Ghana: Why Tullow Missed Production Target For 2019
Executive Vice President of Tullow Ghana, Kweku Andoh Awotwi, has explained what caused the company’s inability to meet its production target for the year 2019 in the Republic of Ghana, West Africa.
According to him, the lower than forecast full-year outcome is predominantly due to topside issues that constrained water injection and gas handling during the year.
He said at TEN, production was impacted by the delayed start-up of one of its wells, that is, the EN10-P well and the suspension of the EN14-P well and production drawing on fewer wells than planned.
“In Jubilee, one of the most important reasons for why we did not meet the target we set of about 170,000 is that we had a significantly reduced offtake of gas by Ghana Gas and that meant that we had to re-inject significant volumes of gas back into the reservoir,” Mr Andoh Awotwi at a media soiree organized by his outfit in Accra, capital of Ghana and reported by Myjoyonline.com.
“The fact of the matter is that the Jubilee partners have been re-injecting gas from day 1 because remember we didn’t have a gas plant at first and then more recently with the advent of ENI, Ghana Gas has been taking the ENI gas over the Jubilee gas,” Mr. Awotwi added.
According to the Tullow Ghana Executive Vice President, discussions on increasing gas offtake are ongoing.
The company has attributed the lower export of gas to a lack of demand from the Ghana National Petroleum Corporation (GNPC).
The lack of demand is due to the Sankofa gas taking priority. If less Sankofa gas is offered and GNPC nominates more of Jubilee’s gas, the current plant capacity could max out.
Background
Tullow Oil Plc earlier announced the resignation of its Chief Executive Officer Paul McDade and also scrapped its dividends, as it continued to face issues at its main producing assets in Ghana.
The company faced problems at its operations in Ghana because of mechanical issues at the Jubilee field and a delay in completing a well at the TEN offshore field, which led Tullow to cut its estimates for 2019 oil output last month.
Tullow Ghana says it’s in discussion with GNPC to increase gas export and anticipates increased offtake. The company says it is optimistic more gas demand will occur allowing for increased export. It says the government of Ghana is creating more demand by the relocation of the power barge to the Western Region and switching it to gas. It also revealed plans to export gas from the West to Tema through the West African Gas Pipeline.
Tullow Ghana says it’s Jubilee planned shutdown for maintenance is scheduled for the first quarter of the year 2020.
The nine-day period with four days full shutdown, according to the company, will prioritise the gas handling modifications to increase gas capacity and maintenance on the water injection and cooling system.
SandRidge Energy CEO Resigns
The Chief Executive Officer of SandRidge Energy Inc. the oil and natural gas producer based in Oklahoma, USA, Paul McKinney is set to resign as the company evaluates its 2020 spending plan.
McKinney became CEO in January, after serving previously as COO of Yuma Energy Inc.
The company in a statement that announced the decision of the CEO said John Suter, SandRidge’s chief operating officer, will service as interim president and CEO.
“In light of the current challenging price environment, we are reevaluating our 2020 capital plans with an emphasis on cost control and free cash flow generation,” Jonathan Frates, SandRidge’s Icahn-backed chairman of the board, said in the statement. “Our goal is to maintain our strong balance sheet and pursue only high return opportunities.”
SandRidge shares slumped last year after saying “multiple” potential bids for the company undervalued the producer and its resources. Instead, following a strategic review, SandRidge said it would pursue a plan to develop its holdings in Oklahoma and Colorado.
Icahn, who held about 13% of the company as of Sept. 30, won control of five of eight board seats last year following a proxy fight in which he argued the company couldn’t be trusted to get the best value for shareholders.
SandRidge was the second act of Tom Ward, who co-founded Chesapeake Energy Corp. with Aubrey McClendon. Oklahoma City-based SandRidge was once worth $11 billion and now has a market capitalization of about $141 million.
Shale drillers, pummeled by volatile oil and gas prices, have been pressured by shareholders to cut spending and boost free cash flow. Public equity and debt markets are increasingly shunning all but the largest producers.
SandRidge operates primarily in Oklahoma’s Stack play and in Colorado. Shale drillers outside the Permian Basin, the most prolific U.S. oil play, have struggled amid lower prices for crude and gas.
The shares were little-changed in pre-market trading in New York. SandRidge had tumbled about 48% this year through Thursday.
Chevron Approves $5.7B Deepwater Gulf Of Mexico Oil Project
Chevron has revealed that it had approved the development of a deepwater high-pressure oil project in the Gulf of Mexico, which will require US$5.7 billion investment for the initial development, in the industry’s first such deepwater high-pressure project to have reached a final investment decision (FID).
Chevron sanctioned the development of the Anchor field in the Green Canyon area, some 140 miles off the coast of Louisiana, in water depths of approximately 5,000 feet.
During the first development stage, the project will consist of a seven-well subsea development and a semi-submersible floating production unit. First oil from Anchor is expected in 2024.
