories, is expensive and risky. A nation’s loans and scarce resources must not be ploughed into such ventures which could prove so negative as to scare future potential investors into the basin. The corporation must not be allowed to return to its old bad ways again!

Investing in production ventures elsewhere
With the help of a Ghanaian entrepreneur in Houston, Texas, Petroci (of Cote d’Ivoire) ventured into the international arena a few years ago, investing in proven oil fields. Today, the tit bits from industry show that they are doing very well as international players. If GNPC has that kind of money to spare, it should try and invest in proven producing fields elsewhere and leave the expensive preliminary exploration of the tough Voltaian basin environment to the “big boys” with deep pockets.

What is required is a tightening of the block acquisition regime with the old Production Sharing (PSA) model, to make future discoveries in the basin more beneficial to the people of Ghana.

Stay blessed