Readying investments for boom in gas demand

With natural gas prices trading at record lows, many within the sector are using this period to source new reserves before the anticipated “boom” in demand.

In the last decade, natural gas has become a globally-traded commodity with new exporters from West Africa.

West Africa, a region already noted for its healthy crude reserves, has gained increasing attention from natural gas players and is set to cash in on this interest.

According to the US Geological Survey’s recent World Oil and Gas Assessment, West Africa’s coast, which covers areas including Liberia, Sierra Leone, and Guinea, is home to an estimated 3.2 billion barrels of oil, 23.63 trillion cubic feet of natural gas, and 721 million barrels of natural gas liquids.

Analysts observe that intensified natural gas exploration initiatives are already being undertaken in Ghana as the government seeks new ways to counter diminishing oil production following the discovery of the Jubilee field in the deepwater Tano Block.

Greater focus on natural gas production and refining in recent years has opened new export markets and generated additional revenues for West African economies, according to a recently published market report titled The West African Oil and Gas Market.

Despite this boost, West Africa still poses unique challenges, including low availability of refining capacity, adequate logistical infrastructure, and transportation. It is hoped that with an increase in revenue on the back of this exploration, some of these challenges will be overcome.

The report concluded that the development of LNG refining capacity within West African states – particularly Equatorial Guinea, Cameroon, and Nigeria – is indicative of the future development of the region’s natural gas export market.

World Bank in a recent report explained that interfacing with government from West Africa countries would encourage investment for the completion of the West African Gas Pipeline (WAGP) project, which has enabled the supply of Nigerian gas to Benin, Togo, and Ghana. The pipeline system has a capacity of 800 million standard cubic feet per day (MMscfd), and will initially carry a volume of 170 MMscfd before peaking at 460 MMscfd.

The pipeline was a significant step in relation to the transportation of gas for export, as well as for use within the region. It links into the existing Escravos-Lagos pipeline at the Nigerian Gas Company‘s Itoki Natural Gas Export Terminal and proceeds to a beachhead in Lagos. From there it moves offshore to Takoradi, Ghana, with gas delivery laterals from the main line extending to Cotonou (Benin), Lome (Togo), and Tema (Ghana).

Interest in West African natural gas has not been limited to juniors. Kosmos Energy Limited an oil and gas exploration and production company, has confirmed the presence of natural gas reserves in offshore Ghana.

The company announced that its Teak-3A appraisal well confirmed a northern extension of the Teak discovery on the West Cape Three Points Block, with analysis indicating that the well encountered 35 meters of hydro in multiple good-quality reservoirs. The analysis also identified 13 meters of 36 to 39 degree API gravity and 22 meters of gas-condensate pay.

Natural gas exploration into regions such as this is not the result of a knee-jerk reaction. As expert believe that it is becoming more economical for companies to go deeper and to go riskier.

KELECHI EWUZIE