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FOSSIL FUELS
1
UGRC 140 : SCIENCE AND TECHNOLOGY IN OUR LIVES
SECOND SEMESTER : 2011/2012 ACADEMIC YEAREARTH RESOURCES
WHAT ARE FOSSIL FUELS?
These are energy sources formed from the remains of once living organisms OR they are fuels formed by natural resources such as anaerobic decomposition of dead organisms.
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WHAT ARE FOSSIL FUELS?
They are non- renewable resourcesThey include the following:
Oil Natural Gas Coals Fuels derived from oil shale and tar
sand3
Formation of Fossil Fuels – common conditions
High Organic Production Burial of organic material Reducing conditions – little or no free
oxygen Reducing conditions preserve organic
matter Coal and Petroleum diverge from here
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Formation of Petroleum and Natural Gas
Accumulation of organic material – typically marine mud
Burial and preservation of organic material – reducing conditions
Reducing conditions in deep sea or on continental shelves during times of unusual oceanic circulation
Formation of Petroleum and Natural Gas
Black, organic-rich mud is buried deeper and converted to rock – shale
With burial, the organic matter is heated
6
Formation of Petroleum and Natural Gas
When heat is sufficient (but not too great about100degrees C )
The organic matter is “cooked” and oil is formed
Process is called thermal maturation
7
Formation of Petroleum and Natural Gas
If heat is greater than 300 degrees C, the liquid petroleum is further broken down to form natural gas
8
Formation of Petroleum and Natural Gas
If heat is too great, even the natural gas is broken down to form carbon dioxide, which has no value as a fuel
9
Migration and Concentration
Petroleum must leave source rockProcess is called migrationMigration is essential because
most source rocks are too fine-grained to enable easy extraction of the oil
10
Migration and Concentration
To be economically concentrated, petroleum must migrate to a reservoir rock with a trap
11
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Petroleum Resources-Conditions
Conditions for source rock are rare Conditions for maturation must be
just right Migration must not let petroleum
escape to surface Reservoir rock must be present Trap must exist before migration
occurs
Distribution of Petroleum
Economic accumulations of petroleum only occur when all of these conditions are met
These conditions and the sequence of occurrence do not occur everywhere
Conditions are most likely where there are thick accumulations of sedimentary rock – in sedimentary basins 13
Some of the world’s most productive sedimentary basins
Saudi ArabiaKuwaitAlaska – north slopeTexas – Louisiana Gulf Coast Iraq and IranMexicoVenezuela
14
Ghana has four (4) sedimentary basins; Three (3) offshore and One (1) onshore
What about Ghana?
The offshore (below the sea bed) basins are; The Tano Basin Saltpond Basin Accra- Keta
Basin
The onshore (land based) basin is the
Voltaian Basin
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The Origin of Oil and Gas:- Planktoncache.eb.com/eb/image?id=93510
en.wikipedia.org/wiki/Image:Copepod.en.wikipedia.org/wiki/Image:Ceratium_hirundinella.jpg
Most oil and gas start life as microscopic plants and animals that live in the ocean
Plant plankton Animal plankton
10,
000
of t
hese
bug
sw
ould
fit
on a
pin
head
!
19
The Origin of Oil and Gas:- Algal Blooms
serc.carleton.edu/images/microbelife/topics/red_tide_genera.v3.jpg
Today, most plankton can be found where deep ocean currents rise to the surface
This upwelling water is rich in nutrients and causes the plankton to bloom
Blooms of certain plankton called dinoflagellates may give the water a red tinge
© Miriam Godfrey
Dinoflagellate bloom
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The Origin of Oil and GasOn the sea bed
upload.wikimedia.org/wikipedia/en/0/04/Plankton.jpg
When the plankton dies it rains down on sea bed to form an organic mush
Sea bed
en.wikipedia.org/wiki/Image:Nerr0328.jpg
If there are any animals on thesea bed these will feed on theorganic particles
21
The Origin of Oil and GasBlack Shale
© Earth Science World Image Bank
upload.wikimedia.org/wikipedia/en/0/04/Plankton.jpg
However, if there is little or no oxygen in the water then animals can’t survive and the organic mush accumulates
Where sediment contains more than 5% organic matter, it eventually forms a rock known as a Black Shale
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Sedimentary rocks are formed by the
deposition and cementation of fragments
derived from the breaking apart of ancient
rocks.
