n October 2011 I wrote an article on Nigeriaworld.com titled "Developing Nigerian unconventional hydrocarbon resources". In the article, I discussed the potential of and approach to developing both unconventional oil and gas resources in Nigeria. I have received a lot of questions on this article since then, especially pertaining to "unconventional gas". These questions centered mostly around three themes, namely: (a) Current Status (b) Going Forward (i.e. Future Potential) and (c) Opportunities for Nigerian Independents. I have provided answers to these questions through individual contacts. The purpose of this write-up is to summarize these answers and disseminate to the general public.
Currently, there are no commercial productions of unconventional gas in Nigeria. But evidence points to the presence of unconventional gas resources (tight sands gas, shale gas and coal-beds methane [CBM]) within Nigeria. These resources are located mostly in the frontier inland basins of Benue trough and Maiduguri [i.e. Borno] basin, which span the southeastern and northeastern parts of Nigeria. The Benue trough is made up of the lower Benue [i.e. Anambra basin], the middle Benue and the upper Benue (i.e. Gongola and Yola sub-basins). There are also potentials for shale gas in the Niger Delta and Benin (Dahomey) basins in the south-south and southwestern regions of Nigeria, respectively.
There are several existing geological, geo-chemical, petro-physical and basin modeling data scattered in the open literatures (For example, see references 1 to 4) that can be combined to carry out systematic and integrated studies to identify and give a holistic view/interpretation of locations of unconventional gas in Nigeria (5). These data cover work done from the 1960s to date. Data in references 1 to 4 are just a tip of available data in public domain. But identifying, extracting, assembling and diligent interpretation of such data takes time and efforts. As a result, current systematic and integrated studies on Nigerian unconventional gas resources for "localized" identification are proprietary and are not available in public domain. Usually, third-party consultants have been engaged in such studies. These are experienced, specialized and highly trained geoscientists and engineers.
Even, when such studies are available or can be purchased from proprietary sources, they only give a regional view and in some "rear cases" localized information on the potential of unconventional gas resources. This is because unlike conventional gas resources, unconventional gas resources are not structurally trapped. They span several miles or kilometers with localized sweep-spot of higher gas saturation and enhanced permeability. Hence, in accordance with SPE-PRMS (6-7), further appraisal drilling, core analysis, reservoir characterization, reservoir modeling, patterned production pilot and economic analysis would still be required before these resources can be categorized into technically recoverable or commercially recoverable gas.
Unconventional resources' knowledge base has been growing in recent years and highly sought-after experts in this technical domain are very scarce outside of North America. Unconventional gas resources' evaluation and workflow are quite different from those of conventional gas resources. For example, the concepts of adsorbed gas and nano-flow regime are quite common in unconventional gas resources' evaluation and analysis. Such technical jargons are really encountered in the evaluation and analysis of conventional gas resources.
Nigeria would need to build its own capabilities and critical knowledge base towards the development of unconventional gas resources from its sedimentary basins through a combination of: (a) joint ventures undertakings between Nigerian companies and companies (operating and service companies) with expertise in the development of unconventional gas (b) sending of staff members of Nigerian companies with interest in unconventional gas for formal training (c) on the job training of technical staff members of Nigerian companies under the supervision of experts and (d) for highly motivated technical staff of Nigerian companies: self-learning through attendance of technical conferences and by keeping up with technical developments and advances through reading of technical literatures.
Opportunities for Nigerian Independents
Nigerian independents or small exploration and production companies that intend to develop unconventional gas resources, especially those with a focus on dry gas, would need technical experts to help them zoom on high impact areas of dry gas windows. Such gas windows can be found within existing dry gas and condensate bands of tight sands and shale rocks and in the coal-beds of southeastern and northeastern sedimentary basins. In Nigeria, for dry gas development from unconventional sources, significant improvements in well economics under efficient operating environment can result in positive project economics and lead to faster pay-out and good internal rate of return (IRR) even at natural gas sales price of 2 to 3 $US per MSCF (MMBtu) within Nigeria and/or West-African sub-region markets.
Unlike condensates or wet gas production, produced dry gas is almost pipeline quality ready, it requires less complicated processing, hence reducing the cost to process the gas before it is sent to pipeline for delivery to market. That is, the extra variable cost associated with the extraction/stripping of natural gas liquids, during gathering and transportation, is eliminated. In addition, due to recent competition in the drilling and completion market, the cost of hydraulic-fracturing operation, which is normally required to boast gas production from unconventional sources, is coming down and would probably go further down in the future (8). This has the potential to further improve the economics. In addition, operational logistics are easier to handle in these regions of Nigeria because of terrains that are devoid of meandering creeks.
It is hoped that ongoing discussion in the Nigerian national assembly on the draft PIB (Petroleum Industry Bill) would lead to additional provisions in the bill that would encourage further appraisal, production piloting and commercial development of unconventional gas resources in a way that encourages early risk taking and ample rewards for risk takers. For example, tax incentives can be included in the PIB to lure service companies (both established and new ones) to offer their services within Nigeria, in area of unconventional gas development. Small service companies could also be encouraged to form beneficial partnerships with Nigerian indigenous service companies within existing "local content" rules. These service companies do most of the heavy lifting work involved in oil and gas development and should be encouraged to peddle their technologies to Nigerian operating companies (big and small) towards fast-tracking the development of unconventional gas resources.
- Obaje, N.G., Wehner, H., Scheeder, G. (2004) Hydrocarbon prospectivity of Nigeria's inland basins: From the viewpoint of organic geochemistry and organic petrology. AAPG Bulletin, Vol. 88, No.3 (March 2004), pp. 325-353.
- Idowu, J.O. and Ekweozor, C. M. (1993). Petroleum potential of Cretaceous shales in the Upper Benue trough, Nigeria. Journal of Petroleum Geology. Vol. 16 (3). July 1993, pp. 249-264.
- Obaje, N.G. and Abaa, S.I. (1996). Potential for coal-derived gaseous hydrocarbons in the Middle Benue trough of Nigeria. Journal of Petroleum Geology. Vol. 19 (1). January 1996, pp. 77-94.
- Avbovbo, A.A. and Ayoola, O. (1981). Petroleum prospects of southern Nigeria's Anambra basin. Oil & Gas Journal, May 4, 1981, pp. 334-342.
- Ayodele, O.R. (2011). Developing Nigerian unconventional hydrocarbon resources. http://nigeriaworld.com/articles/2011/oct/261.html. Retrieved on September 16, 2013.
- SPE-PRMS (2007). SPE/WPC/AAPG/SPEE - Petroleum resources management system. http://www.spe.org/industry/docs/Petroleum_Resources_Management_System_2007.pdf. For non- technical guide, see: http://www.spe.org/industry/docs/PRMS_guide_non_tech.pdf. Retrieved on September 16, 2013.
- SPE-PRMS Guide. (2011). Guidelines for application of the petroleum resources management system. http://www.spe.org/industry/docs/PRMS_Guidelines_Nov2011.pdf. Retrieved on September 16, 2013.
- Sider A. (2013). Fracking firms face new crop of competitors. US edition of the Wall Street Journal (WSJ). July 9, 2013. Page B6. Also see the following link: http://online.wsj.com/article/SB10001424127887323300004578555743698255254.html. Retrieved on September 16, 2013.