afrol News, 21 October - One of Ghana's most promising deepwater offshore oil wells has turned out a flop, producing water rather than oil. The operating oil company announces it will take "lower risks" in future Ghana explorations.
The UK-based company Tullow Oil PLC has until now made numerous success announcements in its large engagement in Ghana's offshore oil search. The number of positive hits was skyrocketing and Ghana is set to become an oil producer next year, in 2011.
The Onyina-1 well, a deepwater exploration with high costs and large hopes of major oil discoveries, however turned a major flop for Tullow Oil, as the company admitted today. The expensive exploration well offshore Ghana "encountered water bearing reservoirs" in stead of the expected oil, according to Tullow Oil.
As expectations had been high for the deepwater Onyina-1 well, Tullow Oil shares plummeted at the London stock exchange. Brokers and analysts called the setback a "major disappointment," given the high stakes in the deepwater well.
Geological formations in the Ghanaian deepwater Tano licence, where the disappointing well was drilled, had indeed been promising. Tullow Oil had earlier published its expectations to find an estimated 700 million barrels at the prospect. The high costs with deepwater drilling were therefore accepted.
Also Ghanaian authorities had great expectations to the Tano licence, hoping it would open up for much larger investments in its deepwater zones. Tullow's failure now however will produce a slowdown in these investments.
Tullow Oil's exploration director Angus McCoss today in a statement made it clear that the disappointing development would lead the UK company to take less risks offshore Ghana. The flop would lead to a "refinement of our exploration and relinquishment strategy offshore Ghana," Mr McCoss said.
The exploration director added that Tullow's "main focus remains on the lower risk primary play" offshore Ghana, contrasting the "high risks of charging and trapping oil in this secondary play" (the deepwater Tano licence).
Tullow Oil and the other main players in Ghana's oil scramble therefore will focus on the known Jubilee, Tweneboa and Owo offshore fields, where major discoveries will lead to Ghana's first commercial oil production next year.
However, these "low risk" fields are already relatively well explored, and few analysts expect more major discoveries here. Without major investments in new exploration areas, Ghana's oil bonanza therefore could be more limited than expected.
Nevertheless, already the confirmed discoveries and planned production is set to have a major impact on Ghana's economy. According to the latest data from the International Monetary Fund (IMF), Ghana's GDP growth in 2011 is projected at over 20 percent, mostly due to the new oil production.
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