Frost, rain, wind and the heat of the sun detach rock fragments, or debris, from the mountain flanks . These fragments are carried toward the valleys by streams and rivers.
On their way, the rock fragments knock together, and break. They are carried along and laid down as sands and pebbles.
In time, the weight of new debris squeezes and hardens the older debris which become sedimentary rocks.
Oil is found in the sedimentary rockswhat are they?
23
Oil is generated from the organic matter derived from the decomposition of plants and animals deposited in the sedimentary rocks. During millions of years the organic matter is transformed into oil by the action of bacteria, temperature and pressure.
How has the Oil Been Generated?
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Origin of Oil and GasCooking the Source Rock
As Black Shale is buried, it is heated.
www.oilandgasgeology.com/oil_gas_window.jpg
Kerogen
Gas
Oil
Organic matter is first changed by the increase in temperature into kerogen,which is a solid form of hydrocarbon
Around 90°C, it is changed into a liquid state, which we call oil
Around 150°C, it is changed into a gas
A rock that has produced oil and gas in this way is known as a Source Rock
“Black” shale formation, a potential source rock found at Takoradi
Source Rock – Takoradi Shale, Takoradi25
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Hydrocarbon Expulsion and Migration
www.diveco.co.nz/img/gallery/2006/diver_bubbles.jpg Hot oil and gas is less dense than the source rock in which it occurs
Oil and gas migrate upwards through the rock in much the same way that the air bubbles of an underwater diver rise to the surface
The rising oil and gas eventually gets trapped in pockets in the rock called reservoirs
Rising oil
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KalimantanIndonesia
Pitch Lake, Trinidad
Iran, 1924
Hydrocarbon Expulsion and Migration - Oil Seeps
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Seal
Reservoir
Carrier
Source Rock
P
T
Generation
Migration
Entrapment
Expulsion
The Petroleum System
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The Petroleum SystemReservoir Rocks
The permeable strata in an oil trap is known as the Reservoir Rock
Reservoir rocks have lots of interconnected holes called pores. These absorb the oil and gas like a sponge
This is a highly magnified picture of a sandy reservoir rock (water-filled pores are shown in blue)
Earth Science World Image Bank Image #h5innl
As oil migrates it fills up the pores(oil-filled pores shown in black)
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The Physical Characteristics of Oil Bearing Rocks
NUMMULITES(MIDDLE EOCENE)50 Mil. years
INVOLUTINA(LIAS)
190 Mil. years
The POROSITY is the volume of the empty spaces inside a rock
( it is the ratio between the empty spaces and the total volume of the rock.
The porosity higher values can be about 30 - 32% but it is possible to produce oil from
rocks with a porosityof 3- 4% )
The PERMEABILITY is the phisical property that allows the passage of some fluids through
a rock(it is measured in millidarcy. Only
permeable rocks can produce oil)SOME EXAMPLES OF POROUS ROCKS THAT CAN BE OIL BEARING
( seen on thin sections)
31
Compattazione
>Compattazione
Classazione
< Classazione Cementazione
Hydrocarbon Reservoir Rocks
As the source rock undergoes further heating due to increased temperature and pressure the resulting oil and gas migrate upwards and eventually get trapped in pockets in the rock called reservoirs
Reservoir Rock – Takoradi Shale, Takoradi32
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The Petroleum SystemHydrocarbon Traps
Dome Trap
Some rocks are permeable and allow oil and gas to freely pass through them
Other rocks are impermeable and block the upward passage of oil and gas
Where oil and gas rise up into a dome (or anticline) capped by impermeable rocks it can’t escape. This is one type of an Oil Trap.
