The American oil exploration giant, ExxonMobil has abandoned its exploration exercise in Ghana. This was contained in a letter addressed to the Minister of Energy and other stakeholders dated 18th May, 2021. This comes at a time when major oil companies appear to be moving away from oil.
ExxonMobil, which recently established Exxon Low Carbon Solutions to commercialize its extensive low-carbon technology portfolio, is aggressively pursuing divestments, after suffering a $22.4 billion loss last year. It is under pressure from shareholder groups pushing for the company to shift to cleaner fuels.
It, therefore, comes as no surprise the news that ExxonMobil has determined not to apply for an extension to its exploration license to drill any exploration wells, thereby, relinquishing 100% of its rights in and to the Deepwater Cape Three Point block (DWCTP block).
In the letter, ExxonMobil said it had resigned as operator of the block, having fulfilled its contractual obligations during the initial exploration period under the petroleum agreement of 28th November 2018. The work done included processing about 2222 sq.km of 3D seismic data. It, however, failed to drill the optional exploration well under the initial work programme.
GNPC and Goil are, therefore, free to search for a new operator to partner them on the DWCTP block. Insiders believe the prospects are promising. Insiders tell Asaase News that the work done so far on the block by ExxonMobil points to a current unrisked deterministic recoverable volumes estimated to be 494 million barrels for the low case and 1806 million barrels for the high case, using optimistic reservoir parameters. This puts the risked recoverable volumes for the medium case at 87 million barrels and at best around 319 million barrels.
ExxonMobil controlled 80% of the block, with the Ghana National Petroleum Corporation holding 15% and Goil Offshore Ghana Ltd having the remaining 5%.
European and American oil & gas companies are actively transitioning from fossil fuels to renewable energy, as oil reserves in Europe and America are fast depleting. West Africa, where new discoveries are happening, has, however, not been spared, as the oil majors appear to be losing appetite in investing heavily for the continent’s reserves.
The global situation is not promising and may require some policy changes to make West African wells competitive for the scarce resources available for fossil fuels.
Shell is not doing any exploration for oil in new countries after 2025. BP, which had earlier applied for the Keta Basin in Ghana, has said subsequently it is not entering any new countries for oil exploration.
Total is also operating now within a tight framework of strict capital discipline, high grading its portfolio and not taking any wide exploration risks. ENI, which has also acquired a new block in Ghana and preparing for exploration drilling, is also disposing non-core upstream assets and shying away from any more mega projects for oil and gas elsewhere.
Meanwhile, Exxon has pledged to increase spending on low-carbon projects and lower the intensity of greenhouse gas emissions. Last April, Exxon floated $100 billion, with the view of attracting both private and public funds, in a new business which would initially focus on carbon capture and storage (CCS).
CCS is one of the critical technologies required to achieve net-zero emissions and the climate goals outlined in the Paris Agreement. Exxon plans to invest $3 billion on lower-emission energy solutions through 2025.
CCS is the process of capturing CO2 that would otherwise be released into the atmosphere from industrial activity, and injecting it into deep geologic formations for safe, secure, and permanent storage.
The United Nations Intergovernmental Panel on Climate Change and the International Energy Agency agree that CCS is one of the most important low-carbon technologies required to achieve societal climate goals at the lowest cost.
CCS is also one of the only technologies that could enable some industry sectors to decarbonize, including the refining, chemicals, cement, and steel sectors.