Top Frontier Oil Countries: Potential, exploration opportunities and risks

Date: April 22, 2010
Pages: 157
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Publisher: Business Insights
Report type: Strategic Report
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ID: TC53384363CEN
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Top Frontier Oil Countries: Potential, exploration opportunities and risks
Report overview

Economic growth in non-OECD countries, particularly in developing countries such as China and India, and a predicted increase in vehicle numbers to 2bn by 2030, are the chief factors in forecast growth in global energy demand, forecast to grow by 40% by 2030 compared with 2008 levels. Despite increasing concerns about emissions from the burning of fossil fuels and the effects on the global climate and increased investment in renewable energy sources, fossil fuels are forecast to account for more than three quarters of this energy demand growth. Of the main sources of primary energy; oil, coal, natural gas, nuclear, hydropower and biomass, coal will see the largest absolute rise, of about 53%. Demand for oil is forecast to rise by 24% to105m barrels per day in 2030, while natural gas demand is forecast to rise by an even greater volume, predicted to reach 4.4trn cubic meters a year by 2030. This sustained demand for oil and gas is against a backdrop of maturing oil and gas fields in many of the world’s ‘traditional’ producing areas such as the North Sea and the Gulf of Mexico, and concerns about peak oil. In addition, a large proportion of the world’s proven oil and gas reserves are held by a small number of countries, and evidence of resource nationalism and tighter criteria for foreign investment have led to increased concerns about energy security. Many of the world’s key producing fields are now maturing or are seriously depleted, and the continued demand for new oil and gas supplies means governments and companies are looking to new, and often completely unknown, regions to replace reserves. Some of these areas are believed to contain substantial undiscovered and undeveloped resources but many of them pose serious political and technological challenges to exploration and development.

Key findings

Over three quarters of overall energy demand growth up to 2030 is forecast to come from fossil fuels, despite increased investment in renewable energy sources. Over 50m bpd of the 78m bpd of oil forecast to be produced in 2030 will have to come from resources yet to be discovered or developed

In Africa, the Gulf of Guinea alone is forecast to meet a quarter of total US energy imports by 2020. Sierra Leone, Sao Tome and Principe, and Liberia are emerging as high potential areas for investment in the west of the continent as companies look beyond major producers Nigeria and Angola. The joint development zone between Sao Tome and Nigeria could contain up to 11bn barrels

In eastern Africa, following successful exploration in the Albertine basin, Uganda holds the potential to become a net oil exporter

The Arctic could contain undiscovered resources of 90bn bls of and 1,670trn cu ft of natural gas, representing 13% and 30% respectively of the world’s yet-to-be-found oil and gas

Technological developments such as wide-azimuth seismic acquisition and floating LNG will play key roles in successful exploration and development of frontier oil and gas reserves

Use this report to

  • Understand the drivers of the need to explore for oil and gas in new and largelyunknown areas
  • Analyse the opportunities available for investment consideration through examination of the data available and an exploration history of the selected frontier areas
  • Be better-informed of both the potential and the challenges presented by exploration in frontier areas, including the associated political and technological risks
  • Assess the attraction and the risks for your company of investing in these frontier areas
  • Benefit from the report’s information to help make your company’s next international upstream investment decision


Explore issues including...

Sustained fossil fuels reliance: Despite climate change concerns and increasing investment in renewable energy sources such as wind, solar and biofuels, fossil fuels will account for over two-thirds of overall energy demand up to 2030

Maturing traditional producing areas: Many of the world’s traditional producing regions are maturing or depleted, meaning oil and gas companies now need to venture into new and unknown areas, ‘frontier’ regions, in order to look for new oil and gas resources to replace produced reserves and meet continued demand

Frontier equals high-potential, high-risk: Frontier areas are often data-poor, being barely or completely unexplored. Many are believed to hold substantial undiscovered oil/gas resources, but pose political, socio-economic, geographical and technological challenges that may present serious barriers to commercial investment

Technology opens up frontiers: Technological developments in the oil and gas sector, including significant advances in seismic to aid reservoir analysis; deep and ultra-deepwater drilling capabilities; growing liquefied natural gas (LNG) capacity and ‘mega-pipelines’