Impermeable
Permeable
34
The sediment thickness increases because the sea bottom sinks. Some rocks
contain a large amount of organic matter. They are named “SOURCE ROCKS”.
The source rocks produce oil & gas.
Movements inside the earth crust can fold and break the sedimentary rocks and
accumulation zones can be generated. These zones are named TRAPS. The oil & gas
produced by the source rocks is able to move through the rocks and becomes
trapped. The movement is called “MIGRATION”.
A trap needs the presence of an impermeable
rock
(a “SEAL ROCK”) with a convex shape and a
porous / permeable rock (a “RESERVOIR
ROCK”).
When a trap is big enough to contain a
substantial oil accumulation it is called a “
FIELD “
SEAL ROCK
RESERVOIR ROCK
GAS
OIL
TRAPS
Oil and Gas is Contained in the Sedimentary Rocks in “Traps”
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Anticlinal folds exposed in sea cliffs south of Cardigan, West Wales
Types of Oil and Gas Accumulations
STRUCTURAL TRAPS
are often found along the
edges of salt domes, in the
crests of ‘anticlirial’ folds or
along fault lines.
Distances from the surface
are greatly reduced for
clarity in this cross-section of
underground strata.
STRATIGRAPHIC TRAPS may occur where the
reservoir rock thins laterally or is ‘pinched-out’ into
surrounding seal rocks
Accumulation
Types of petroleum traps (A)A simple fold trap (B) Petroleum accumulated in fossilized ancient core reef (C) A fault trap (D) Petroleum trapped against an impermeable salt dome.
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Source rock
Source rock
Where oil & gas can be found
Oil and gas can be found in traps created by
faults and folds
Earth Science World Image Bank Image #h5inpj
Earth Science World Image Bank Image #h5inor
Geophysicists find these reservoirs by bouncing sound waves off them, and timing how long it takes for the sound to come back
Drill here!
Computers process the data to construct pictures of what the earth
looks like underground.
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Kashagan, Caspian, September 2007
The Search for Oil and Gas - Seismic Surveys (Offshore)
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Caspian Sea, September 2007
The Search for Oil and Gas - Seismic Acquisition (Offshore)Seismic Air Guns
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Seismic Survey Crew, Po Plain, Italy, 1950’s
The Search for Oil and Gas - Seismic Acquisition (Onshore)
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The Search for Oil and Gas - Seismic Acquisition (Onshore)Vibroseis Trucks
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Nigeria, 2005
The Search for Oil and Gas - Seismic Acquisition (Onshore)Seismic Recording Cables
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The Search for Oil and Gas - Seismic Acquisition (Onshore)Shooting and recording the seismic data
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Navigation Centre, Seismic Acquisition Vessel, Caspian Sea, 2007Navigation Centre, Seismic Acquisition Vessel, Caspian Sea, 2007
The Search for Oil and Gas - Seismic AcquisitionRecording Seismic Data
• Once an oil or gas prospect has been identified, a hole is drilled to assess the potential using a DRILLING RIG
en.wikipedia.org/wiki/Image:Oil_platform.jpg 46
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Drilling Rigs
ON-SHORE RIGON-SHORE RIG
OFF-SHORE RIG
DIFFERENT OFF-SHORE RIGS
100 m
1000 m
2500 m
500 m
Drilling shipFixed platform
Semisub rigJack-Up
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Oil FieldsOil is Trapped in Sedimentary Rocks
Here’s a sequence showing how holes are drilled,
First, a large drill bit is used to drill a short interval of hole.
Then, steel casing is run and cemented on the outside to keep the hole from collapsing.
0m
100m
A Drilling Rig is an equipment used in drilling holes into the earth.
TAS Oct. 1998 49
Next,a smaller bit is run inside the first casing.
This bit drills out the bottom of the casing, and drills new hole.