The facility at Anchor is designed to have capacity of 75,000 barrels of crude oil and 28 million cubic feet of natural gas per day. According to Chevron, the total potentially recoverable oil-equivalent resources at Anchor are estimated to top 440 million barrels.
Chevron is the operator of the Anchor field with a 62.86-percent working interest, while Total’s U.S. unit holds the remaining 37.14-percent working interest.
“For new projects in the Gulf of Mexico, we have reduced development costs by nearly a third, compared to our last generation of Greenfield Deepwater investments,” Steve Green, president of Chevron North America Exploration and Production said.
“This decision reinforces Chevron’s commitment to the deepwater asset class,” said Jay Johnson, executive vice president, Upstream, Chevron Corporation.
Chevron’s new project sanction comes a day after the U.S. supermajor announced that it would write down US$11billion in cases in the fourth quarter, following a downward revision of its long-term forecast for oil and gas prices. Much of the write down is connected to natural gas assets in the Appalachia basin, due to the low natural gas prices.
Chevron—like the other U.S. supermajor Exxon—is heavily investing in the Permian basin, looking to significantly boost oil production, but it has yet to turn a positive free cash flow there.
IEA: An Oil Glut Is Inevitable In 2020
Despite the OPEC+ cuts, the oil market is still facing a supply surplus in 2020, according to a new report from the International Energy Agency (IEA).
OPEC+ announced additional cuts of 500,000 bpd, which sounds more impressive than it is because the group was already producing under its limit. In November, for instance, OPEC was producing 440,000 bpd below the agreed upon ceiling.
Saudi Arabia agreed to shoulder an additional 400,000 bpd of voluntary cuts. But the deal also exempts 1.5 million barrels per day (mb/d) of Russia’s condensate production, allowing Russia to actually increase condensate output by 0.8 mb/d.
Still, the deal should take supply off the market. “If all the countries comply with their new allocations and Saudi Arabia delivers the rest of its voluntary cut of 0.4 mb/d, the fall in production volume versus today will be about 0.5 mb/d,” the IEA said.
OPEC said in its own report that the oil market would be largely in balance in 2020, albeit with a temporary glut in the early part of the year. The IEA sees inventories building at a rate of 0.7 mb/d in the first quarter.
The IEA cut its forecast for non-OPEC supply growth from 2.3 mb/d to 2.1 mb/d, due to weaker growth from Brazil, Ghana and the United States. The U.S. typically gets all of the attention, but disappointing news from Brazil and Ghana also led the IEA to revise forecasts lower.
Notably, Tullow Oil revealed a major disappointment from its Ghana operations, causing a complete meltdown in its share price this week. Its stock fell nearly 70 percent in a single day as investors overhauled their valuation of the company. Tullow admitted that its production from Ghana would decline in the years ahead.
But even the combined effect of slower non-OPEC production growth and the OPEC+ cuts is not enough to erase the glut entirely. “With our demand outlook unchanged, there could still be a surplus of 0.7 mb/d in the market in 1Q20,” IEA said.
“Even if they adhere strictly to the cut, there is still likely to be a strong build in inventories during the first half of next year,” the IEA warned.
But the forecasted glut largely depends on ongoing production growth from U.S. shale drillers. The IEA admits that there will be a slowdown, but is still optimistic on production growth, with gains of 1.1 mb/d in 2020, compared to 1.6 mb/d this year.
The agency has consistently been at the optimistic end of the spectrum regarding shale growth, even as major investment banks long ago slashed their forecasts. The IEA cut its U.S. supply forecast by 110,000 bpd from last month’s report, but at 1.1 mb/d, its figure still seems generous. The IEA is betting that the oil majors, who are less responsive to lower prices and problems with cash flow, will continue to scale up drilling.
Meanwhile, a new report from IHS Markit highlights the accelerating rate of decline among the U.S. shale complex, a decline rate that grows in tandem with production increases. “Oil and gas operators in the Permian Basin, the most prolific hydrocarbon resource basin in North America, will have to drill substantially more wells just to maintain current production levels and even more to grow production, owing to the high level of recent growth,” IHS said in a statement. The base decline rate in the Permian has “increased dramatically” since 2010.
“Base decline is the volume that oil and gas producers need to add from new wells just to stay where they are—it is the speed of the treadmill,” said Raoul LeBlanc, vice president of Unconventional Oil and Gas at IHS Markit. “Because of the large increases of recent years, the base decline production rate for the Permian Basin has increased dramatically, and we expect those declines to continue to accelerate. As a result, it is going to be challenging, especially for some companies with cash constraints, just to keep production flat.”
The firm sees U.S. production growth of only 440,000 bpd in 2020, before flattening out in 2021. If this proves accurate, OPEC+ might not need to worry as much.
