How NNPC’s Resilience, Partnerships Led To First Ever Discovery Of Crude Oil In Northern Nigeria

History was made in Nigeria on Tuesday when President Muhammadu Buhari flagged-off the ground-breaking ceremony of the Kolmani OPLs 809 and 810 at the Kolmani field site in Bauchi and Gombe States.

The flag-off by the President is coming three years after the Nigerian National Petroleum Company Ltd discovered crude oil in commercial quantity in the region.

The journey to the epoch-making occasion of today (Tuesday, 22nd November 2022) commenced in the 1990s when Oil Prospecting License (OPLs) 809 and 810 were initially awarded to Shell and Chevron respectively as part of their frontier obligation under the Production Sharing Contractual (PSC) Agreement on Oil Mining License (OMLs) 118 and 132 for consolidated cost recovery.

These companies explored the acreages and drilled a well each in their respective blocks. Kolmani River-1 was drilled on OPL 809 by Shell and Nasara-1 was drilled by Chevron on OPL 810 as part of their minimum work programme obligation.

But both companies reported sub-commercial discovery of hydrocarbon in their blocks but beyond the sub commercial discoveries, the landlocked location of the blocks made it impossible for the export of any oil find. This made the two oil giants to return the blocks to the regulator’s basket.

Subsequently, in the Nigeria License bid round of August 2005 under former President Olusegun Obasanjo, The New Nigeria Development Company (NNDC) made a bid for and won the two blocks–OPL 809 and 810 on Production Sharing Contract basis with NNPC as the Concessionaire.

But the NNDC made several efforts to further explore the acreages for commercial findings without significant outcomes. In 2017, the Nigeria Petroleum Development Company (NPDC), a subsidiary of NNPC agreed to join NNDC as part of the PSC contractor group, as well as the Operator responsible for funding and technical operations.

Subsequently, NPDC engaged the services of Frontier Exploration Services (FES) Division of NNPC to acquire 3D seismic data over the Kolmani River Prospects area, in order to determine whether there were any possible prospects previously overlooked.

Using the state-of-the-art hydrocarbon de-risking technologies, including Magneto-telluric technology, air-borne based stress field detection technology and micro-magnetic analysis (MMA) amongst others, FES went into an aggressive exploration to achieve commercial discovery in the basin.

This laudable initiative resulted in the maturation of several drillable prospects in the area which include spudding of the Kolmani River-II & III and subsequently Kolmani River-IV to determine the size of hydrocarbon find and explore deeper targets.

On the morning of Saturday 2nd February 2019, President Muhammadu Buhari arrived at the site of Kolmani River II well on the Upper Benue Trough of the Gongola Basin, where, in a truly auspicious event, he flagged off the spud in of the wells.

Then on Thursday 10th October 2019, at about 6:02pm, one of the reservoirs in the Kolmani River II Well was perforated and at 9:20pm, hydrocarbon started gushing to the well head.

In so many ways, the patina on the Kolmani skyline that fateful night effectively signaled triumph in the long quest for commercial hydrocarbon deposit in the Gongola Basin.

The first phase of this campaign in Kolmani area led to the successful initial discovery of one billion barrels of oil and over 500 billion standard cubic feet of gas with prospects for higher volumes.

In 2021, the Contractor party represented by NPDC conducted a Three-Tier Open Competitive Bidding Process for the engagement of a credible Strategic Partner (Financial and Technical Service Provider) for the Integrated Development of Oil Prospecting Licences (OPLs) 809/810.

Transparently conducted in full compliance with the provision of extant processes and regulations, the process resulted in the engagement of Africa Oilfield Movers Limited Consortium as the Strategic partner for the integrated development of OPL 809 and 810.

According to the provisions of the Production Sharing Contract, NNPC Limited is the Concessionaire of the blocks, NEPL (formerly NPDC) and NNDC are the contractor parties while AOML Consortium signed a strategic partnership with the contractors to provide funding and technical capabilities for the integrated oil and gas development project and to be compensated from the contractor’s profit oil after commencement of operations.

The in-situ integrated development guarantees evacuation and monetization route for the hydrocarbon in the location, which eliminates the high cost and burden of building a crude/product pipeline.

Three years after the discovery, President Muhammadu Buhari visited the region for the Presidential Flag-off of Kolmani Integrated Development Project of Oil Prospecting Licences (OPLs) 809 and 810 at the Kolmani field site, which straddles Bauchi & Gombe States.

In a novel partnership that will see the trio of Africa Oilfield Movers Ltd consortium, New Nigeria Development Company (NDDC) and NNPC E&P Ltd (formerly NPDC) producing and monetising the field making yet another historic step in the history of hydrocarbon production and monetization in Nigeria.

Being an integrated project, the first phase will entail an in-situ Oil Refinery of up to 120,000 barrels per day capacity, a Gas processing plant of up to 500 million standard cubic feet per day, a Power Plant of up to 300-megawatt capacity, and a Fertilizer Plant of 2,500 tons per day.

In another phase of the project, there will be a Downstream Oil Terminal/depot for offtake and distribution of the white products coming out of the refinery and further development of the integrated project.

These will ultimately emplace a downstream oil terminal/depot with the capacity to offtake up to 250tructs of products/day.

The commencement of this project is expected to create an opportunity to monetize over 1-billion-barrel Crude oil deposits in the area, which hitherto would not have been able to monetize, due to the absence of an evacuation route.

With the drilling of crude oil from these two oil wells, the hope for an increase in crude oil production has been rekindled.

The move will also help to create employment opportunities, ease product distribution and increase fiscal earnings for the government.

Already, the President said that about $3bn investments have been attracted into the project, adding that his administration will continue to provide the needed support for more investments to come into the sector.