Mar(k): Travel, Hiking, and "Doing Good"

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Another close race in the Ghana 2012 elections

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One of the things that we learned from our time in Ghana was that the people of Ghana are fiercely political.   We mean REALLY political.   Almost everyone seems to take an active interest, and often a very vocal interest, in what is happening politically in the country.   Talk back radio in particular is a huge way for Ghanaians to get their message out to the public;  we used to listen to talk back radio almost every morning, and could not believe how much more engaged these folks were about issues that affected their everyday life.   Certainly in Australia, the general apathy that is present around political matters would seem very misplaced indeed in this lively, politically engaged country.

for the love of Ghana

So it is with great interest that we are eagerly watching the process unfold of the country selecting its new leader.  Of course, our fingers are also crossed that Ghana does itself proud (yet again), by having a peaceful voting process, and a smooth transition to a new government, if indeed that is the outcome.

Preliminary results seem to indicate that it is, once again, going to be a very close race.  This was the case four years ago when the National Democratic Congress (NDC) won the election under John Atta Mills by less than one percentage point.   With the passing of Mills, the leadership of the party is current held by John Dramani Mahama.  The main political opposition to Mahama is Nana Akufo-Addo, who leads the New Patriotic Party (NPP).

Ghana put herself at the forefront of the world by being the “little darling” of the governance world, as she has successfully moved forward without excessive violence in no fewer than five elections since military rule ended in 1992.   So once again, the world’s eyes are upon her.

However, the game being played out this time is one of higher stakes, as the last four years has seen the Ghanaian economy grow substantially with the commencement of oil production in the Jubilee field.   This is an area that we watch closely, and know that the stakes are high for all Ghanaians to hopefully benefit from the royalties that the oil will provide to the government.   But of course, this makes it even more imperative that whoever wins this election, ensures that the distribution of the oil royalties is done in a transparent and open manner.   Only then can Ghana truly raise its hand to the world to demonstrate what a true “little darling” she is!

This election was run by the Electoral Commission, and as such, it is only the EC that can officially announce results.  No doubt people are impatient to know the outcome of who will be at the helm for the next four years.   But irrespective of the result, we certainly offer our congratulations to this amazing African country for demonstrating their commitment to democracy by exercising their right to vote, and for doing so peacefully.  Our hearts are with you, Ghana

UPDATE:  Mahama of the NDC has been declared the winner!  Another close race, but at this stage it looks like the NPP will be challenging the results.   Keep calm, and carry on everyone!

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Written by Mar(k)

December 9, 2012 at 9:25 pm

Ghana Oil Production: An Update February 2012

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Introduction

Our last update was in July 2011, so we thought it time to see how things have progressed with the development of the Jubilee field (Ghana’s only oil production).

Background

Production from Jubilee commenced on 28 November 2010 and the Operator, Tullow Oil, was forecasting peak production of 120,000 barrels/day would be achieved by mid-2011 from the 9 production wells. Unfortunately, as is often the case, things have not gone to plan……

Production                                                                                                                                

According to Tullow, the field peaked at 88,000 barrels/day before declining to around 70,000 barrels/day at the end of 2012. The cause of the problem “has been identified as a technical issue related to the design of the well completions and is not expected to have any impact on field reserves and resources”. Apparently the screens put in the well to prevent sand ingress (a procedure known as “gravel packing”) are not performing as planned – perhaps due to blockage. Whatever the cause, Tullow have embarked on the side-track (redrilling of the bottom part of the well) and recompletion of 4 of the wells – a rather unfortunate outcome with an estimated cost of $100 million per well. Ouch!

The good news is that the water and gas injection systems are now working as planned and routine gas flaring has stopped.

In 2012, production is now expected to average between 70,000 and 90,000 barrels/day, depending upon the success of the 4 side-tracks and the number of new wells which start flowing during the year (see below).

Further Development

The Phase 1a development, consisting of 5 new producers and 3 additional water injectors, has been approved by the government. Drilling is expected to commence this month and take 18 months to complete. The total cost will be $1.1 billion.

And where does the money go…..

The Ghanaian government receives 13.75% of production from Jubilee. In 2011 this amounted to 3.93 million barrels which earned $444 million (note that the government also receives income tax levied at 35%).

To its credit, the government has passed the Petroleum Revenue Management Act which “provides a framework for the collection, allocation and management of petroleum revenue in a responsible, transparent, accountable and sustainable manner for the benefit of all citizens of Ghana”. The act specifies that up to 70% of the oil revenue can go to the annual budget and 30% to a “Stabilization Fund and a Heritage Fund”. A “Public Interest and Accountability Committee” has also been established to monitor the management of petroleum funds.