Source: Nick Cunningham of Oilprice.com
Ghana: GRIDCo Workers Suspend Sit-Down Strike But…
Energynewsafrica.com can report that the striking workers of Ghana’s power transmission company, GRIDCo, have suspended their sit-down industrial action.
The information was contained in a joint press statement signed by the management and staff of GRIDCo after a joint standing committee meeting in Tema, Ghana’s industrial city, Thursday, December 12.
Three decisions that were agreed on by the two bodies were that the intended strike action had been called off, management is committed to closer and regular engagements with the staff groups and stakeholders with the view to resolving all outstanding issues and regular work including other services to proceed as normal.
On Wednesday, December 11, a meeting between management of GRIDCo and workers ended inconclusively after the management of GRIDCo had agreed to sit at a table with the striking workers to resolve their concerns for them to return to work.
According to energynewsafrica.com’s sources, the meeting was adjourned to Thursday, December 12, 2019, because both management and workers failed to reach a consensus.
Workers of GRIDCo in the West African state hinted of embarking on a sit down strike action on 1st May, 2019, when they marched at the Black Star Square during the workers’ day celebration.
The workers had been agitating over the inability of the ECG, VALCO and NEDCo to pay their over GHc1.2 billion indebtedness, which they claimed, had crippled their operations.
The workers announced a series of industrial action last month and served notice to embark on a sit down strike by December 10, 2019, should the three companies fail to settle their debts.
This action, the workers carried out on Tuesday to press home their demands.
However, the joint press statement, which energynewsafrica.com has a copy , assures the general public the GRIDCo workers are committed to delivering on their mandate of transmitting reliable and uninterrupted power supply to them.
“Management is committed to closer and regular engagements with the staff groups and stakeholders with the view to resolve all outstanding issues.
“GRIDCo wants to assure the general public and its cherished customers that it is committed to delivering on its mandate of transmitting reliable and uninterrupted power supply,” the statement assured.
In an interview with energynewsafrica.com Raphael Kornor, Chairman of Senior Staff Association, he said their decision to call of the strike was based on assurances management gave including showing them a letter ECG had written to the company indicating their commitment to pay their debts.
He, however, said on the issue of emergency services workers would still treat them as normal and would not attend to them outside working hours.
“The suspension was as a result of some conditions we wanted to fulfill in the labour law,” he said.
He justified the action of the workers saying “if we sit down and the company collapses we will be people who will suffer directly.”
Nigeria: NNPC Moves To Curb Oil Theft
The Nigerian National Petroleum Corporation (NNPC), says it is taking measures to address the menace of pipeline vandalism and crude oil theft in the nation’s Oil and Gas industry.
The Group Managing. Director, Mele Kyari disclosed this at the inaugural Nigeria Extractive Industries Transparency Initiative (NEITI) Policy Dialogue in Abuja last Tuesday.
He said that oil theft had remained a challenge in the industry in spite of some strong interventions in the past.
The NNPC boss noted that the gradual reduction in pipelines vandalism would be sustained through improved collaboration, implementation of Global Memoranda of Understanding (GMoU), and deployment of appropriate technologies.
Kyari, represented by the NNPC Chief Operating Officer, Upstream, Roland Ewubare listed other measures to curb the menace to include a security architecture with single accountability for national critical infrastructure.
He listed others as industry and regulatory commitment to transparent crude oil and products accounting, realistic expectation by host communities, and emplacement of sustainable social investment mechanism.
Kyari emphasised the need to inculcate shared values of integrity and transparency across every level of the governance structure for pipeline security, policy refill and enforcement of legal actions on economic saboteurs.
He harped on the need to prioritise and instill in the nation’s teeming youth a sense of patriotism and national orientation.
Ghana: CPC To Cut Electricity Cost By 63% As It Cuts Sod For Construction Of $14.0M Biomass Plant
As global efforts to increase investments in renewable energy and alternative sources of energy in the energy mix is seeing significant growth with some industries divesting their source of power, Ghana’s Cocoa Processing Company (CPC) is latest to join the hosts of companies making investments in renewable energy.
CPC, which is located in the West African nation’s industrial city of Tema, will, on Friday, cut the sod for the construction of a power system consisting of biomass gasification and a Combined Heat and Power (CHP) generation package that uses locally available shells and pod husks as biomass fuel feedstock for optimum efficiency, under a Captive Model.
The move is part of CPC’s effort to control its high cost of energy.
The project is being supported by three major foreign development partners namely GP GREEN ENERGY – INDIA, HORUS ENERGIA POLAND & CAPTIVE ENERGY CO including a bank; State Bank of Poland (BGK).
Two local banks namely, Agricultural Development Bank (ADB), Standard Chartered Bank (STANDCHART), Ghana, and the Energy Commission.
