Oil exploration in the north: moving from guess-work to hard work – Part 2

In the Benue Trough, (North-East of Nigeria a few oil wells have been drilled by multi-nationals from 1999 to date on OPL 809, Shell have conducted work program on the blocks and drilled one (1) well, Kolmani River – 1 in 1999. The hydrocarbon phase encountered in the well, was essentially a Gas and condensate phase, estimated to have minimum Gas reserves of between 33 billion to 100 billion cubic feet” said the New Nigerian Development Company, adding that another block, OPL 810, which the company acquired, had traces of gas, though the exploration activities in it which was undertaken by Chevron using an error prone method “was inconclusive”.

Also on the oil blocks in the Lake Chad Basin (North East Nigeria) NNDC said, preliminary review of the available information to them revealed that, Gas was encountered in the OPL 722, during the NNPC operations in the area. However, information available to the company revealed that Gas was encountered in an adjacent block OPL 732 in the Lake Chad Basin. We are ready to start re-evaluating the deposit of Gas encountered in the OPL 732 and 733 with our technical partners, said Aliyu Alkali, the Group Managing Director of NNDC.

NNDC will not spend over 346.6 million Naira on acquisition of Oil blocks both in the Lake Chad and the Benue Trough “if we are in the doubt of the huge potentials of hydrocarbon in the area” said Fedrick Durlong, the business development and cooperate planning Manager of the company in his office in Kaduna, added that, the company is optimistic in spite the several shortcomings in the quality of exploration, that resulted in the acquisition of the oil blocks in the first place.

The Politics of Oil in the North is not a question of “North versus South” as many in the north will have it, but rather, the lack of political will in the north and Nigeria as a whole, “I slightly disagree with this position” said Ibrahim Wamdeo, a retired civil servant and a social commentator in Maiduguri who argued that “ I think the failure to harness the proven oil and gas reserves in the north is; the Southern dominated oil and gas sector together with their over bearing influence in the financial market took advantage of the disharmony in the north and the lack of visionary leadership here, to undermine the potentials of the region in order to maintain their relevance as the leading revenue generating region against the so-called parasitic north” said Wamdeo.

On the 28th of July, 2008, the Chairman of the Northern Governors Forum, Dr. Mu’azu Babangida Aliyu said, the 19 governors of the north have resolved to turn their backs on oil revenues from the South and will hence forth develop the agricultural resources of the north. The declaration of the Chief servant of Niger state as he likes being called was supported by the Governor of Adamawa state as thus: “As a Nigerian of northern extraction, I feel very unhappy when somebody describes me as a parasite because of oil, when I know that I have the capacity to solve my problems and probably do even better through agriculture and education.

For many Northerners, these declarations at the just concluded Northern Agricultural summit are a turning point for the north. “The north will soon be back and in charge” said Wamdeo. But he cautioned that in as much as the words of the leaders of the North are ”Sound advice” the gap between their comforting words and their troubling credentials is one reason why there is great uncertainty about the future of the north, Wamdeo implied.

“I cannot imagine picking up a hoe trying to cultivate a farmland, with my level of exposure, knowing very well that, Shell petroleum and NNPC, have both confirmed that under my farmland lies 33 billion cubic feet of Gas reserve or even more” said Wamdeo “that is unimaginable”, adding that, during the groundnut pyramids and other agricultural produce that was pioneered by the north “the value of oil and the possibility of having it in the north was not there”. But today, the average northerner or Nigerian knows the value of oil and its implication on the development of his or her community” Wamdeo intoned.

Another issue that was stressed at the recent Northern agricultural summit in Kaduna was, the gradual transition from petroleum to bio- fuels and other materials for energy, and the north has the potentials to be part of this new opportunities “ But even one of the biggest advocates of saver fossil fuels in the United state of America, the Rocky Mountain Institute that summit a work plan to the pentagon, for the US, the largest consumer of oil and gas in the world, proposed 2040 as the period when the US can completely get off it reliance on oil. The question here is, is 2040 too short for the north to harness its oil and gas reserves to develop its human resource, agriculture, and infrastructure?

