22 January 2013

Liberia: NOCAL, AP Quell Crude Oil Hysteria -Calls 840 Million Barrels Report 'Estimation'

"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)," says a recent progress report of the African Petroleum Limited (APCL) report signed by CEO Karl Thompson. The CEO intended this report to highlight how closer Liberia has come to assaying its oil deposits as well as what prospects are there for crude oil production and marketing. But some media houses inadvertently interpreted that to mean that Liberia has begun producing 840 barrels of crude oil daily. This interpretation sparked citizens' hysteria across the nation last week about possible ripping of the nation's natural resources. The nation's crude oil manager and watchdog, the National Oil Company (NOCAL), teaming up with APCL, were out over the weekend quelling the sparks. With Reporter Nathaniel Walker, The Analyst, reports.

APCL West African Director Pierre Raillard, and NOCAL President and CEO Randolph McClain clarified over the weekend what they called the media's misinterpretation of the APCL's January 8, 2013 disclosure.

Observers say the clarification is likely to go a long way in quelling the citizen hysteria that had been brewing on suspicion that APCL was drilling and marketing crude oil with the acquiescence of NOCAL without benefit to the nation.

At a joint press conference, last Friday, high-level representatives of both institutions told journalists from a prepared text that reports that APCL has begun drilling and marketing oil was untrue.

The duo said APL had simply announced the commencement of the drilling of the Bee Eater-1 Well in Block LB-09 offshore Liberia with semi-submersible ocean rig, the Eirik Raude.

They said the exercise was an experimental drill that would "test the potential of a westerly extension of the Narina-1 Turonian oil discovery".

A survey this paper conducted over the weekend indicates that ordinary Liberians barely understand what "test the potential of a westerly extension of the Narina-1 Turonian oil discovery" means in practical employment and revenue terms.

But ACPL, flanked by NOCAL, was quick to clarify that if the test drill is successful, the Bee Eater well could demonstrate the presence of a large hydrocarbon reservoir system. A range of possible volumes of oil that could be recovered from this reservoir has been estimated from analysis of regional geological and engineering data".

"The estimated range is an average volume of 840 MMstb (million stock tank barrels) of oil for the Narina/Bee Eater reservoir system in Block LB-09," ACPL said, stressing "estimated range" apparently to draw attention to the status of Liberia's oil production.

The APCL representative directed reporters to an ERC Equipoise update on the prospective resources of Liberia Blocks LB-08 & LB09 posted on its website to authenticate its position.

The website however did not do much of a work of affirming APCL's clarification.

Amongst other things, it notes regarding Block LB-09, "Oil was found in good quality reservoirs in a Turonian submarine fan system that extends across a prospective area of 250 sq km.  This discovery confirmed the prospectivity of both of these highly successful West African exploration plays on African Petroleum's Blocks LB-08 and LB-09."

However, the duo told journalists that "un-risked prospective resources", as used in the APCL report, meant the discovery of "possible resources which need to be confirmed by further technical work and additional drilling".

They said that was why it was unfortunate to interpret it as 'proven reserves of oil' ready to be produced as was reported recently in the press.

"Only further drilling can demonstrate whether "resources" can move to the "reserve" category and how much commercial quantities will be available for production," the statement said. "The current drilling campaign is aimed at confirming the nature of the geology and of the reservoir, including its size and quality so that further drilling and technical programmes can be developed. The shape of the programme, the number of possible appraisal wells will be dependent on the outcome of the Bee Eater-1 Well."

The duo, noting that they have been working together and have aligned their objectives – without saying what those objectives were – reiterated that oil and gas exploration phases include exploration drilling, appraisal, development, production and decommissioning.

"The cycle from an initial discovery to production typically takes 5 to 7 years," revealed the NOCAL and APCL statement, which Public Affairs Vice President Israel Akinsanya and West Africa Director Pierre Raillard signed for NOCAL and APCL, in that order.

Re-emphasizing the focus of the NOCAL-APCL statement, NOCAL CEO Randolph McClain who attended the press conference, said APCL has to go through several test drillings, which have to be proven technically as required by the oil regulator in order to be able to produce the 840 million barrels of cruel it announced.

He said NOCAL and ACPL did not intend, by the joint press conference, to cover up any wrongdoing or to score public relations points, but to set the record straight for the Liberian people and the international community who were fed the media disinformation.

But wasn't NOCAL trying to control news from investors? "NOCAL is not trying to control information emanating from any other company in this sector," Dr. McClain said.

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