Jan Maier, Vice President, Exploration from Africa Energy at Africa E&P Summit 2019
Interview Conducted by Our Summit Journalist, Ed Reed
AFRICA E&P SUMMIT 2020 DATES ANNOUNCED: 20 - 21 MAY 2020, REGISTER NOW FOR THE BEST EARLY BIRD RATE OF £1,495 + VAT
ER: Is there a new appetite for exploration in Africa?
JM: In South Africa, there’s been a change in the political environment and investor perception that it was unstable – resulting from corruption concerns, which Ramaphosa is cleaning up. The new president and Total’s positive drilling results with the Brulpadda-1AX well are really making the E&P space in South Africa look much more promising, especially given the attractive commercial terms. The whole sub-region is going to get more attention. There’s definitely an uptick in terms of exploration activity, there’s more interest and more companies wanting to get wells drilled.
ER: Brulpadda seems to have captured people’s attention.
JM: It was a challenge to drill initially due to the surface conditions. In 2014, they drilled and were unsuccessful. Total came back with a good solution and drilled the well this year without any problems. It took less time than expected and it was a good starting point for the next phase of drilling, which should start early next year.
ER: Given the harsh conditions in that area, will costs be higher for development?
JM: In terms of the environment, it’s really a question of dealing with the Agulhas current. It was a challenge but [Total] found a solution to drill and likewise I’m sure they’ll find a solution to develop it. They wouldn’t do a major development in the current; they’d do it with subsea trees and manifolds and thereafter bring the umbilicals to a production platform located on the shelf. There will certainly be a technical solution and they’re driving hard to get this done. South Africa also wants a better energy mix, the government would be happy to have gas to generate power and feed the onshore GTL plant, at Mossel Bay, as that’s running out of feedstock. There are many uses for the reserves and they’d be keen to have it sooner rather than later.
ER: Would piping the gas onshore be an economically viable solution?
JM: There are different ways of bringing it onshore. There is a pipeline system in the basin that could be utilised, or it could be brought straight to shore, we are looking at the project economics of each option.
ER: What’s the next step on that area, Block 11B/12B?
JM: We’ve already done some initial 3D seismic, and based on that data, we’ll be able to locate the next well. We expect Total to start drilling again in early 2020.
ER: How’s progress coming on Block 2B, on the west coast of South Africa?
JM: We want to get that drilled in 2020 as well. We’re trying to find partners, and we’re quite a long way down that road. That would be good for South Africa and good for the company. A-J1 is the existing discovery on Block 2B from 1988, that already has contingent resources of 37 million barrels proven. We just need to find a little more to get that over the line, of 60 million barrels, to make that commercial. It’s in shallow water, so it’s not a challenge, we’re getting to the point where we can prove up resources to produce. It’s in the synrift play; in an old graben – it has similar geology to that found in both Uganda and Kenya.
ER: A well was drilled in Namibia in 2018, on PEL 37, and that didn’t pan out. Has that changed your thinking on the country?
JM: It was a pity it was a dry well. The play was proved and the question is really just to trace the migration of the hydrocarbons as we know there’s a mature source rock. We’re going to stay in the block and keep an eye out, there are a couple of wells that will be drilled nearby [PEL 37] and then we’ll make a decision about what to do next.
ER: Are you looking at further expansion?
JM: Well, we have a lot on our plate with the follow-on prospects at Block 11B/12B. Of course, we’re assessing opportunities that we’re familiar with in terms of the play. We’re looking at areas where the petroleum system is working in blocks that have some running room. We’re looking purely at exploration in conjunction with Africa Oil Corp., which is our largest shareholder.
ER: Are there regulatory concerns about moving further afield, beyond Namibia and South Africa?
JM: Governments have become aware of the fact that there’s been less activity recently and are changing their fiscal terms to make them more attractive. Angola, for instance, has taken some steps in that direction. Other countries that have had failed bid rounds are following suit and they need to entice explorers back and make it more attractive for IOC’s. The biggest challenge is finding low-risk projects, we’re not going to take on places where there not been exploration. I would rather be cherry picking opportunities.