When it was decided that the stake holders of the NNDC, the 19 Northern states, to acquire oil blocks and commence oil exploration and production in the north, there was a need to recapitalize the NNDC to give it an international outlook that can afford the company to seat down on the table with multi-nationals to do business. 4.75 billion was required to increase the company’s share capital to N5.5 billion ( US$47 million). The arithmetic was, 250 million from each of the 19 states through an Independent Standing Payment Order (ISPO) from the Central Bank of Nigeria, directly into NNDC‘s account.

Interestingly, Sunday Trust found out that the first signature that could give the CBN the authority to make deductions from the direct allocation of these states came from the north-west and north-central states. “As at date, the core potential oil producing states in the north, Borno and Gombe have not yet paid a single kobo, Bauchi reluctantly paid at the tale end of Governor Ahmed Mu’azu’s tenure in 2007”, said a reliable source.

If states like Borno, the seat of Lake Chad and Gombe that is part of the Benue Trough cannot sign their ISPO, “where is the politics of the north versus the south in the exploration of oil in the north” a former top NNPC staff Abuja challenged this correspondent.
NNDC’s broken fens

Three years after the acquisition of 4 oil blocks by the NNDC from NNPC in the Lake Chad and the Benue Trough with over 2 million US dollars, “there is little information coming to us to act on the blocks” said Mr. Durlong and like the academics from several universities in the north that claim, “There is still considerable lack of cooperation in exchanging geological and technical data, in the use of available equipment and in the correlation of survey programs and results in the Country by the NNPC,” said professor Abaa and professor M.R. Islam.

Engineer Ibrahim Alli, cautioned the academics that, getting any information from NNPC or the DPR on oil exploration activities require paying “200,000 US dollars only for keys into the viewing room” said engineer Alli. But NNDC paid every single kobo demanded from it by both the DPR and NNPC to acquire these blocks and like the academics that paid nothing, NNDC that paid hugely, is having problems “the data that is coming from the Benue trough is still very sketchy and nothing yet from the Lake Chad” Said Mr. Durlong.

And the stake holders of NNDC that comprises all the political leaders in the North Sunday Trust learnt do not find it deem to pressurize the federal government “on this deliberate attempt to frustrate NNDC”, said an official of the company. Instead, the “political leaders declared that they will order crude farming implements and go to the farm, while they (leaders) will fly abroad and negotiate buyers for their farm produce” said Wamdeo.

Likely Investment Windows

According to Professor Abaa, many experts accounts “indicate that the Chad Basin constitute an extensive stretch of gas shores and with some 160 trillion cubic feet of gas, Nigeria, has the 10th largest reserves in the world and second only to Angola on the African Continent,” said Abaa, it is now therefore safer and profitable to now begin to add to Nigeria’s proven reserves by exploiting the opportunities in the Chad Basin, he added.

That, with the increasing demand in gas utilization programmes worldwide, Nigeria can use it additional gas reserves in the Lake Chad and Benue trough not only for it’s Economic growth, but to further assert itself as a regional power in Africa, as it is the case with Russia that use it energy reserve to get political favors in Europe.

For many of geologists in the University of Maiduguri, the Federal Government must design exploration programme that will primarily target gas as the main objective “such a programme can only become economical with the construction of a National Network-grid of gas pipelines with model points input and output. The input points will constitute gas production and gathering stations in Niger Delta and the inland Basins (Anambra Basin, Benue trough, Chad Basin, Sokoto Basin, Bida Basin and Duhomey Basin)” said Abba

While the output points “would constitute the numerous gas utilization projects (fuel for industries, fuel for power generation, feedstock’s for industries and domestic fuel, gas to liquid projects) in the major industrial centers along the grid route while the net balance from the out put could be exported, said Abaa

According to the GMD of NNDC, the company in conjunction with our technical partners satisfied with the available reserve of the hydrocarbon available in the birth has considered that an independent power project (IPP) as well as a fertilizer project among other can be established” he said adding that in the near future efforts would be made to facilitate the use of gas for domestic purpose like cooking, heating etc, in towns in the producing areas where the odds of distribution would be more favourable than else where.