Good laws do not necessarily guarantee a successful outcome and whilst the government has been very open in its usage of petroleum funds to date (http://ghanaoilwatch.org/index.php?option=com_content&view=article&id=3&Itemid=4), civil society organisations in Ghana still harbor concerns including:

  • Prioritisation of budgetary expenditure – in particular ensuring equitable spending in the underdeveloped north of the country.
  • Correct allocation of revenue to the stabilization fund.
  • Using oil revenue as collateral to enter into risky loans.

It is in the impoverished north of the country, where we lived and worked, where the funds flowing from oil production are most desperately needed. Poverty levels in the most northern regions of Ghana are 3 times the national average; infrastructure is poor or non-existent and subsistence farming in the harsh sub-Saharan climate is the lot of most people. They deserve more in life.

Written by Mar(k)

February 23, 2012 at 4:33 pm

Ghana Oil Production – an update! July 2011

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Hello faithful blog readers!  We’re so happy to report that we have just recently ticked over 10,000 views of our wee blog!   So thanks for staying with us!  

We thought it was about time to provide an update, given that many visitors to our site are interested in Ghana’s progress as an oil producer. This short summary concentrates on oil production. Future updates will look at gas development plans (all being re-injected or flared at the moment), economics and how the government is managing its share of production, and lastly what’s happening with exploration in Ghana.

Most of the information has been collated from Tullow’s website, so it should be pretty trustworthy.

Feel free to post comments or ask questions!

Background

Jubilee was discovered in 2007, 60km offshore in water around 1200 m deep. Subsequent appraisal drilling confirmed the high quality field extended across two exploration permits: Deepwater Tano operated by Tullow and West Cape Three Points, operated by Kosmos. The field was therefore unitised and Tullow were appointed Operator of the “Jubilee Unit Area” on behalf of both Joint Ventures:  (click on the images below to be able to read them!  then hit the “back” button at the top of your browser to return to the blog).

About 50% field is deemed to lie in each permit (note that Southeast Jubilee, now named Mahogany East, lies outside the Jubilee Unit Area and will be the responsibility of Kosmos to develop). Also, GNPC have exercised their right to increase their equity in both permits to 13.5%, reducing each of the other interest holder’s equity by a proportional amount.

Development

Jubilee is a subsea development utilising a converted oil tanker to process and store the produced oil:

The total cost of the 17-well Phase 1 development was $3.3 billion – which works out at only $9/barrel (for the quoted mid-level estimate of Phase 1 reserves). First production was on 28 November 2010, an impressive 40 months after discovery of the field.

Production                                                                                                                                

Over 10 million barrels have already been produced (giving revenue of around $1 billion!) and the current (July 2011) production rate is 80,000 barrels/day from 7 of the 9 planned production wells (the other 8 wells inject gas and water into the reservoir). Plateau production of 120,000 barrels/day has slipped to August, with Reuters recently reporting this may be further delayed.

Forecast production (with 5% downtime) for the low, mid and high Phase 1 reserve estimates, is given below (on the right hand scale is the cumulative recovery):

Further Development

Planning for the 1a Phase of development is well underway. This is will likely consist of up to 8 further production and injection wells targeting an additional 100 million barrels (at the mid-reserves level). Production from these wells is expected to commence mid 2012.

Depending upon field performance, a notional Phase 1b (10-20 wells) may be considered to increase recovery by a further 205 million barrels.

Reserves

Reserves and estimates are given for each phase of the development in the table below in millions of barrels (MMbbl). Note that it is impossible to exactly determine how much oil will be recovered from a hydrocarbon reservoir. Instead low, mid and high estimates are made (which correspond to 90%, 50% and 10% confidence of equalling or exceeding the given estimate).

Also note that this table from Tullow splits the volumes between “Reserves” (commercially recoverable volumes) and “Resources” (potentially recoverable volumes which are not currently considered commercial).

Tullow often quote the reserves and resources range for Jubilee (which you really shouldn’t do) as 500 – 700 – 1000 million barrels, which you can see approximates the sum of each of the rows in the table.

Written by Mar(k)

July 14, 2011 at 10:21 am

For the Petroleum Readers

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We know that many of our friends and former colleagues regularly keep up to date with what the Shox are doing in Ghana!  In fact, we are now approaching 3,000 hits on our blog site, which makes us giddy with glee.  So thank you for continuing to share our Ghanaian journey with us!

There is not a day that goes by here in Ghana, when the front page news is not somehow related to the impending windfall from oil production from Ghana’s Jubilee Field, scheduled to commence later this year.  For that reason, we thought we’d provide a wee service to our loyal readers – free of charge – which is some links to recent news articles about the petroleum sector here in Ghana.

