As Ghana gets ready to explore for hydrocarbons at the onshore Voltaian Basin, Nigeria, which has long years of experience and exposure in onshore oil exploration and production is offering ways Ghana can avoid some of the practical errors made in one of the continent’s leading oil-producing nations. Oil production commenced in Nigeria at Oloibiri (in present-day Bayelsa State) in 1956, while Ghana began oil production (in recent times) from offshore Jubilee field in 2010. Both countries generally produce sweet crude, which is low in sulphur content. Analysts say onshore exploration and production offers a simpler, relatively cheaper cost. Engineer Kamoru Busari, Director Upstream, Nigeria’s Federal Ministry of Petroleum Resources listed the following as advantages of onshore hydrocarbon development;
- Onshore drilling typically requires less infrastructure and is this translates to lower cost/cost-effectiveness than offshore drilling.
- Onshore oil reserves are much easier to access during drilling operations than, as they are located on land.
- Onshore hydrocarbon development has reduced Environmental Risk In the event of a spill, containing and cleaning up the oil on land than in the marine environment.
- Onshore production uses less technical equipment & facilities than offshore production which presents technical challenges, including dealing with high pressure and harsh conditions, which can lead to equipment failures and safety risks.
- Transportation of equipment, personnel, and crude oil is typically simpler for onshore operations, reducing logistical challenges than offshore drilling.
- Onshore drilling is less affected by adverse weather conditions, leading to more stable and predictable operations.
But the phenomenon also presents peculiar challenges and disadvantages, such as; Onshore drilling leads to competition for land disrupts land ecosystems used for other activities, such as agriculture or residential development, can lead to conflicts, impact local communities, and requires significant land use.
- Oil spills on land can still have a significant environmental impact, particularly if they affect groundwater or nearby bodies of water.
- Onshore reserves may be smaller in scale compared to offshore reserves.
- Securing land rights and dealing with landowners can be challenging and time-consuming.
- Onshore drilling facilities are often visible and may generate noise pollution, which can be a concern for nearby communities.
Environmental sustainability is perhaps the most critical concern in onshore oil and gas production, with emphasis on minimum ecological footprint, through better waste management, reduced water usage and enhanced well integrity. Specifically, Mr. Busari listed the following as challenges in onshore production that Ghana can avoid. They are;
- Environmental Degradation: Onshore oil and gas production has had a significant environmental impact. Oil spills, gas flaring, and inadequate environmental regulations have led to severe pollution, affecting ecosystems, water sources, and local communities.
- Weak Regulatory Framework & Institutional Capacity: It is a disincentive to attract the needed investment. The over/under regulation of Oil and Gas operations by regulators will drive the cost of production or limit the accruing revenues to the operators and the resource country.
- Unclear and Unstable Regulations & Policies: This creates huge uncertainty that will be an encumbrance to the ease of doing business. Before the passage of the PIA 2021, Nigeria had no clear rules/guidelines for Oil and Gas bid allocation, environmental remediation, gas monetization, etc.
- Obsolete Oil and Gas Laws: Nigeria until 2021 had nothing concrete on decommissioning & abandonment laws, host communities’ management, etc. The laws for Ghana’s Oil and Gas sector must critically be tailored to be in tandem with industry standards at every point in time.
- Insecurity and High Operational Costs: The fixed costs of operating in the Niger Delta are high, mostly in the last 10 years. This includes navigating a geographically vast area of mangrove swamps inaccessible by road and also a bureaucratically murky system known for inefficiency and corruption. Before the passage of the PIA 2021, it was reported that Nigerian oil and gas projects cost 69% more than the global average. In some locations, onshore locations, the cost of production of oil per barrel ranges between USD$20-30, as compared to Saudi Arabia, which stands at less than $10 per barrel.
- Defunding of Fossil Fuel Development due to Energy Transition: The global decarbonization agenda, which is the aftermath of the Paris Climate Agreement agenda, of restricting temperature rise to 1.5°C above industrial levels, is mandating international banks and insurance firms to defund fossil projects globally. These international policy actions are forcing IOCs to abandon or discourage new oil and gas developments in new areas (Greenfields), thereby leaving these assets stranded and undeveloped, what is today known as ‘stranded assets.’
- Rising CSR Costs due to Huge Infrastructure Deficits: In attempts to establish a social license to operate, oil & gas operators provide Corporate Social Responsibility (CSR) projects, which include; community pipe-borne water systems, electricity, and other infrastructure projects, scholarships, training, and enterprise opportunities.
- Pipeline Transportation Sabotage and Crude Oil Theft: The widespread vandalizing of pipeline systems and transportation infrastructure has reached unimaginable heights because of the lack of transparent CSR initiatives embarked on by the oil-producing companies.
- Host Communities/Restiveness: The IOCs have not had an easy time managing their relationships with communities, and the entrenched hostilities towards their operations across the region are currently worsening. IOCs are seen to have spent decades exploiting local resources, polluting the environment, and destroying local livelihoods of fishing and farming, while revenues generated have not led to expected investments in the host communities.
The Voltaian Basin covers almost 40 per cent of Ghana’s total land mass. State-owned Ghana National Petroleum Corporation (GNPC) expects to drill the first exploration well in the first half of 2024. The area is said to be endowed with huge oil and gas reserves. GNPC’s Chief Executive Mr. Opoku-Ahweeneh Danquah sees great possibilities that could make the Voltaian Basin a game changer for Ghana. Ghana has intensified efforts to discover hydrocarbons in the Voltaian basin, which stretches across the Eastern, Ashanti, Brong-Ahafo, Northern and Volta Regions. The Voltaian basin covers 103,600 sq. km. Oil and gas discoveries and production already exists in analogous basins in North Africa and elsewhere. The Voltaian basin is also said to be rich in bauxite, iron ore, phosphate and uranium. The basin is the least explored of Ghana’s four distinct sedimentary basins.