The three foreign partners would finance the biomass development; ADB is the LOCAL BANK providing a CONFIRMED IRREVOCABLE PURCHASE ORDER (CIPO) for six months for CPC whilst Standchart Ghana is providing the relative standby Letter of Credit to pay for the Plant and Machinery and the Energy Commission ensuring the processes for procurement of expertise and selection of an Energy Consultant for project implementation.
The project is a US$14.0 million Build Operate and Transfer (BOT) arrangement payable over six years after which at the end of the BOT arrangement, CPC will drive its energy cost down by a whopping 63 percent cost reduction.
Meanwhile, in line with government’s industrialisation policy aimed at boosting the ‘Ghana-Beyond-Aid’ agenda, CPC has, since 2017, redoubled its efforts at increasing its product range and improving packaging to enable the company take advantage of growing global emerging markets for its products.
Accordingly, in December 2018, CPC launched three sets of new ‘GoldenTree’ products.
CPC Ltd, once again, is ready to launch 19 new and improved GoldenTree Cocoa/Chocolate products tomorrow, December 13.
Source:www.energynewsafrica.com
Address Tullow’s Challenges To Save Ghanaian Jobs – Alex Mould To Gov’t
The former Chief Executive of Ghana National Petroleum Corporation (GNPC), Alex Mould is calling on government to as a matter of urgency engage TULLOW and its partners in order to protect the jobs of Ghanaians in the upstream petroleum sector.
According to him, government inability to lift gas from Jubilee field as a result of delays in completing the reverse flow of the WAPCo pipeline from Aboadzi to Tema, topside challenges on FPSO Kwame Nkrumah, reservoir issues at Tweneboa, Enyenra, Ntomme (TEN) were to be blamed for TULLOWS inability to meet its production targets.
In his latest epistle, the Oil and Gas expert suggested TULLOW needed to transform from an exploration to a mature producing company; “this will mean major restructuring and massive layoffs.
“Let’s hope Ghana government will stand firm to ensure that the right ‘fat’ is cut – mainly expensive unnecessary head office staff and expatriates, NOT the highly qualified lower paid Ghanaians.”
Mr. Mould urged TULLOW to eliminate those unnecessary highly paid cushy jobs at their CHISWICK Head Office, “whose time writing charges are suspected to be inflating the cost of oil production of their Ghana operations.”
Read Full Statement
TULLOW OIL CRISIS: ALL IS NOT GLOOMY FOR GHANA – ALEX MOULD
This week, TULLOW Oil (aka TULLOW) shocked the oil world when both its CEO and Exploration Director, who were also board executives, “resigned” with immediate effect. Tullow also suspended dividend payments.
TULLOW, once a £14bn company saw its Net Asset Value (NAV) drop to a little over £560m.
When TULLOW Oil Plc issued its initial public offering (IPO) less than 10 years ago, the value of its shares went north of $20. Last Monday it fell below $1.00, but has since bounced back up to $1.50.
Investment Analysts say that a culture change and debt refinancing in 2022 will be required to support the equity value going forward.
The 75% drop in its price by 1pm on Monday was attributed to the following reasons:
⁃ A reduction in production estimates from 100k to 70-80k bbl/day (Tullow’s share of the total production mainly in Ghana), and then 70k bbl/day from 2021-24;
⁃ A 25-30% downward revision of one of its flagship oil fields in Ghana, TEN;
⁃ Miscommunication on oil quality issues in its highly publicised Guyana discovery;
⁃ Lower than expected investments in Ghana which is required to sustain production at levels needed to ensure the free cash flow promised to investors.
So, what are the real challenges at both Jubilee and TEN fields?
- Jubilee field:
- TEN field:
Maersk Drilling Joins Forces With Halliburton And Petrofac For Seapulse Drilling Program
Offshore drilling contractor Maersk Drilling has signed agreements with Halliburton and Petrofac to collaborate on the exploration program to be delivered under Maersk Drilling’s master alliance agreement with Seapulse.
Maersk Drilling and Seapulse signed the master alliance agreement in December 2018 under which Maersk Drilling is responsible for providing fully integrated drilling services, including the provision of drillings rigs and all related services for a global offshore oil and gas exploration program.
Announcing the new agreements with the oilfield services providers on Wednesday, Maersk Drilling said that Petrofac would deliver well management services, and Halliburton would deliver integrated well services, throughout the program.
The Seapulse portfolio spans shallow water and deepwater wells in several regions. Two wells in the UK North Sea have previously been announced as part of the work scope, which is expected to start drilling in the second half of 2020.
Maersk Drilling COO, Morten Kelstrup, said: “We’re thrilled to join forces with Halliburton and Petrofac for this program which breaks new ground in the industry by using a fully integrated service delivery model aimed at eliminating inefficiencies by aligning incentives and removing complexity across the entire value chain. Halliburton and Petrofac bring strong operational expertise and decades of experience in delivering and integrating oilfield services, which will further contribute to the ability to mitigate the operator cost risk associated with exploration drilling whilst we foster new ways of collaborating across the supply chain.”