100m
0m
180m
Then, this new hole is also cased off and cemented.
TAS Oct. 199850
Again, a smaller hole is drilled out,
and smaller casing is run to keep the hole from falling in.
TAS Oct. 199851
In this way, the hole is drilled in stages, until the target reservoir rock is penetrated.
TAS Oct. 199852
They do this by running logs across the zone. Logs are tools run on electric cable which record the physical properties in the rock such as resistivity, porosity, density, radioactivity, and pore pressure.
How do Geologists tell if the reservoir has oil or gas?
TAS Oct. 199853
Sand
Shale
Siltstone
Shale
Siltstone
Dolomite
Shale
Here’s an example of what a log looks like. Geologists look at logs to decide whether or not to complete a well (if there is oil), or abandon it (if there’s no oil).
GammaRadiation
200 m
500 m
3000 m
ElectricalResistivity
Porosity
Lookslike goodsandquality
good resistivity,may have oil or gas
poor resistivity,probably water
good porosity
poor porosity
good porosity
poor resistivity,probably water
poor porosity
good porosity
TAS Oct. 199854
If the well looks good on the logs, we run a final string of casing across the production zone, and cement it in place.
TAS Oct. 199855
Then, we run perforating guns in the hole and perforate (shoot holes ) in the casing across the productive zone.
TAS Oct. 199856
Production tubing is run, with a packer to isolate the produced zone from the casing above.
tubing
Packer
TAS Oct. 199857
Finally, the well is produced into a pipeline, which takes it to production facilities on surface.
TAS Oct. 199858
© California Department of Conservation
• To enhance recovery, in some situations, a hole is drilled adjacent to the well and steam is pumped down. The hot water helps to push the oil out of the rock and up into the well.
59
Off-shore production facilities may include various pipelines on the sea floor channeled to a Floating Production Storage and Offloading (FSPO) Vessel for further processing.
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Oil and Gas ProductionAt the Refinery
DistillationPlant
en.wikipedia.org/wiki/Image:Crude_Oil_Distillation.png
Jet fuel
Car fuel
Road tar
Before it can be used crude oil must be refined.
Hydrocarbons can be separated using distillation, which produces different fractions (or types) of oil and gas
Oil refinery
en.wikipedia.org/wiki/Image:Anacortes_Refinery_31911.JPG
The production facilities on land (eg Tema Oil Refinery, TOR) separates out the gas, oil, and water into their separate phases.
Production Separator
Oil
Produced Water
Produced Gas
TAS Oct. 199862
Production Separator
Oil
Produced Water
Produced Gas
From there, the oil and gas may be refined further before being ready to market.
Oil Refinery
Storage Tanks
Finally, the gas and oil can be sold to power cars and heat houses.
TAS Oct. 199863
64
Exploration and ProductionToday’s Major Oil and Gas Producing Areas
Global oil and gas occurrences are now well understood (Main producing areas shown in green). Only the
Antarctica and the Arctic remain unexplored.
USGS
65
How Much Oil is there in the World ?Where is it ?
With the current yearly consumption, world gas reserves will last about 63 years
In 2000 the world total gas reserves were 146,000 Giga cubic meters, so distributed:
With the current yearly consumption, world oil reserves will last about 41 years
In 2000 the world total oil reserves were 143 Giga Tons, so distributed:
THE PRODUCTION (2007) IS ABOUT 86 MILLION BARRELS EVERY DAY.
THIS IS EQUIVALENT TO A CUBE HAVING A FACE EQUAL TO SIX FOOTBALL FIELDS.
1 barrel = 159 litres of oil
66
With Oil We Produce Energy !