Discover

  • By how much is demand for oil and gas forecast to grow in the next twenty years? How much of this forecast demand will need to come from resources yet to be discovered?
  • To what degree can successful frontier exploration change the concept of ‘peak oil’?
  • Why do oil and gas companies need to explore in new and unknown frontier areas?
  • Which are the most promising ‘new’ countries in West Africa for exploration? ‘What is their undiscovered resource potential and how risky is investment?
  • How likely is a resolution to the sovereignty dispute over Western Sahara, believed to hold substantial oil resources, and should companies sign for licences with Morocco or the territory’s exiled government?
  • What discoveries have been made in the ultradeep waters of the Gulf of Mexico and what potential do its deep and ultra-deep-waters hold?
  • Is going deeper in the Gulf of Mexico a better bet than new areas elsewhere in the US?
  • What is the resource potential of the Falklands? Will drilling there lead to a repeat of the 1982 Falklands conflict?
  • Which basins contain most of the Arctic’s undiscovered resources?
Top Frontier Oil Countries
Executive Summary
Introduction and context for frontier oil exploration
West Africa the ‘Third Generation’: Sierra Leone, Liberia, Sao Tomé and Principe
Ultra Deep Water: Gulf of Mexico, the next US frontier
Western Sahara: A disputed frontier and the challenge of sovereignty
The Falkland Islands
Other frontier countries: Uganda, the Bahamas and the Arctic
Technological advances facilitating frontier access and development

CHAPTER 1 INTRODUCTION AND CONTEXT FOR FRONTIER OIL EXPLORATION

Summary
Methodology
The global energy market
Sustained fossil fuels reliance
Energy security
Peak oil
Security & diversity of supply
Maturing of traditional producing areas
The push for the frontiers
No more easy options

CHAPTER 2 WEST AFRICA, THE ‘THIRD GENERATION’: SIERRA LEONE, LIBERIA, SAO TOMé AND PRINCIPE

Summary
Background and context to the new West African exploration
African advantage
Sierra Leone
Political landscape
Natural resources and oil exploration
The next Jubilee?
Liberia
Reserves potential
Onshore potential
Sao Tomé and Principe
Investment challenges and risks in the West Africa region
Coping with graft
Exploration risk

CHAPTER 3 ULTRA DEEPWATER GULF OF MEXICO, THE NEXT US FRONTIER

Summary
Introduction
Offshore exploration
Ultra-deep discoveries
Maturing production driving the need to go deeper
Reserves potential
Sustained licensing
Facilitating investment- why the GofM?
Challenges and risks of going deeper

CHAPTER 4 WESTERN SAHARA: A DISPUTED FRONTIER

Summary
Introduction
Hydrocarbon prospects
Exploration history
Licenses awarded by SADR and Morocco
Conflicting licenses
Political context
Current political situation and impact on exploration
Case Study - The East Timor experience
Conclusion

CHAPTER 5 THE FALKLAND ISLANDS

Summary
Introduction
Exploration history & production potential
The North Falkland Basin
Recent activity
The ‘Southern Basins’
Proven reserves in the vicinity
Further opportunities available for investment
Far north of North Falklands
Political context and the challenge to exploration
Other challenges

CHAPTER 6 OTHER FRONTIER COUNTRIES: UGANDA, THE BAHAMAS AND THE Arctic

Summary
Introduction
Uganda overview
Context for oil exploration and development
Risks and challenges to development
Learning the lessons of Nigeria
The Bahamas
Context for oil exploration and development
Why the Bahamas?
Challenges and risks
Arctic
Prospectivity of Arctic basins
Exploration history and current activity
Risks and challenges

CHAPTER 7 TECHNOLOGICAL ADVANCES FACILITATING FRONTIER ACCESS AND DEVELOPMENT

Summary
Introduction
Understanding little-known reservoirs
The future of seismic surveying
Exploration drilling capabilities
Marketing and monetization
The case for liquefied natural gas
Floating Liquified Natural Gas (FLNG)
Conclusion
Political and economic risk assessment of Frontier oil countries
Appendix
Glossary
Index