Nick Shorten, Managing Director for Petrofac’s Engineering and Production Services West business, said: “Petrofac is delighted to be part of this exciting global supply chain collaboration. The aims of the Maersk Drilling and Seapulse alliance closely align with our own operating principles – we very much look forward to working with all parties to deliver effective and technically robust campaigns.”
“This collaborative model aligns with and leverages Halliburton’s proven integration approach that creates value for our global customers both on- and offshore,” Steve Haden, Senior Vice President of Halliburton Project Management said.
CEO and co-founder of Seapulse, Scott Aitken, added: “We are very pleased to see the well delivery model that we have entered into with Maersk Drilling continue to mature with world-class partners. The Seapulse business model leverages Maersk Drilling’s partnerships’ technological and operational expertise to drill and test a statistically relevant exploration portfolio of a scale normally only associated with major oil companies.”
Subsea 7 Gets Ærfugl Job From Aker BP
Subsea 7 has been awarded a sizeable contract by Aker BP for the Ærfugl Phase 2 gas field development, located approximately 210km west of Sandnessjøen in the Norwegian Sea.
Subsea 7 defines a sizeable contract as being between $50 million and $150 million.
The company said on Thursday that this EPCI contract was a long-distance tie-back involving the application of Subsea 7’s Electrically Heat Traced Flowline (EHTF) technology for a distance of 13.5km from the subsea location to the existing Skarv infrastructure.
Subsea 7 has a long-term subsea alliance agreement with Aker BP. Project management and engineering will start immediately at Subsea 7’s offices in Stavanger, Norway. Fabrication of the EHTF system will take place at Subsea 7’s spoolbase at Vigra, Norway with offshore operations taking place during 2020 and 2021.
Monica Th. Bjørkmann, Vice President Subsea 7 Norway said: “Electrically Heat Traced Flowlines have been developed by Subsea 7, in collaboration with InterPipe, to deliver leading insulation performance and enable cost-effective long-distance tie-backs. We look forward to continuing our alliance with Aker BP for the development of Ærfugl and future projects.”
The Ærfugl is a gas condensate field about 210 kilometers offshore Sandnessjøen in Norway. It is a subsea project, which is being developed in two phases. Both phases are tied into the existing FPSO vessel on the Skarv field, which is located approx. 210 km west of Sandnessjøen.
The Phase 2 of the project was sanctioned last November, three years ahead of the original plan. The goal is to start production from the first Phase 2 well as early as in first half of 2020. This means that production start-up for phase 2 will come before the start-up of Ærfugl phase 1.
Also on Thursday, Aker BP awarded a contract for the subsea production system for the second phase of the Ærfugl development to Aker Solutions. The subsea delivery will include wellheads, vertical subsea trees, satellite structures, control systems, a tie-in module and about 30 kilometers of umbilicals.
Ghana: Striking GRIDCo Workers And Mgt. Meeting Ends Inconclusively
Information available to energynewsafrica.com indicates that a meeting between management of Ghana’s electricity transmission company, GRIDCo, and workers ended inconclusively.
The meeting was for the management of GRIDCo to sit at a table with the striking workers to resolve their concerns for them to return to work.
According to sources, the meeting was adjourned to Thursday, December 12, 2019, because both management and workers failed to reach a consensus.
Workers of the West African nation’s power transmission company have been agitating over the inability of three stakeholders namely ECG, VALCO and NEDco to pay their over GHc1.2 billion indebtedness which they claimed has crippled their operations.
The workers announced a series of industrial action last month and served notice to embark on a sit down strike by December 10, 2019, should ECG, GRIDCo and NEDco fail to settle their debts.
The workers, on Tuesday, declared a sit down strike following the three stakeholders’ failure to meet their demands.
Is There A Looming Crisis In Ghana’s Power Sector?
By: Paa Kwasi Anamua Sakyi
Electricity is widely regarded as a major determinant of economic prosperity of any State. It is the force that propels any economic activity, and indeed the pillar of wealth creation. Onakoya et al. (2013) finds the output of the energy sector (electricity and the petroleum products) usually consolidating the activities of the other sectors which provide essential services to direct the production activities in agriculture, manufacturing, mining, commerce et cetera. Electricity according to Kumi (2017), plays a significant role in undertaking daily activities from cooking, lighting, heating to powering machines in the industrial sector. It is also essential for quality healthcare delivery, education, transport, effective communication, mineral exploration and many more.
Notwithstanding its vital role to the economic segment of the global economy, the power sector is often plagued with crisis which have led to increased poverty rate, slow pace of economic activities, poor health delivery system, environmental degradation, and major development setbacks. Poor funding of the sector, corruption, and shutting down of major power plants due to infrastructural decay and non- performance are to be blamed, according to Emem (2015).
