Gas-flaring could extend beyond deadline

Jubilee Field operator Tullow Ghana says it may request an extension to its temporary gas-flaring authorisation if Ghana’s gas infrastructure is not completed by the end of October.

Tullow was given permission by government to flare 500million standard cubic feet of gas per month in mid-June this year, as a result of the delay in completing the country's gas processing plant. However, the authorisation expires at the end of October.

“We are doing limited flaring and we will seek an extension for it if gas export to shore is delayed,” Mr. Charles Darku, Chief Executive Officer, told investors and journalists when the company took its turn at the Facts Behind the Figures forum organised by the Ghana Stock Exchange (GSE) in Accra.

Tullow Oil plc, the parent company of Tullow Ghana, was listed on the GSE in 2011 in the first sign of the oil firm’s commitment to ensuring that locals benefit from the burgeoning industry.

The oil exploration company flared about 1.7billion standard cubic feet of gas from Jubilee between June and September, which helped maintain Jubilee’s daily production at about 100,000 barrels per day.

Flaring of gas from the country’s first offshore oil field was a tricky subject between government -- which preferred gas to be re-injected into the producing wells -- and the oil companies who feared continued re-injection would jeopardise production and their revenues.

Before the resort to flaring, Tullow had proposed the construction of a by-pass to supply gas directly from the Floating Production, Storage and Offloading (FPSO) vessel to electricity-producing thermal plants in Takoradi, but the initiative fell through at the last minute.

Mr. Darku said Tullow had brought in the parts for Ghana Gas Company to install, but there was an issue with the heater and procuring one would have taken a long time.

Environmental concerns about gas-flaring however remain, and there have even been calls for the oil companies to pay an environmental tax for the activity.

Mr. Darku said his company will "comply with what the regulator wants us to do with respect to flaring gas".

He also talked about Tullow’s preference for local contractors and service providers where there is demonstrated capacity, in keeping with the industry’s local content and participation rules.

"We have made local content part of our procurement processes. Once there is capacity, we will procure from here," he said.

Tullow has awarded about 200 contracts to local suppliers that altogether employ about 1,500 Ghanaians, he said. The company is also sponsoring the training of 55 Ghanaian engineers in Singapore.

Tullow also has substantial interest in the Tweneboa-Enyenra-Ntomme (TEN) licence, for which a plan of development was recently approved. The TEN project is expected to produce first oil in mid-2016.