Look to the right of this entry at the side bar.  Note the Links reference, with hotlinks below to some recent stories that we thought may be of interest.  Let us know if you are reading these, and if we should keep them up!  Always happy for reader feedback….

To kick start things, we thought this link below gave a good overview of Ghana’s economy at the moment, and the impact that first oil may have:

Ghana News from Reuters – The New African Tiger?

We also wanted to take this opportunity to remind folks that we publish, also on the RHS sidebar – copies of the ADVOCATE articles we publish for RUMNET’s development newspaper, as well as Mar’s Musings on life as a volunteer in Ghana.  Finally – we have been keeping the “random thoughts” updated, so you can always click there for a snapshot on some aspect of life here.

AND – if you scroll down to near the bottom of the RHS, you can find a place where you can sign up for updates on our blog!  Never be caught out again!  An e-mail will be posted to you when any new activity happens in the main blogging space…

What does all of this mean?  Well, don’t just read our main blog!  Head to the right and start clicking!   Enjoy.

Written by Mar(k)

May 7, 2010 at 5:03 pm

Running out of gas

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We have gotten pretty used to regular electricity outages and water shortages.  But running out of gas (LPG) which is the fuel for our stove, is a position we really hadn’t contemplated.  Although we have two cylinders (one for use, one as spare), you could be forgiven for thinking that being without a fuel source is a position we should never find ourselves in.  Quite right.  Each cylinder lasts about three months.  So we have had more than enough time to refill our spare.  Coming from a paradigm of abundance, we just never thought refilling (on demand) would be an issue.

Gas.... finished......

Thursday night: midway through cooking dinner, the gas runs out.  Spare cylinder swapped over to check for any residual fuel – none.  Inconvenient, but no big deal (luckily it was left-over night so partially warmed food was a small inconvenience).  We (that being the Royal We – ie: Mark) will simply go to the refilling place Friday morning, and we’ll be enjoying our coffee by mid morning.

Friday morning: Taxi driver is summoned – off Mark and driver head to get fuel.  First place – “the gas is finished” – ditto at the next place.  Off to main Tamale gas distributor.  Nothing – no gas in Tamale (and hasn’t been, for three weeks, we discover after 2 hours of fruitless searching in the taxi).  Hmmmmm…..   In fact, there is NO GAS IN GHANA.  Period.  Gas – finished.  Right.

Two main rumours were that a) there was a gas tanker docked but the offloading hose was leaking, so that needed to be fixed b) there was no tanker and Ghana was presently (desperately) trying to source gas from Nigeria.  Neither suggestion fills us with hope for an immediate resolution to the gas crisis.  Alternative plans need to be made.

Friday afternoon: Colleagues at work confirm they, too, are out of gas.  They have fuel switched to charcoal as they wait it out.  Not really an option for us, however.

the purveyor of coffee.... cleverly disguised as an electric kettle!

We have “borrowed” the electric kettle from work, as a means to at least obtaining hot water.  We now have the ability to have our coffee (very important), a cup of tea (of lesser importance), and other potential foodstuffs (two minute noodles).

Friday dinner: a makeshift affair involving various ingredients being added to a two minute noodle soup experience.  Not bad!

Weekend: fortunately we are away this weekend up to Walewale (delightfully pronounced Wally Wally), to participate in a Northern Region Volunteers meeting.  This means being fed (yay!) on the Saturday night.  One less night to worry about stove issues.  Our friends who we stayed with have adequate gas supplies, so aren’t impacted with the shortage.

Sunday night: Back home, our cold dinner consists of tuna and a green salad.  Quite yummy.

Monday: a fellow volunteer aware of our plight is off to Accra for about 10  days.  Although she is also out of gas, she kindly offers us her kerosene stove while she is away.  We gladly accept.  Said stove comes home with us on the back of Mark’s bicycle, perched precariously using a single occy strap.  Most of the kerosene leaks out, so a minor mess requires cleaning when we get home.  A few stops enroute to find replacement kerosene are not successful.  Nobody seems to know where to get some.   However, there is enough fuel in the stove to last for hopefully two dinners (Mon and Tues).  We shall see.

Mark cooking *before* the fireball extravaganza!

Tuesday: Rumour mill again in action.  Apparently the distribution to Tamale *should* occur tonight (?).  We will see what develops tomorrow – hopeful at least by the end of the week we will be back in action.  Having a young Trent University student from Canada over for dinner, so have been discussing amongst ourselves what the easiest / quickest meal alternatives are, to conserve fuel and still be acceptable as a dinner for “outsiders”.  Have decided on a make shift pasta.  Fingers crossed that the fuel lasts for the duration of the cooking time required.  Salad and fruit salad will help things along.

