One of the offshore rigs belonging to exploration firm Tullow, which is drilling more appraisal wells to discover the full extent of the find

Not previously known as one of West Africa’s big oil producers, Ghana’s fortunes in the energy sector may be about to change with the discovery of what is said to be a world-class hydrocarbons reservoir earlier this year.

An initial deepwater find around 40 miles from the coast was followed by a linked discovery in an adjoining area soon after. Initial reports suggest that the field, located in the Tano Basin, could contain in excess of one billion barrels of highly marketable light crude – a find of immense proportions.

Though Ghana’s deepwater oil infrastructure is minimal at the present time, bringing these kinds of projects onstream is almost routine practice in nearby Nigeria. With more testing and drilling, Ghana could shortly be among the region’s better known oil exporters and its national finances could receive a major boost.
UK-based Tullow Oil made both the initial find in the West Cape Three Points block and the subsequent discovery in the adjoining Deepwater Tano license. Its partners include private-equity backed Kosmos Energy and US-based Anadarko Petroleum, plus the state-owned Ghana National Petroleum Corporation.

None of these companies have released reserves estimates as yet, though the scale of the linked discovery is reported to have surpassed all expectations. Speculation on the initial Mahogany-1 find was that the reservoir could hold anything between 400 million and 800 million barrels. With the follow-up Hyedua-1 well, these figures are being revised upwards. Typically, any talk of a world-class oil find means about a billion barrels.

In water depths of almost 5,000 feet, the discoveries also open up a new frontier exploration zone that has seen minimal work in the past. The bulk of exploration to date has focused on the shallow water areas close to the shore. This work has yielded some joy, though not always. Tullow’s last well, for instance, in the Shallow Water Tano licence in September was plugged and abandoned as unsuccessful.

That has not dented its hopes elsewhere however. An appraisal campaign to test the deepwater structures more thoroughly is planned later this year and through 2008, with more wells lined up.

When Tullow made the Hyedua-1 discovery in August it outlined plans for more seismic acquisition to image the sub-surface area as well as a string of additional wells. This is a big investment in Ghana – the deepwater drillship used to drill the recent discovery wells, the Bedford Dolphin, does not come cheap.

At the time of the discovery, Tullow’s Chief Executive Aidan Heavey said it was an important milestone for the country itself. “The discovery of oil in Hyedua-1, and the confirmation of its communication with the recent Mahogany discovery, represents a major step forward for the Republic of Ghana,” he said.

Though no dates for first production have been given – speculation has hinted at a possible 2011 start-up – the scale of the find means Ghana is assuming priority status. “It significantly enhances our understanding of the resource, enables us to focus and accelerate our appraisal programme, and is highly encouraging for our plans to establish commercial production in Ghana,” says Mr Heavey.

Although a discovery of this size would be developed principally for oil exports, the presence of such a large accumulation of resources could materially affect Ghana’s own energy position. With limited production to date, the country relies largely on imports to meet its domestic fuel needs. Nigerian natural gas via the West African Gas Pipeline will help (see page 9), but the availability of local oil is another positive.

The recent discovery sites, which sit about three miles apart, are also reasonably close to the shore, in comparison to some deepwater finds elsewhere. The Mahogany site is approximately 82 miles south-west of the port and industrial city of Takoradi, home to much of the country’s power infrastructure.

The oil find could also stimulate more inward investment not just from other explorers but as development gathers momentum and new energy infrastructure is put in place. West Africa as a region is building its skills base in conjunction with the international oil companies and Ghana stands to benefit in this field. Putting together a world-scale oil development is a billion dollar business that could generate multiple benefits for the local economy.