Seven Energy’s quest for Nigeria’s gas resource development
The pace of economic development in Nigeria is constrained by lack of investment in the country’s power infrastructure and the absence of a reliable and affordable electricity supply. Often, the power conundrum is traced to lack of steady and reliable gas supply. After attaining an average price of $94 per barrel for crude oil sales in 2014, seeing oil prices plummet to below $50 per barrel in early 2015 reinforced the need to develop the vast natural gas resource and grow Nigeria’s domestic gas market.
To fast track the drive for the development of the gas resource and propel the country’s industrial revolution, Seven Energy, an oil and gas company has taken up the challenge to champion the exploration and production of natural gas. More critically, the company has also undertaken gas commercialisation through processing and distribution infrastructure, with an investment portfolio of over $1 billion in the south east region of the Niger Delta in the last five years. This has enabled the company to reach the end user and so support Nigeria’s evolving power sector, meeting the growing energy needs of the industrial sector and providing stability in a market that is currently uncertain and volatile.
Phillip Ihenacho, Chief Executive Officer, Seven Energy, was quoted in a statement as saying that delivering a cost effective and reliable gas supply was critical to sustainable power supply to the national grid in order to meet the government’s reform objectives and facilitate industrial development.
“I am delighted that our ability to deliver an indigenous gas solution from end to end is now being recognised by a broad range of industrial and power sector customers,” Ihenacho said.
It will be recalled that in 2014, President Goodluck Jonathan commissioned the Uquo Gas Processing facility owned by Seven Energy. The facility commenced gas supply to the 190MW Ibom Power Plant immediately. Today, by deploying a combination of fixed-price gas sales and take-or-pay contracts, the facility supplies gas to five industrial customers which include three Independent Power Plants (IPPs) in South South/South East of Nigeria, as well as, industrial off takers; Ibom Power, since the start of 2014, Unicem in late 2014, Calabar NIPP, Alaoji Power and Notore Chemicals in early 2015.
Seven Energy is currently supplying power stations and industrial customers, generating 1,700 MW of electricity which is one third of matched operating capacity in Nigeria, and largest in West Africa. This accomplishment has been recognized across Africa as the company recently clinched indigenous firm of the year award in the gas category conferred by the Petroleum Africa magazine.
Having started as the leading supplier of gas to the Nigerian domestic power market for power generation, its foray into industrial sector is quite instructive. The case of Notore illustrates a giant stride in the industrial sector. The commercial delivery of gas to Notore, a leading fertiliser and agro-allied company in Onne, Rivers State, is being executed through Accugas, a wholly-owned subsidiary of Seven Energy. Natural gas is the core input into the production of fertilizer and it is being supplied at a rate of 25 million metric cubic feet per day (MMcfpd) as part of the feedstock to Notore’s fertiliser plant. By this supply arrangement, Seven Energy has enabled the Notore fertiliser plant to improve its operational efficiency thereby enhancing the plant’s output.
“We are providing a new source of feedstock to meet the company’s increasing requirements, whilst directly enabling the production of fertiliser that Nigeria’s burgeoning agriculture sector desperately needs to grow”, said Ihenacho.
Stephen Tierney, managing director, Accugas, while commenting on the company’s feat in gas supply to Notore said: “This milestone represents another significant step for Accugas in our effort to increase domestic supply and utilisation of gas for the good of the Nigerian people and its economy. By providing a clean, dependable, quality gas to the Notore plant, and doing so via an integrated end to end solution, we are demonstrating our clear commitment toward enhancing domestic gas consumption for broader industrialisation.”
In 2014, Seven Energy completed the acquisition and integration of the East Horizon Gas Company into its core group and also reached an agreement with Niger Delta Power Holding Company to construct, and take ownership of a section of pipeline between Oron and Creek Town, thus expanding its geographic reach to this industrialised area of Nigeria.
In the same year, Seven Energy completed two wells, Uquo 7 and 8, which are now producing gas at combined rates of up to 85 MMcfpd, with estimated potential of some 140 MMcfpd. In early 2015, they drilled an exploration well, Uquo NE-1, which encountered gas and oil reservoirs, achieving results ahead of expectations.
Consequently, Seven Energy also reached agreement with Nigerian Gas Company (NGC) to transport gas from Ikot Abasi through its pipelines to customers in the Port Harcourt region. By this, the company now has the capacity to transport gas to customers in an area stretching from Port Harcourt to Calabar.
With limited competition, Seven Energy’s quest for expanding its gas processing and transportation infrastructure positions them to reach a larger distribution area and demand for their own and third party gas. Having demonstrated ability to deliver gas to high specifications with consistent reliability, the company is attracting new customers as a result of their reputation for quality performance and their first-mover advantage.
Through its subsidiary company, Universal Energy Resources Ltd, Seven Energy recently announced the commencement of crude oil production from the Stubb Creek Field, in Akwa Ibom State, following approval to embark on delivery of oil through ExxonMobil’s Qua Iboe Terminal. Its interest in the Stubb Creek field is held through a 62.5 percent interest in the Universal Energy Resources Ltd.
Stubb Creek’s development was conceived and led by the Seven Energy team, resulting in production start-up in February 2015 at an initial gross rate of 2,000 bpd with plans to increase the processing capacity to 8,000 bpd. The company also constructed a 23 km oil pipeline from the field to the Qua Iboe Terminal to enable evacuation and export crude produced.
The Stubb Creek Field was discovered in 1971 and lies near the mouth of the Cross River in OML 14 located in Akwa Ibom State. It was classified as a marginal field in 2002, and subsequently transferred to Universal Energy, a subsidiary of Seven Energy, in 2004. The field has been developed in a joint venture partnership with Sinopec International Petroleum Exploration &Production Company (Nigeria) Ltd.
According to Ihenacho, “production at Stubb Creek is also important because it marks the attainment of first oil at one of the marginal fields allocated to indigenous companies. This realises the original intention of the marginal field round to enable domestic companies to bring smaller, unutilized fields on-stream, enhancing both domestic ownership and national production, and so revenue.”
Seven Energy has continued to demonstrate its commitment to supporting the developmental aspirations of its host communities in order to foster mutually beneficial relationships. Considering the geographical location of the company’s activities in the Niger Delta, one of the most significant challenges is ensuring the secure operation of their upstream and midstream activities. They engage specialist security consultants to examine and manage transport routes and any other identified hazards to mitigate potential risks and security issues.
Seven Energy is an independent Nigerian integrated gas development, production and distribution company founded in 2004 with a unique focus on the emerging Nigerian domestic gas market. The group’s upstream assets include licensed interests in the Uquo Field and the Stubb Creek Field (south east of Niger Delta), an indirect interest in OMLs 4, 38 and 41 through strategic alliance agreement with Nigerian Petroleum Development Company (north west of Niger Delta) and a license interest in OPL 905 (Anambra Basin). Its midstream infrastructure assets, focused on south east Niger Delta, include the 200 MMcfpd Uquo Gas Processing Facility and a gas pipeline network of 260 km with distribution capacity of 600 MMcfpd.
FRANK UZUEGBUNAM