Sunday first heard that the purpose of established a refinery for petroleum products is top on the agenda of the investors of oil and gas in the north, these will inadvertently open windows of employment opportunities for many youths in Nigeria and reduce or eliminate the need for importation of petroleum products.

The economy of the north and that of Nigeria as a whole is supported by Agricultures as Adamu a columnist implied however natural gas could be used as a feedstock in petrochemical plants and in the production of nitrogenous fertilizer which many people say, the demand alone may not allow for immediate exportation of these products brining the need for expansion of such fertilizer plants” said the during

According to Abaa, the must effective way to dispose of the largest possible quantities of gas that would otherwise be flared is to gather and liquefy it for export Abroad in the form of liquefied natural gas (LNG). The Natural market for our LNG, according to Abaa Bwe, the United States and Western Europe include.

Though, Abaa said, the sellers of LNG include Nigeria do not have a say on the products, because the US exercise total control on the quantities and price of LNG and all sales contracts require the approval of the US Department of energy, these frustrations “should be kept in mind both by those conducting negotiations and those impatiently awaiting the benefits” said Abaa.

Corporate Responsibility

Sunday trust fund out from many villagers across that, oil wells, that the stint by NNPC in the areas in the 80’s and 90’s though left them with witer but within to show any sign of responsibility by the National oil Giants, the fragile road that were constructed went away with the heavy duty equipments of the company. Still the villagers complained this correspondent that they did not get any form of compensation from NNPC after being depreved of their farms for over a decade.

Many critics claimed, this was how it started in the Niger-Delta that has become an intractable problem and they fear that the North-East t5hat borders three troubled countries, Cameroon, Chad, and Niger Republics may even be more volatile then the Niger-Delta in the event of oil discovery.

According to the GMD of NNDC, his company has a track record of corporate social responsibility since it was established many decades ago that on each of the four oil blocks “a management committee which comprises NAMPIMS, NNDC and the committees will always meet” and one of the key focus of this committee is the issue of corporate social responsibilities “where we do not intend to assist in developing the area in terms of infrastructure but expand our youth professional development scheme to empower the youths in the area to assume leadership rulers” said Alhaji Alkali

For Lawan Bukar Gumna, the village head of Gumna in kulli ward in Marte Local Government in Borno where one of the provened wells is situated his village is not only waiting for the compensation, long awaited from NNPCC but it need every thing because the village has nothing, Lawan implied, which reflected so well in the thatched houses and bear footed children and women that are oblivious of the opportunities for good health, education and other developments that accord e4very individual that seats on top of such huge hydrocarbon reserves.
Conclusion

For many optimist in the North, the heightened agitations on the Niger-Delta for greater share of the oil revenues in alas, even independence couple with the good price of crude oil and the short life expectancy of the commodities in the face of advancements in alternative source of energy in the developed world are enough indicators for the North and Nigeria as a whole to annex all it tax revenue base.

“As I am talking to you now no single State in the North has fully annex tax revenue base instead they await whatever they get from the Federal account” said Barrister Haruna Mshelia the Chairman Nigerian Bar association Borno State chapter who added that there is a need to diversify the economy as the 19 Northern Governors at the just concluded Agricultural summit at Kaduna.

For professor Abaa, the Lake Chad Basin is a force to reckoned with in the oil reserved areas in the world with an extensive stretched of gas believed to be more than 130 Trillions cubic fit. According to professor Abaa globally natural gas being the cleanest of all fossils is gaining more ground over oil as the energy of the future. When resources from petroleum are utilized and managed properly in the north it will offer a balance for stability in Nigeria and disabuse the minds of one region accusing the other of exploitation and in the long run bring about socio-economic transformation without necessarily making the mistakes of the Niger-Delta.

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