HOUSTON—At the recent 2016 KPMG Global Energy Conference, a panel discussion among three industry executives revealed that the concept of a new frontier in upstream oil and gas exploration might indeed be the way in which E&Ps impact the areas they work in, on economic and social levels.
Peter Manoogian, vice president of international E&P at Sasol Petroleum International, has plenty of experience in African operations. His view is that overall—anywhere in the world—over the next five years or so the new frontier will be the ways in which companies further develop the geographies they are currently working in now.
The oil and gas frontier of East Africa is proving challenging, even after decades of E&Ps’ involvement.
Sasol has worked primarily in the downstream in Mozambique for the past 12 years, and works in 36 countries globally. Manoogian said that a glaring lack of infrastructure in place has made work in Mozambique—one of the poorest countries—very difficult.
As a young geologist in the 1980s, Manoogian worked projects that turned out to be uneconomic. His point, though, was that had they turned out to be economic, any oil and gas would have been “a long way from the coast” where it would be processed and sold and thus very difficult to monetize.
Today, in Uganda, Kenya and Tanzania, oil and natural gas remains stranded because of the long way hydrocarbons must travel to coastal markets. Political and geographic disputes currently complicate proposed pipeline solutions. The areas’ waxy crude is extracted conventionally and cheaply, Manoogian said, but efforts to monetize it are proving expensive.
Kenneth M. Fisher, executive vice president and CFO of Noble Energy Inc. (NYSE: NBL), stressed that “the definition of a major project is that it will also impact the environment it exists in,” from the area’s biodiversity to its government and population.
In its work on the Leviathan project offshore Israel, Noble Energy has dealt with a country with an infrastructure that could readily support the work. “Here was a country that, five or six years ago, was not energy self-sufficient; who can now be energy self-sufficient. There’s been a lot of work done to get the regulatory framework in place,” he said.
Manoogian described much of Africa as the opposite. “When there is no infrastructure and no trained workforce, it’s a different approach to developing the discoveries.”
He said that in many cases, readying the local population for oil and gas exploration in the countries took the form of ground-up education, from teacher training in the lower levels up through universities. Many countries did not have proper petroleum laws on the books when potentially viable discoveries were made, and efforts had to be made to conform to international safety standards.
The author can be reached at epedigo@hartenergy.com.
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