A 2019 research by the African Development Bank (ADB) and Association of Power Utilities of Africa (APUA) in Nigeria concludes that the energy crisis in Nigeria for example, is associated with multiple technical and commercial challenges in its power sector; including high losses, poor maintenance, poor financial viability, supply shortfalls, frequent outages, and unsustainable tariffs below cost recovery levels.
Past Incidents of Power Crisis in Ghana
With the inauguration of Ghana’s Akosombo hydroelectric dam in 1966, hopes were that the power generated from the “Volta Lake” as it came to be called, would perpetually take the country out of darkness; practically availing power to every home and offering stimulus for the modernization of new and existing industries.
However, Ghana was confronted with its first electricity crisis in 1984 as the nation was plunged into darkness as a result of a severe drought of the lake; very much attributable to climate between 1982 and 1984. According to Kumi (2017), the total inflow into the dam between 1982 and 1984 was reported to be less than 15 percent of the expected total, and this triggered power rationing and a reduction of electricity supply to neighboring countries, including Togo and Benin. The country’s failure to add on to the generation capacity in tandem with population growth largely exposed it over-dependence on the hydro power.
Notwithstanding the addition of 160MW to the country’s installed capacity with the commissioning of the Kpong Hydro-electric power station in 1982 (Asante and Clottey, 2007), another power crisis emerged in 1998, largely as a result of low rainfalls and inflows to the Volta Lake; even when the demand for electricity had falling slightly from 5110 GWh in 1991 to 4965 GWh by 1998 (Eshun and Amoako-Tuffour, 2016).
Beyond the first two power crisis, the country had to experience yet another period of inadequate power supply between 2006 and 2007. The third round of power rationing led to the introduction of Thermal Power Plants into Ghana’s generation mix, with the first of these thermal plants being the 550 MW facility (Tapco and Tico) at Aboadze in the Western Region of Ghana (Kumi, 2017).
After 2007, the country was once again visited with darkness between 2012 and 2016. The uniqueness of the 2012 – 2016 power crisis was the longer period the Ghanaian had to endure with rotating Load Shedding timetable, which earned the name “Dumsor”. However, by close of 2016, the country had experience some form of stability in power supply as power plants installed capacity grew from 3,175 megawatts (MW) in 2015 to approximately 3,775 MW by the close of 2016 through the interventions of Karpower Barge (225MW) and AMERI (250MW) et cetera (Energy Commission, 2017).
Low generation capacity to meet the projected demand, poor maintenance schedule for power plants, inadequate supply of natural gas, low stock of liquid fuels, and delay in the completion of Ghana Gas Project — for reason of lack of funds, were identified as key factors that impacted on the reliability of power supply between the period 2012 and 2016 (Energy Commission 2017; Ministry of Finance 2017).
2018/2019 Incident
The country boasted of over 4,310 MW of installed generation capacity as at January 2018, with net dependable capacity exceeding 3,890 MW. Peak demand recorded in 2018 rarely exceeded 2,525 MW. The country also had a significant quantity of natural gas to fuel the power plants which are largely dual-fuel-fired. And the Volta Lake had a decent water level of over 79 meters at January 4th 2019, compared to the prior year level of 76 meters at January 4th 2018 (Energy Commission, 2019).
But in spite of the fact that these situations presents great comfort for a State, Ghana between November 2018 and September 2019, experienced yet another recurring power outages. This situation had developed even though the installed generation capacity was far in excess of the country’s peak demand. The power sector’s poor financial health resulting from mounting legacy debt, poor planning, poor tariff structure, and political interference in decision making, were some of the factors known to have influenced the situation.
Still Waters
Currently the country seem to be enjoying some form of stable power supply, since gas started flowing from the Western power corridor to the Eastern corridor; taking away the huge burden of importing liquid fuels for power generating plants. Plants availability looks quite good with the relocation of the Karpower Plant from the East to the Western corridor, with a decent Volta lake level, and with installed power capacity far exceeding peak power demand. These are comforting enough, as the assurance of power generation in the country is high.
However, the predominant challenge to the provision of reliable electricity supply had been the weak financial position of the power utilities which impact on the ability to produce more power, the ability to transmit and the ability to distribute generated power in an effective and efficient manner.
Availability of funds to ensure system maintenance and expansion remain ever vital. High costs and operational inefficiencies stemming from high payments for installed capacity to power producers; high transmission and distribution losses; poor revenue collections by distributors; and non-payment by Government entities, are still creating additional debts. And to sustain their operations, sector utilities have had to resort to expensive external debt, thus worsening the situation and creating financial distress.
Today the indications are that the country’s power sector debt has soared to unprecedented heights; leaving power generating, transmission and distribution companies in perilous financial position. The sector’s accumulated debt which stood at US$2.3 billion as of March 2017, is reported to have climbed close to US$4 billion. This situation of course is quite worrying, as past experiences have clearly shown that it is the illiquidity in the power sector that has always been a problem in ensuring consistent and reliable power supply in the country.