Success!  The stove worked, although it took more than twice as long to get the pasta cooked.  But…. We had a meal!   The most exciting part of the evening was when Mark went to shut off the stove – and a “fireball” erupted from the stove!  Good thing he wasn’t peering over the stove (as he so easily could have been)… otherwise, there would be a photo posted of him sans facial hair….  (and we all know how hirsute he normally is!!!)

Wednesday: confirmed sighting of long queues at gas refilling station via text message from a fellow volunteer.  We decide to wait it out until late afternoon, when, in a surprising display of efficiency, the tanks are filled quickly and Mark is quickly dispatched home with full cylinders.  A simple meal is made, but oh, how sweet it is!   Life back to normal once again…. Equilibrium restored…..

never thought we'd say we enjoy having gas! but we know it's true...

Written by Mar(k)

March 24, 2010 at 9:52 pm

Posted in Life in Ghana, Oil News

Ghana and its Black Gold

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Many of the readers of this blog would know that between us, we have spent in excess of 50 years (!!!) working in the petroleum industry. So you can imagine that we take more than a passing interest in the machinations of the Black Gold machine in Ghana!

 

Offshore Location of the Jubilee Field

For those who may not be aware, oil was discovered offshore Ghana in 2007, and the country’s first production is due to commence later this year. The Jubilee field is the most significant discovery in West Africa in years and hardly a day goes by when the local media does not have a story about some aspect or another of Jubilee’s impending development. In fact, it is quickly developing into a soap opera, complete with threads of hope, despair and deception……..There are basically three stories running:

 

<!–[if !supportLists]–>·<!–[endif]–>the original award of the offshore licences,

<!–[if !supportLists]–>·<!–[endif]–>the proposed sale of Kosmos Energy’s share of Jubilee and

<!–[if !supportLists]–>·<!–[endif]–>how Ghana will manage the oil revenue.

 

In this blog we’ll start with the first of these……… The story begins in 2002 with the formation of the E&O group, a company founded by two expatriate Ghanaians: Mr E (formerly a medical doctor in the US, but more recently a Ghanaian ambassador to the US (more of that later) and Mr O (a former Shell executive in Houston). The E&O group interested Kosmos Energy, a private company in Houston, in the acreage in which the Jubilee field was subsequently discovered. Kosmos took an 87.5% share, E&O 3.5% and the Ghanaian National Petroleum Company (GNPC) 10%. Kosmos also agreed to carry E&O (i.e. pay all their expenses), gave them $250,000 and appointed Mr O as their Ghanaian representative on a very handsome salary. At the time, the deal was reported to have been approved by Ghana officials in “record time”. Unfortunately, therein lays the problem…….. Both Mr E and Mr O were reportedly very close to President Kufor (hence the ambassadorial role) and his Energy Minister and it is alleged that favours were done…..

Rig being used to drill the wells in the Jubilee Field - Offshore Ghana

 

None of this may have led anywhere but Kosmos subsequently sold some of their interest to Tullow Oil and Anadarko, and while doing due diligence, Anardarko smelt a rat and notified US officials (as obliged under law) of their concerns….This also may have led nowhere, but and this is a BIG but, there has been a change of government in Ghana since the oil was discovered and the new government, on hearing about Anardarko’s concerns, jumped into the fray with relish. There have been various hearings, Mr O has been sacked by Kosmos, as has one of their senior executives, and accusations have been flying thick and fast……culminating in leaked documents from the Attorney General’s department indicating that E& O are about to be charged with 25 offences ranging from defrauding the Ghanaian people of $200 million (which seemingly equates to their 3.5% share of the Jubilee block), forging the signatures on company documents and failing to hold annual general meetings! In other words, they are throwing the book at them! The bottom line is that the current government believes that the deal originally struck was far too generous to the E&O group and Kosmos.

 

Now, if you are on the other side of politics, the story is somewhat different. To quote one report: “The vindictive and devilish persecution of the EO group orchestrated by the (current government)… is not only an assault on Ghana’s entrepreneurial spirit but also a slap in the face of Ghanaians in the Diaspora.”

 

Jubilee's Production Profile - a la Tullow

Stay tuned for the next instalment when Mr E & Mr O group have their day in court…..

Here it is!  Click here for a more up to date view of Ghana’s Black Gold (updated July 2011)….

Written by Mar(k)

February 17, 2010 at 3:25 pm