A sustainable structure in NigeriaMay 12, 2022
Akinyemi Okeremi, CEO of YYConnect, talks to The Energy Year about the company’s activities in Nigeria, its success in acquiring a marginal field licence in the 2020 bidding round and its strategy for developing the Edi field in OML 67. YYConnect is an engineering, project management and E&P company active in Nigeria’s oil and gas sector.
What inspired YYConnect to establish a presence in Nigeria?
Globally, we have done a lot of work with IOCs such as Shell and ExxonMobil; we’ve even led the commissioning of TotalEnergies’ and ExxonMobil’s rigs in Singapore and Norway, respectively. In 2003, we saw rising opportunities in Nigeria, and we got our first job here as consultants on the Bonga field. When the subsurface data for Bonga field was run in the US, our team couldn’t believe the results; the reserves were just outrageous. It seemed too good to be true! God has blessed Nigeria with natural resources untapped. Bonga was the first deepwater development in Nigeria and only few people had the right skillsets.
We noticed that IOCs were starting to divest in Nigeria, and we realised that there would be a gap to fill as local companies. We saw this as a niche; that’s why we decided to incorporate YYConnect Consulting Limited in Nigeria as an affiliate of our US company, YYConnect Consulting Incorporated.
What is your current footprint in the country?
Our biggest strength lies in our engineering and project management services; we can bring a field to production successfully. We are currently offering this service to Shell and Amni, as well as West Africa E&P and its sister company First E&P. We are highly specialised in asset integrity, control and automation, commissioning and startup. We do initial pipeline design, then give the design to a reputable company to do the pipeline alignment and installation.
We have also provided well intervention services for SNEPCo. We’ve managed to secure these contracts because we have a robust structure. Our engineers are well trained and equipped to deliver quality service. We focus on training because we want a successful and long-lasting legacy for YYConnect. We pride ourselves on our capabilities and ability to provide simple engineering solutions to complex problems.
How did YYConnect succeed in acquiring a marginal field licence in the 2020 bidding round?
We knew that we had the capabilities and the robust subsurface team to bid by ourselves, so we prepared and submitted the bid [for a field in OML 67] independently. We later learnt that our submission was one of the best, and we expected to receive the field exclusively for ourselves. Instead, we got a minority stake, and the company with the majority of stakes couldn’t raise funds. They overbid the field and could not meet their financial obligations.
Their stakes were then transferred to another company, but unfortunately one with the same financial constraints. Our long-term plan is to possibly acquire a majority stake in marginal fields and operate them. We are ready and we have the needed expertise.
Can you give us an overview of the Edi field in OML 67?
The Edi field is a shallow-water field previously owned by a joint venture between Nigerian National Petroleum Corporation (NNPC) and Mobil Producing Nigeria Unlimited. We wanted a shallow-water field because it enables us to drill for the relatively low sum of circa USD 25 million. Also, the host communities are very co-operative and not as hostile as in a few other areas. They welcome new developments in these areas. Furthermore, Mobil has built excellent facilities that we can tie into to optimise our production. Gas pipelines are present within 10 kilometres of the field.
However, our field presents a challenge in that it is effectively a greenfield project because only a single exploratory well has been drilled. This was done in May 1965 by the Shell-D’Arcy consortium, before the field was transferred to Mobil Producing Nigeria Unlimited. The discovery well, EDI-1, was initially drilled to a total depth of 8,502 feet [2,591 metres]. The well is hydrocarbon-bearing, with oil being discovered in four reservoir intervals. 3D-seismic data was acquired in 1994. Data we analysed suggests the well was re-entered in 2002 and further drilled to a total depth of 12,940 feet [3,944 metres], and they discovered additional sand column.
We are talking about STOIIP of about 100 million barrels (P50) and 30 million recoverable barrels. We plan to drill four wells by Q3 2024 and with those we could produce about 20,000 bopd. We are already in contact with investors, and it looks promising. We will need to reprocess some of the seismic data to update our data inventory.
How are you planning to connect your OML to possible offtakers?
We have identified three nearby facilities, and two of them are only 30 kilometres away. As it’s a shallow-water field, we will lay pipelines for around USD 2 million per kilometre (installed). There is an existing trunkline to Qua Ibom, which is fantastic in case we choose to process produced hydrocarbons.
As part of the concept selection, we shall also explore the option of a floating production, storage and offloading (FPSO) unit or a mobile offshore production unit (MOPU) and floating storage and offloading (FSO) unit. This option will require getting our own terminal licence. The critical aspect here is to reach a good agreement with the offtakers. In a well-structured organisation, the regulator should oversee these agreements on behalf of the marginal fields. NUPRC [Nigerian Upstream Petroleum Regulatory Commission] promised us that they would do so, but time will tell.
It is imperative to understand who your oil and gas offtakers will be and to visualise how you will dispose of produced water safely and in an environmentally friendly way. We are open to having a shared licence with other operators; however, we would need a minimum of 300,000 barrels of storage capacity to acquire a terminal licence. It would be easier to pay a premium and tap into an existing facility.
What is YYConnect’s growth strategy?
We are preparing ourselves for a financially stable future. Oil and gas is not a cheap venture, especially in the upstream segment. We plan to drill four wells soon, and they will come at a cost. We want to get it right the first time.
Our strategy is to put a robust structure in place that is sustainable and can be easily replicated. Once we get this right, we will acquire more and grow.
This year we will work behind the scenes, doing a lot of modelling, challenging ourselves to ensure we get it right the first time. We are looking for financial partners to take on interests or equity. We need like-minded people. Fortunately, we don’t lack technical partners. We have the required expertise from the subsurface to the offloading point. We could become the next Shell in 20 years because we have a suitable business structure that can be easily replicated anywhere.