The Analyst (Monrovia)

11 January 2013

Liberia: Liquid Oil Yet to Harvest - NOCAL Says Actual Exploit in Five to Seven Years

Crude oil and gas being the magic wand for eradicating poverty and underdevelopment, their discovery in the country have charged nerves in the last few years. And, understandably, many Liberians, including foreign development partners, are itchy to hear when the good news would turn into liquid harvest. Thus, every pronouncement related to the sector is wildly received and often mistaken for actual pumping of oil into containers. This is exactly what happened the other day when one of the companies leading the find of oil in the country announced it commenced drilling. But the Agency of Government regulating the oil and gas sector has calmed the boiling anxiety, as The Analyst reports.

The National Oil Company of Liberia (NOCAL) says while it welcomes latest progress in the drilling program of African Petroleum (AP), it is reemphasizing that AP is in the process of appraising the discovery they announced in February (2012).

Early this week the African Petroleum Corporation Limited announced it started drilling the Bee Eater-1 well in Block LB-09 offshore Liberia on the 4th January 2013 with Ocean Rig's semi-submersible rig, the Eirik Raude.

The company said the Bee Eater-1 well is located 9.5 km north west of the 2012 Narina discovery which discovered high quality oil in Turonian reservoirs.

AP stated that the Bee Eater-1 well will test a potentially westerly extension of the Narina-1 Turonian oil discovery in an axial position of the fan for improved reservoir quality and is located up dip of the postulated Narina -1 OWC.

Mean recoverable un-risked prospective resources for the Bee Eater/Narina fan system, which extends over an area of 300 sq km, are estimated as 840 MMstb and 2396 MMstb for the additional prospects identified on Blocks LB-08 & LB-09 (3236 MMstb in total). ERC Equipoise has provided a recent update on the prospective resources for Liberia Blocks LB-08 & LB-09 which is available on the company website www.africanpetroleum.com.au.

The second well in this drilling program will be drilled with the Eirik Raude in Liberia following on immediately after completion of the Bee Eater-1 well. A number of potential well locations in Blocks LB-08 & LB-09 are under consideration dependent on the outcome of the Bee Eater-1 well.

AP in a release quoted its CEO Karl Thompson saying that 2012 has been a very successful year for the company with the Narina-1 discovery in Liberia and the expansion of the exploration portfolio with the addition of 5 more exploration blocks in Senegal, Sierra Leone and Cote d'Ivoire.

The information by the management of Africa Petroleum was widely reported as meaning that the Company had begun the actually harvest of crude oil from Liberian waters; but this seems not to be the case because in a subsequent press release NOCAL said only the further drilling as announced by AP will determine if there are commercial quantities and that the announcement by AP was intended to inform the public, as required by all public companies about the potential prospects of its ongoing appraisal program.

"Oil and gas exploration phases include exploration drilling, appraisal, development, production and decommissioning. The process from exploration to exploitation on average, takes at least 5-7 years," NOCAL said in a press statement, adding: "The ongoing appraisal drilling by AP is aimed at evaluating the size and nature of their reservoir to determine the number of confirming or appraisal wells required, and not for production as is being reported. This appraisal drilling program will determine whether potential discovery in Block LB-09 is commercially viable (as determined by the terms of the agreement), which could eventually ensure a progression to the development phase."

NOCAL reiterates that even if the ongoing appraisal programmes determine the commercial viability discoveries, commercial production of oil in our off shore basin may yet be a decade away.

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