Writings on the Wall
Since the first quarter of the year 2019, certain developments within the power sector is clearly giving indications that all may not be well with the country’s power sector, and that the country may be sitting on a time bomb.
A report released by the Finance Committee of Ghana’s Parliament in early July 2019, warned that liquidity challenge in the power sector may spur the return of Dumsor if steps are not taken to address it. The report had it that Ghana’s energy sector is currently overburdened with growing indebtedness as it battles with a debt portfolio of over US$4billion. The report revealed that state-owned enterprises (SOEs) in the sector like GRIDCo, Power Distribution Services (ECG/PDS) and the Northern Distribution Company (NEDCo) have for the past two and half years all posted revenue losses. Government’s indebtedness to Karpower was captured as US$150million, ENI US$160million, NEDCo US$162million, IPPs US$1billion, GRIDCO US$171million and Ghana Gas Company US$735billion.
Barely a week after the Legislative Committee report, six (6) IPPs in the country which supply about 1,500 MW of electricity threatened for the first time to shut down their power plants if ECG/PDS failed to settle debts amounting to over US$700 million within eight (8) working days. The IPPs rescinded their decision to shut down their plants in protest, when the ECG made some part-payment to the group. However in late October 2019, the IPPs threatened once more that the country could experience erratic power supply if they are not paid on time, having disclosed that power distributors in Ghana owes them US$1.5 billion.
As if that was not enough, the Senior Staff Association of GRIDCo a power sector stakeholder, threatened government with series of “industrial actions” in late October 2019, if the Finance Ministry does not act immediately to settle the debts owed them by the ECG, VALCO, amongst others. This follows an initial indication to government on May Day this year when the group protested at the march for non-payment of monies owed them by some entities. According to the staff group, the failure by the ECG, VALCO and NEDCo to defray their debts could plunge the country into darkness following the possible withdrawal of service.
In the face of all these developments, one is left to ask if there is a fresh and looming crisis in Ghana’s power sector.
Written by Paa Kwasi Anamua Sakyi, Institute for Energy Security ©2019
The writer has over 22 years of experience in the technical and management areas of Oil and Gas Management, Banking and Finance, and Mechanical Engineering; working in both the Gold Mining and Oil sector. He is currently working as an Oil Trader, Consultant, and Policy Analyst in the global energy sector. He serves as a resource to many global energy research firms, including Argus Media and CNBC Africa.
Contact: [email protected], +233 69 00 95
Ghana: Give Mahama Credit For Indigenous Gas Utilisation-Armah Buah Tells Akufo-Addo
A former Minister for Petroleum in the Republic of Ghana, Emmanuel Armah-Kofi Buah, says the country’s former leader John Dramani Mahama deserves every credit for the indigenous gas utilisation and its associated savings and not President Nana Akufo-Addo.
He argued that ENI project and the 450 megawatts Karpowership in the West African were part of the legacy projects of former President Mahama and the Government of the National Democratic Congress (NDC), which the President Akufo-Addo led Administration must acknowledge.
President Nana Akufo-Addo on December 7, 2019 turned on the valves for the use of natural gas from the ENI-OCTP fields to enable the 450 megawatts Karpowership to use lean gas instead of heavy oil fuel (HFO).
In his speech, the President gave a list of the benefits of gas and how the switch of the Karpowership to natural gas, would save electricity users an amount of US$170.5 million per year and a projected amount of US$1.2 billion over the remaining terms by way of reduced electricity charges to consumers.
Speaking to the press in Ghana’s parliament, Armah-Kofi Buah explained that former President Mahama during his time in office led a historic effort to bring the project on stream and it was part of a comprehensive effort to address Ghana’s energy challenges and address fuel security for the thermal plants.
He said after the successful completion of the Atuabo gas project, the next effort was the ENI’s OCTP project to utilise the associated and non-associated Sankofa gas.
He said the project represented game-changer in the country’s gas-to power ambitions with about 45,000 barrels oil per day (bopd) and 180 mmscf of gas, enough to generate 1,000MW of power daily.
Mr Armah-Kofi Buah said before the NDC left office they initiated processes to interconnect the Ghana Natural Gas Transmission system with the West African Gas Pipeline system part of the broader long term vision to ensure a sustainable and reliable supply of gas.
“This is to allow a reverse flow of gas from the West (Takoradi) to the East to serve power plants in the Tema enclave.”
He said the initiative received cabinet approval before NDC left office, and that was so critical to ensuring that the ENI gas was not stranded.
The Government of the New Patriotic Party, Mr Buah, said failed to prioritise this project.
He said the NDC government commenced the process of relocating the 450MW Karpowership Badge to Takoradi to replace the 230MW ship in Tema to off-take part of the gas.
