Tullow Oil Faces Production Impact in Ghana Due to Well Glitches: Examining Available Remedies
Tullow Oil has hit downhole problems on its Jubilee oilfield offshore Ghana — a vital revenue source for Ghana’s flailing economy — which will result in an unexpected drop in average production for 2023.
Jubilee is Tullow’s flagship asset, with production averaging 95,900 barrels per day during the three months ending 30 September, one-third higher than the previous quarter after the Jubilee South East (JSE) project began feeding fresh oil to the field’s floating production, storage and offloading vessel.
Three production wells were brought online at JSE in the third quarter, taking gross output up to around 100,000 bpd, according to partner Kosmos Energy, whose chief executive Andrew Inglis told analysts this week is “a level not seen for several years”.
After the end of September, two water injection wells, whose drilling was delayed, were also brought online.
However, the delay, coupled with higher than anticipated downtime of the existing water injection pumps during the third quarter, resulted in a slower ramp-up in Jubilee production.
As a result of the lower water injection rates, said Inglis, the operator is now forecasting Jubilee will produce around 85,000 bpd on average for 2023, down from its previous estimate of 90,000 bpd.
However, Kosmos’ boss described the problem as: “Just a timing issue. Our view of 2024 production is unchanged, with the shortfall in 2023 expected to be made up in 2024.”
To help counter this shortfall, the field partners now plan to accelerate drilling of an additional production well and water injector from 2024 to this quarter, as a result of which they will keep the Maersk Valiant drillship at location instead of temporarily allocating it to another client.
Inglis said both wells are expected online in early 2024, at a cost of around $30 million, net to Kosmos’ interest.
“The objective is to build well capacity so we’ve got reserve capacity beyond the facilities’ limit. We’ve accelerated some capital out of 2024 into 2023 to allow us to build towards that facility limit faster,” he explained.
Meanwhile, at Tullow’s bitterly disappointing Twenboa-Enyenra-Ntomme (TEN) project in Ghana — which also produces via an FPSO — production averaged only 15,100 bpd for the third quarter.
The field partners, said Kosmos, have submitted a draft amended plan of development to Accra in order to boost output from TEN, including a proposal to combine gas sales from Jubilee and TEN.
Local reports put the value of this new plan at $1.3 billion, a number Inglis confirmed.
An interim gas sales agreement for Jubilee’s associated gas has been extended through to the end of this month at a price of $2.90 per million British thermal units, while discussions are ongoing on a longer-term agreement, said Kosmos this week in its third quarter results statement.
Tullow undertook two weeks of maintenance on the TEN FPSO recently, which means that associated gas is now being re-injected into the Ntomme field to support reservoir pressure and maintain production levels.
This action has cut flaring by around a 75%.
Jubilee — and TEN to some extent — is a key revenue generator for Accra whose economy has been hit hard by the impact of the Ukraine-Russia war due to the rising cost of grain, fertiliser and fuel.
Earlier this year, the government of President Nana Akufo-Addo put in place a ‘gold for oil’ programme which allows Accra to pay for imported oil products with gold bought by the Central Bank.
The policy aims to save the country some $4.8 billion annually in foreign exhange.(Copyright)