Authors: Dr Conor Ryan MIEI, senior geoengineer – geophysical technology & operations, Tullow Oil; and Dr Jonathan Leather, geoscience manager – subsurface technology, Tullow Oil
Tullow Oil was founded in 1985 when Aidan Heavey, an accountant working for Tullow Engineering in Carlow, heard about an opportunity to develop small gas fields in Senegal that had been overlooked by the major oil companies. Even though he had no major backers and knew nothing of the oil and gas industry, Aidan flew to Senegal, negotiated the deal and Tullow Oil was set up to rework the fields.
Today, Tullow Oil is Africa's leading independent oil company and has a portfolio of over 100 licences in 25 countries, stretching from Africa to South America and from Asia to Europe. Tullow's shares are listed on the London, Irish and Ghana Stock Exchanges, and the Group is a constituent of the FTSE 100 index with a market capitalisation of over £10 billion.
The company employs more than 1,500 people worldwide, and although it is now headquartered in London, maintains an Irish office that is continuing to expand and which currently has a staff of over 100. This office is based in Dublin, and is responsible for South American and Asian business.
The Dublin office is also the base for a Geophysical Technology & Operations Group and a Subsurface Technology Group which provide geophysical and specialist subsurface services to the rest of the company.
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HISTORY
Through the late 1980s and 1990s, Tullow Oil grew steadily. But it was not until 2000, when Tullow announced a £201 million acquisition of producing gas fields and related infrastructure in the UK Southern North Sea from BP, that Tullow had its first defining and transformational period.
Over the following four years, this led to increased production and, from the strong increases in sales and profits that were achieved, Tullow was able to focus its financial resources and management attention to offshore UK, West Africa and South Asia.
From 2004 to 2006, Tullow grew further through a number of acquisitions – more than doubling in size. The acquisitions included Energy Africa in 2004 (which had a large office in Cape Town and a good spread of interests throughout Africa) and the Australian company Hardman Resources in 2006 (which had operations in Africa and South America). These helped Tullow create a strong portfolio of international exploration, production and development assets.
Having such a strong portfolio provided Tullow with a great platform and, since 2006, growth has accelerated – largely driven by exceptional exploration results. Tullow has achieved exploration success rates above 74% since 2008 (almost unheard of in the oil industry), the company's reserves replacement ratio has consistently been above 400%, and the reserves base has grown from 358 million barrels of oil equivalent (mmboe) in 2005 to 1,743 mmboe at the end of 2011.
In this time, Tullow has opened up four brand new hydrocarbon provinces – identifying and then proving up effective hydrocarbon systems that had been overlooked by other companies in Uganda (2006), Ghana (2007), French Guiana (2011) and Kenya (2012).
Indeed, Tullow has been voted by its peers to be the most admired explorer in the oil industry for the last four years running (Wood MacKenzie's 'Future of Exploration Survey' Report).
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Drilling on Lake Albert, Uganda[/caption]
In 2006, Tullow made five oil discoveries in the Albertine Graben in Uganda, establishing the existence of a working hydrocarbon basin. This marked the beginning of proving up a new world-class oil province there, and over a billion barrels of oil have now been discovered in the basin.
Tullow bought out its partner in the acreage, Heritage Oil and earlier this year successfully farmed-down its 100% equity position to Total and CNOOC for $2.9 billion, retaining 33% equity in all of the blocks. This brings in Total's and CNOOC's experience in developing new basins and dealing with infrastructure challenges, whilst also strengthening Tullow's balance sheet and providing financial flexibility for future growth.
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FPSO, Ghana[/caption]
In 2007, Tullow discovered the world-class Jubilee Field offshore Ghana in over 1,200m water depth. This was Tullow's largest ever discovery, and opened up a major new oil province. A large oil column was found in excellent quality turbidite sands, deposited on the continental slope during the Late Cretaceous.
Rather than target traditional structural traps with the exploration well, Tullow identified the potential for stratigraphically trapped oil, and was able to target this effectively using seismic attributes and knowledge of the West African margin built up over a number of years. The initial discovery was rapidly followed up with appraisal wells and further exploration.
First oil from the Jubilee Field was achieved in December 2010 – just 40 months after the initial discovery. This was a record for deep-water development and highlighted Tullow as an industry leader in development as well as exploration.
Since the beginning of 2013, Jubilee field production has steadily increased towards the FPSO design capacity and is currently producing at a rate of around 110,000 bopd. By the end of the third quarter of 2013, work on a gas-handling constraint on the FPSO is expected to be completed and Jubilee production is forecast to increase to over 120,000 bopd.
A gas injection well is also expected to be drilled and completed by the fourth quarter for additional reservoir pressure support and gas disposal in advance of the start-up of the gas export facilities next year.