“Unfortunately, it took this administration three long years of inertia and procrastination resulting in the delay of the relocation of the Karpowership to the Sekondi Naval base.
“This is the reason why the ENI was stranded and resulted in a huge cost to the Ghanaian tax payer,” former Energy Minister said.
Official: Springfield E&P Discovers 1.5 Billion Barrels Of Crude, Gas Offshore Ghana
Springfield Exploration and Production (E&P) Limited, an independent upstream player in the Republic of Ghana and its partners, Ghana National Petroleum Corporation (GNPC) and GNPC EXPLORCO, on Wednesday, officially announced the discovery of 1.5 billion barrels of crude and gas at its Afina-1 well in Block 2, offshore Ghana.
“Springfield has more than doubled its discovered oil in place volume to 1.5 billion barrels and added 0.7tcf of gas. The current undiscovered potential of the Block is estimated at over 3 billion barrels of oil and gas in multiple leads and prospects within various proven reservoir units,” a statement from Springfield E&P said.
Afina-1, which is located at a water depth of 1030 metres, was drilled to a total depth of 4,085 metres and encountered light oil with a gross thickness of 65 metres, with 50 metres light net oil pay in good quality Cenomanian sandstones.
The secondary target in Turonian age sand was drilled at the edge of the structure and encountered 10 metres of hydrocarbon bearing sands consisting of light oil and gas.
Springfield is currently the Operator and Majority Interest Holder (84%) of WCTP Block 2, with GNPC and its exploration company, EXPLORCO, holding the remaining interest.
Commenting on the discovery, Chief Executive Officer of Springfield, Kevin Okyere said: “This is great news for Springfield, Ghana and Africa. We are excited about the discovery as its ties into our vision of becoming a leading African upstream player with a global focus. This, for us, means increased opportunities to impact the lives of our people positively with the resources.”
On his part, Dr K. K. Sarpong, Chief Executive of GNPC, said: “As the national oil company of Ghana, GNPC is proud of this feat, chalked in this all-Ghanaian partnership. This achievement fits into GNPC’s strategic pillars of: ‘replacing and growing reserves’ as well as ‘enhancing sustainability through local content development.”
“This discovery demonstrates once again the high prospectivity of Ghana’s sedimentary basins and the Ghanaian capacity to deliver, given the opportunity.”
About Springfield
Springfield Exploration and Production Limited was incorporated in March 2008 to pursue exploration and production opportunities in Ghana and the West African sub-region. The process of acquiring a block began in 2012, but this was finally awarded by the Government of Ghana in March 2016.
The Company is currently the Operator and Majority Interest Holder of West Cape Three Points Block 2, with the Ghana National Petroleum Company and its exploration company, EXPLORCO holding the remaining interest. From 2016 until now, the company has been building capacity for both upstream and downstream operations with a significant mix of experienced international industry practitioners working alongside their Ghanaian counterparts. In April 2017 Springfield, which is a wholly-owned Ghanaian company, contracted the world’s largest seismic vessel, the Ramform Titan owned by Petroleum Geo-Services (PGS) to undertake a 3D broadband seismic data acquisition on its Block.
Springfield is currently the Operator and Majority Interest Holder (84%) of WCTP Block 2, with GNPC and its exploration company, EXPLORCO, holding the remaining interest.
Commenting on the discovery, Chief Executive Officer of Springfield, Kevin Okyere said: “This is great news for Springfield, Ghana and Africa. We are excited about the discovery as its ties into our vision of becoming a leading African upstream player with a global focus. This, for us, means increased opportunities to impact the lives of our people positively with the resources.”
On his part, Dr K. K. Sarpong, Chief Executive of GNPC, said: “As the national oil company of Ghana, GNPC is proud of this feat, chalked in this all-Ghanaian partnership. This achievement fits into GNPC’s strategic pillars of: ‘replacing and growing reserves’ as well as ‘enhancing sustainability through local content development.”
“This discovery demonstrates once again the high prospectivity of Ghana’s sedimentary basins and the Ghanaian capacity to deliver, given the opportunity.”
About Springfield
Springfield Exploration and Production Limited was incorporated in March 2008 to pursue exploration and production opportunities in Ghana and the West African sub-region. The process of acquiring a block began in 2012, but this was finally awarded by the Government of Ghana in March 2016.
The Company is currently the Operator and Majority Interest Holder of West Cape Three Points Block 2, with the Ghana National Petroleum Company and its exploration company, EXPLORCO holding the remaining interest. From 2016 until now, the company has been building capacity for both upstream and downstream operations with a significant mix of experienced international industry practitioners working alongside their Ghanaian counterparts. In April 2017 Springfield, which is a wholly-owned Ghanaian company, contracted the world’s largest seismic vessel, the Ramform Titan owned by Petroleum Geo-Services (PGS) to undertake a 3D broadband seismic data acquisition on its Block.