14 May/15

The New Kid on the Western African Oil Block

For a number of years, when considering energy resources in Western Africa, there have been essentially 3 locations – Nigeria, Algeria, and Angola. However, thanks to recent discoveries by a global partnership headed by Edinburgh-based Cairn Energy in West Africa’s Transform Margin, the aforementioned trinity may have to make way for Senegal. After experiencing a drilling drought of 26 years, the offshore area of Senegal has been receiving a greater deal of attention, due to the results of Cairn’s SNE-1 and FAN-1 oil discovery as well as Kosmos Energy’s gas deposit discovery (with Cairn being a 20% partner) off the coast of Southern Mauritania/Northern Senegal.

Looking at the exploratory results themselves, this could be a boom for Cairn, its partners, as well as the greater region economically. After some less than ideal exploratory results, Cairn’s discoveries late last year could easily yield over 1 billion barrels of oil, with SNE-1 potentially yielding between 200 and 600 million barrels of high quality oil and FAN-1 – a mid-point estimate of 950 million barrels, although of a lesser quality than SNE-1. As a partner, Cairn has also been part of the more recent offshore gas deposit discoveries in the Greater Tortue Complex.

In addition to previous drilling, there are also big plans for the future. Cairn recently submitted plans to the Senegalese government detailing actions to be taken within the next 3 years. As well as planning for a definitive 3 wells (2 for testing the core and the reservoir and an additional well for shelf exploration, likely the Sirius and Soleil prospects) in SNE-1, which is the higher grade resource, there will be an additional 3D seismic survey – as an upgrade to the already completed 2D survey – over a 2,000 km2 area of the Sangomar and Rufisque blocks in order to determine prospect evaluation. Beyond this, further plans within the 3-year period are expected to include an additional 3 optional wells and will be primarily tasked with further examination of the FAN-1 area, shelf exploration, or SNE-1, based on the findings of the 3 definitive wells.

While results such as these do paint a progressively optimistic scenario, the logistics and communication issues involved in dealing with a location that has little-to-no energy drilling or transportation infrastructure and hasn’t dealt with even well exploratory energy drilling over a generation, could definitely present a challenge. Though, as we can see with these partnerships, energy companies are accustomed to working with one another, establishing a workable relationship with Senegalese authorities and building a reasonably accommodating infrastructure within a timely manner will require open communication and breaking down the local market’s language barriers. Senegal is a multilingual country, which boasts an impressive list of 36 languages. However, since the colonial era, French has been the official language and the one energy companies, operating on the local market, have had to comply with. This included entering the oil and gas market (licensing, government regulations, partnerships) through work and maintenance processes to shareholders’ and end customers’ satisfaction.

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