LIST OF FIGURES

Figure 1.1: Global natural gas demand, IEA Reference Scenario (bcm), 2009
Figure 1.2: Ten largest global proven oil reserve holders (bn bls), 2009
Figure 1.3: Ten largest global proven gas reserve holders (trn cu meters), 2009
Figure 2.4: US oil imports December (bls ‘000), 2009
Figure 2.5: Venus and Jubilee oil discoveries
Figure 2.6: Liberia third licensing round acreage, 2010
Figure 2.7: JDZ Licensing Round 2004
Figure 2.8: São Tomé and Príncipe 1st Licensing Round (March 2010)
Figure 2.9: West Africa ‘the third generation’ SWOT
Figure 3.10: Gulf of Mexico estimated volume of deep water fields (Mboe), 2008
Figure 3.11: Ultra Deep Water Gulf of Mexico SWOT
Figure 4.12: Comparison North east/North West countries proven gas reserves (trn cubic feet), 2009
Figure 4.13: Aaiun Basin exploration well history
Figure 4.14: SADR Licensing Round 2008
Figure 4.15: Zag License Area
Figure 4.16: Western Sahara SWOT
Figure 5.17: Falkland Islands Regional Basins
Figure 5.18: Oil reserves in South American countries (bn bls), 2009
Figure 5.19: Share of gas reserves in South American countries (trn cu m), 2009
Figure 5.20: The Falkland Islands SWOT
Figure 6.21: Uganda Albertine Rift Basin
Figure 6.22: Key Arctic oil basins (bn bls)
Figure 6.23: Key Arctic gas reserves (trn cu feet)
Figure 6.24: Acreage offered in Baffin Bay (Greenland 2010)
Figure 6.25: Other countries SWOTs
Figure 7.26: Newbuild deep/ultra-deep water rig deliveries, 2008
Figure 7.27: Global liquefied natural gas (LNG) production (m tons)
Figure 7.28: Distribution of standard gas fields, 2008
Figure 7.29: Frontier Oil Countries political/economic comparison, 2010

LIST OF TABLES

Table 1.1: Global natural gas demand, IEA Reference Scenario (bcm), 2009
Table 1.2: Ten largest global proven gas reserve holders (trn cu meters), 2009
Table 1.3: Oil production, IEA Reference Scenario (m bpd), 2009
Table 2.4: US oil imports December (bls ‘000), 2009
Table 2.5: Key discoveries offshore West Africa (excl. Nigeria and Angola)
Table 2.6: JDZ oil potential (m bls)
Table 2.7: Transparency International Corruption Perception Index (CPI), 2009
Table 3.8: Deep/ultradeep GofM discoveries, 2008
Table 3.9: Lower Tertiary discoveries in water depths >5,000ft (2008)
Table 3.10: Active leases by water depth (2008)
Table 3.11: Licensing rounds under current five-year program
Table 4.12: Comparison North East/North West African countries oil reserves (bls bn), 2009
Table 4.13: Comparison North East/North West African countries gas reserves (trn cubic feet), 2009
Table 4.14: Aaiun Basin exploration well history
Table 4.15: Blocks offered by SADR in the 2008 licensing round
Table 4.16: Morocco-SADR: fiscal comparisons 2010
Table 5.17: Wells drilled in the North Falkland Basin (in 1998)
Table 5.18: Oil reserves in South American countries (bn bls), 2009
Table 5.19: Gas reserves in South American countries (trn cu m), 2009
Table 5.20: Farm-in opportunities (Argos Resources)
Table 5.21: Farm-in opportunities (Desire Petroleum)
Table 6.22: Uganda licensing status
Table 6.23: Bahamas exploration well history
Table 6.24: Key Arctic oil reserves (bn bls)
Table 6.25: Key Arctic gas reserves (trn cu feet)
Table 7.26: Key global oil & gas pipelines
Table 7.27: Global liquefied natural gas (LNG) production
Table 7.28: Distribution of standard gas fields, 2008
Table 7.29: Frontier oil countries political/economic comparison, 2010
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