Kate Mackenzie A numbers game: The West African oil frontier

Source: Tullow

(Updated) So does finding oil off the coast of Sierra Leone mean there are oil reserves all the way along the coast to Ghana?

Anadarko and Tullow are certainly hoping so.

Anadarko is expected to announce soon that it has found oil at its Venus field, located in Sierra Leone’s waters. This might increase the odds of an entire stretch of oil reserves similar to the Jubilee field off Ghana’s coast, which is thought to hold up to 2bn barrels of oil.

According to Peter Hitchens, oil analyst at Panmure Gordon, Tullow, which has a stake in Venus, believes such a find would increase the probability significantly:

When we met the exploration director 10 days ago, he suggested that success at the Venus prospect would dramatically improve the chance of success of other prospects from the current 5%, to 25%.

Anadarko also thinks Venus will improve the chances for the 30 prospects it holds along the West African coast. This is what an unidentified Anadarko official told analysts, according to an (unverified) transcript on SeekingAlpha, on what a find at Venus might mean for the entire area:

I think, the success anywhere along here is going to help with the 30 leads and prospects we have got identified. Of course, Jubilee de-risked a lot of it that proved up the petroleum system, that proved up the reservoir and the quality and the depositional systems that we’ve been identifying up and down this margin. We are at the other end of what we see as the play at Sierra Leone and any encouragement there is going to really de-risk and help out everything in between.

To give a very rough idea, here is the 1100km stretch of coastline between Ghana and Sierra Leone:

What would it mean for the countries themselves?

Sierra Leone is one of the poorest states in the world and its neighbours to the south are not much better off. Oil production from Ghana’s Jubilee field is yet to ramp up, but the country is quite reasonably concerned that its oil wealth will turn it into yet another country ‘cursed’ by resources – it is not far away from Nigeria, after all, whose sizeable oil reserves have not exactly brought stability or prosperity for most of its people.

Update: For oil-savvy readers, here’s a quick take straight from the announcement with the numbers regarding the Venus-B1 well:

“Anadarko Petroleum Corporation (NYSE: APC) today announced a deepwater discovery at the Venus exploration well in block SL 6/07 offshore Sierra Leone. The Venus B-1 well was drilled to a total depth of approximately 18,500 feet in about 5,900 feet of water and encountered more than 45 net feet of hydrocarbon pay. Venus is the first deepwater test in the Sierra Leone-Liberian Basin.”

Related links:

Anadarko ventures into new oil frontier (FT, 15/09/09)