Oil discovered in Lagos

Nigeria’s commercial capital, LAGOS, is on the verge of joining the country’s oil- producing states with the discovery of crude oil in commercial quantities in the coastal state. Yesterday, Afren Plc and its partner, Lekoil Limited, announced significant oil discovery offshore Dahomey Basin in Lagos, according to the London Stock Exchange. In separate announcements, the partners said they discovered a significant light oil accumulation based on the results of drilling and wire line logs from a high impact Ogo-1 well, located on the Oil Prospecting Licence, OPL 310 offshore Nigeria. Afren is optimistic that the discovery is likely to be significantly higher than the anticipated 78 million barrels of oil equivalent (mmboe), which encourages search to further high potential zones. The discovery is subject to the authentication of the Department of Petroleum Resources (DPR), which is expected in two weeks. If certified and the partners produce the first barrel of oil, Lagos will become the 11th oil producing state in Nigeria, a club Anambra State joined recently. It will also boost the economy of Lagos, which currently generates about N29 billion internally every month. The other oil producing states are Akwa Ibom, Bayelsa, Rivers, Delta, Ondo, Abia, Imo, Edo and Cross River. Geological studies indicate that the Dahomey Basin is a combination of inland/coastal/offshore basin that cuts across some West African countries including Lagos, Nigeria as well as Southeastern Ghana, Togo and the Republic of Benin. The basin is said to be separated from the Niger Delta by a surface basement popularly called the Okitipupa Ridge. “The Ogo-1 well has been drilled to a total measured depth of 10,518 ft (10,402 ft true vertical depth sub sea), and has encountered a gross hydrocarbon section of 524 ft, with 216 ft of net stacked pay. “The well was targeting 78 mmboe of gross P50 prospective resources, but based on evidence to date, targeted resources are likely to be significantly in excess of previous estimates,” Afren said in a statement made available to Vanguard. The company added that “further evaluation using wire line log analysis is currently underway prior to extending the well to a total measured depth of 11,800 ft (11,684 ft true vertical depth sub sea) to target further high potential zones.” DPR yet to authenticate discovery However, speaking with Vanguard on phone, the DPR said authentication of the discovery could only come after side- tracking (ST) verifications. OPL 310—Map showing the location of OPL 310 , along the Dahomey Basin. A top management source in the upstream unit of the regulatory agency, said: “As far as we are concerned, the discovery for now is very speculative. The side track will indicate whether the resource they have found is actually crude, and this verification takes about two weeks. Thereafter, the company will communicate the tracking result to us, after which we will certify the discovery.” Partners plan side track Ahead of the planned ST, Afren expressed confidence that estimated reserves of about 124 mmboe have a better than 50 per cent, P50, chance of being technically and economically producible. “Partners intend to drill a planned side-track, Ogo-1 ST, which will test a new play of stratigraphically trapped sediments that pinch-out onto the basement high targeting 124 mmboe of gross P50 prospective resources,” it confirmed in the statement. Commenting, the Chief Executive of Afren, Mr. Osman Shahenshah, said: “The discovery of oil in the Ogo-1 well opens up a new oil basin in an under-explored region and represents a possible extension of the West African Transform Margin. “Based on evidence to date, targeted resources are likely to be significantly in excess of previous estimates, with some high- potential zones still to be drilled. We look forward to working with our partners to realise the full potential of Ogo 1 and our additional prospects on the licence. “The Ogo-1 exploration success follows a series of recent discoveries, Okoro Field Extension, Ebok North Fault Block and Okwok in Nigeria and Simrit-2 and Simrit-3 on the Ain Sifni Block in the Kurdistan region of Iraq.” On his part, Lekoil CEO, Mr. Lekan Akinyanmi, said: “The discovery of oil in the Ogo-1 well opens up a new oil basin in an under-explored region and represents a possible extension of the Cretaceous play along the West African Transform Margin. The discovery is a clear validation of Lekoil’s technical analysis and of our extensive studies on the Dahomey Basin. “Results to date indicate that the discovered resources could be significantly in excess of P50 estimates prior to drilling. While Lekoil notes these results are preliminary, we believe there exists substantial scope for upward revisions to the data announced today (Wednesday) as drilling and interpretation continues. “We look forward to working with our partners to realise the full potential of Ogo and the additional prospects on the licence.” Equity participations The Ogo-1 well is being drilled by Afren, as technical partner, under a farm out to Lekoil, as announced on May 14, 2013. The operating licence for OPL 310 acquired in 2009, is valid till February 2019.