Did you know that oil exploration in the North has been going on for over 40 years, and that experts are of the opinion that the discoveries of oil and gas in the North were more political than economic or technical?
For the first time in history, President Muhammadu Buhari, who has for long been pushing for oil exploration in the northern part of Nigeria, is expected to officially kick off the drilling of crude oil in the region on Tuesday, 22 November 2022 nearly two years after the mineral resource was discovered in the region. Here are some facts to know about the development and the oil fields:
Bauchi state and Gombe state become the first oil producing states in northern Nigeria with the Kolmani Oil Prospecting Lease (OPL) 809 and 810 located in Bauchi and Gombe states, respectively.
President Buhari becomes the first president to witness the historic exercise of oil drilling in northern Nigeria, with the support of the Minister of State for Petroleum, Mr. Timipre Sylva and the Group Chief Executive Officer of the Nigerian National Petroleum Company (NNPC) Limited, Mallam Mele Kyari, among others.
The oilfields in Bauchi and Gombe states will be developed by Sterling Global Oil, New Nigeria Development Commission (NNDC) and the NNPC Limited.
The integrated development of OPLs 809 and 810 is in the Gongola Basin, in the Upper Benue trough and extends about 1,000 kilometers from the Bight of Benin to Lake Chad.
The Nigerian Petroleum Development Company (NPDC, now NNDC) in 2021 first issued a request for expressions of interest (EoI) on the development of the two licences in Nigeria’s North-east.
Crude oil and gas were first discovered in “huge commercial quantities” in the Kolmani River, with the oil blocks more than 700 km from the coast, posing challenges to export options, according to the NPDC, leading to it proposing an onsite midstream 50,000 barrel-per day condensate refinery and a 150 MW power plant to allow for use of the resources for local needs as well as “create an industrial hub” to provide economic benefits and employment.
The NPDC drilled the Kolmani River 2 well in 2019 and the Kolmani River 3 in early 2021.
The NNPCL has over the years expended monies on frontier exploration, but the spending has now been statutorily ingrained in the new Petroleum Industry Act (PIA) 2021, which has now raised funding for frontier exploration to 30 per cent, which implies that the NNPCL would have more funds to develop oil fields around the country.
According to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Nigeria currently has crude oil reserves of about 37 billion barrels, and the Kolmani fields could hold as much as one billion barrels crude oil reserve, which could significantly raise Nigeria’s oil reserve.
With an estimated 1 billion barrels of crude oil reserve from the new northern oil wells, Nigeria is expected to gain nearly $73 billion or N32.3 trillion at an average global crude oil price of $73 per barrel benchmark used for the 2023 budget proposal. This earning could be realised over a period of 10 years; depending on when commercial production starts.