Exploration in the neighbouring acreage to Jubilee resulted in the Tweneboa-Enyenra-Ntomme (TEN) discoveries and at the same time, Tullow realised that the same exploration 'play' concept need not be limited to the immediate vicinity of Jubilee.
On 29 May 2013, the Government of Ghana formally approved the Development Plan for the Tweneboa-Enyenra-Ntomme Development (the TEN Project). The approval paves the way for Tullow and its partners to proceed with the development of these discoveries and to define the final schedule and capital programme to deliver first oil in 2016 and a steady ramp up to a capacity production rate of 80,000 bopd.
Development of the TEN Project will require the drilling and completion of up to 24 development wells, which will be connected through subsea infrastructure to a Floating, Production, Storage and Offloading vessel (FPSO), moored in approximately 1,500 metres of water. Contracts for the FPSO and subsea tenders will be awarded over the coming weeks and rig capacity for the drilling and completion of the development wells has already been secured.
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Exploration in French Guiana[/caption]
Following a policy of 'geology not geography', Tullow not only extended the Jubilee play further along the West African coast, but also on to the other side of the Atlantic Ocean. In the Cretaceous period (over 120 million years ago), the North and South Atlantic Oceans were only just beginning to open up, and Africa and South America were joined together.
Tullow realised that the same plays present on the west coast of Africa should therefore also be present on the east coast of South America. This conjugate margin concept was tested in 2011 with the Zaedyus-1 well in French Guiana, which successfully discovered 72 metres of net oil pay in two turbidite fans. This was real frontier exploration and opened up a whole new hydrocarbon province that is now attracting widespread industry attention.
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Ngamia Rig, Kenya[/caption]
This same policy of 'geology not geography' led Tullow to get into Kenya and Ethiopia – chasing the same young rift play that had yielded so much success in Uganda. This was again true frontier exploration in an area that had been largely ignored by the oil industry.
Before any drilling could commence, large-scale gravity data had to be acquired to delineate basins, which were then targeted with sparse 2D seismic data. Tullow’s opening well in Kenya discovered 200 metres of net pay, and this has now been followed up with two further discoveries in Kenya – opening up yet another new oil province.
Current estimates of discovered mean associated resources in the Lokichar Basin are now over 250 mmbbls, and this has the potential to increase further with appraisal and follow-up exploration drilling. Tullow is in a great acreage position in this area, with access to a number of similar basins across Kenya and Ethiopia.
Indeed, the company is currently operating three rigs and a dedicated testing unit to continue pursuing the exploration programme and push towards achieving the commercial threshold for development.
GEOSCIENCE TECHNOLOGY AND ENGINEERING
Early in Tullow’s formation, it was recognised that technology would play a key role in the companies continued exploration success. The Geophysical Technology & Operations (GT&O) group was established in the 1990s to design, plan and execute high-quality geophysical surveys. These surveys are predominantly based on seismic techniques but also include airborne gravity and magnetic surveys.
The group has developed over time to include a range of specialist geophysical services such as seismic data processing and quantitative interpretation. The GT&O team also supports geophysical and geotechnical site surveys, as well as geo-engineering studies in aid of exploration well planning and design. The GT&O group is based in Dublin and staffed by a team of geophysicists, geologists, geodetic specialists and geoengineers.
The Subsurface Technology Group (STG) is a new group that has been set up in Dublin with the vision of becoming a world class centre of subsurface technical excellence in support of Tullow’s worldwide activities. The group aims to become a first stop for leading edge technologies in basin-modelling, geochemistry, sedimentology and reservoir engineering.
The STG uses expert knowledge and best practice approaches to provide a multi-disciplinary resource for specialist subsurface work and support.
THE FUTURE
So, how has Tullow managed to achieve such success? The willingness to get into new areas, challenge the accepted wisdom of the industry and push the boundaries of exploration probably stems from the entrepreneurial spirit that was demonstrated by Aidan Heavey when he first set the company up, and which is still encouraged throughout the company.
Heavey himself has put the success down to three factors: 1) People – employing good people and getting the right person in the right job; 2) Luck – being ready to capitalise on luck when it happens and grasp opportunities that are there; and 3) A long-term view – Tullow takes a different view to many other companies and is continually investing in the future.
We would add intelligent use of the right geophysical and subsurface technology to that list.
Whatever the reasons for its success, Tullow now has a series of exciting and challenging opportunities to capitalise on. In Ghana, the TEN development is pushing ahead; in Uganda, basin development plans are progressing; in French Guiana, the initial exploration success is being followed up with further exploration and appraisal wells; and in Kenya, plans are already being put in place to accelerate the continuing exploration efforts.
And of course, Tullow will, as ever, be looking to capitalise on any other opportunities that may be out there.