Oil to produce electricity
Airplane fuel
Cooking gas
Gas or oil healting
Car fuel
Truck fuel
Ship fuel
Roadasphalt
67
Oil in your Everyday Life
68
Oil in your Everyday LifeOther uses
The remaining 16% of crude oil is used for a range of purposes shown above as well as synthetic fibres, dyes and detergents
en.wikipedia.org/wiki/Image:CD-R.jpg
CDs and DVDs
Plastic en
.wik
iped
ia.o
rg/w
iki/Im
ag
e:L
ilit.
jpg
Fertilizers and Pesticides
Food additives
en.wikipedia.org/wiki/Image:Konservering.jpg
69
Oil and GasFuel source
84% of crude oil is refined into fuel, principally for cars and planes
Demand is ever increasing, especially due to growth of Chinese economy
http://en.wikipedia.org/wiki/Image:Shellgasstationlosthills.jpg
blogs.sun.com/richb/resource/NBC_at_the_Pump.jpg
Oil spills Natural oil seeps are
not unknown It is estimated that oil
rising up through permeable rocks escapes into the ocean at the rate of 600000 tons per year.
Tankers that flush out their holds at sea continually add to the oil pollution of the oceans.
Oil spillage
Oil spills
The oil spills occurs in two principal ways:From accidents during drilling offshore oil wellsFrom wrecks of oil tankers at sea
Oil spills represent the largest negative impacts from the extraction and transportation of petroleum.
However, as a source of water pollution, they are less significant volumetrically than petroleum pollution from careless disposal of used oil.
Oil and Gas Drilling accidents
may also unexpectedly hit a high pressure pocket that causes a blowout . An example occurred in the Gulf of Mexico in 1979 and in 2010 that released millions of gallons of oil.
An animal in an ocean where oil spillage has occurred.
Gulf of Mexico spillage You may have heard the news about the
Deepwater Horizon drilling rig which caught fire, burned for two days, then sank in 5,000 ft of water in the Gulf of Mexico
The rig belongs to Transocean, the world’s biggest offshore drilling contractor.
The rig costs about $500,000 per day to contract.
The rig cost about $350,000,000 to build in 2001 and would cost at least double that to replace today.
The rig represents the cutting edge of drilling technology.
It is a floating rig, capable of working in up to 10,000 ft water depth.
It is thought that somehow formation fluids – oil /gas – got into the wellbore and were undetected until it was too late to take action.
Deepwater Horizon on location in better days
Taken shortly after the rig caught fire – the mast is still there
The drilling mast has toppled over here – they usually melt pretty fast when fire breaks out
Support vessels using their fire fighting gear to cool the rig
About noon Day 1
Day 2, morning
COAL Coal is not formed
from marine organisms, but from the remains of land plants.
The process requires anaerobic conditions, in which oxygen is absent or nearly so, since reaction with oxygen destroys the organic matter.
Fig 6: Picture of Coal
COAL
The first combustible product formed under suitable conditions is peat.
Further burial, with more heat, pressure and time gradually dehydrates the organic matter and transform spongy peat into soft brown coal and then harder coals.
Formation of Coal
Accumulation of land plant material Reducing conditions – coastal and
inland swamps
Formation of Coal
Organic accumulation is greater than destruction (because of reducing conditions)
Organic matter builds up to form peat
Formation of Coal Peat is compressed to
form lignite – brown coal Lignite is compressed
and volatile compounds are lost to form bituminous coal – soft coal
Bituminous coal is further compressed and heated to form anthracite – hard coal
COAL (continued)
Fig 7: Change in character of coal with increasing application of heat and pressure.
COAL (continued)
As the coals become harder , their carbon content increases, and so does the amount of heat released by burning a given weight of coal.
The hardest, high carbon coals are the most desirable as fuels because of their potential energy yield.
However, the heat to which coals can be subjected is limited when compared with oil.
Overly high temperatures lead to metamorphism of coal into graphite.
Environmental impacts of coals use
A major problem posed by coal is the pollution associated with its mining and use.
Like all fossil fuels it produces carbon dioxide (CO2)when burned
It produces significantly more carbon dioxide per unit energy released than oil or natural gas.
Sulfur in coalSulfur content of coal can be more than 3 percent,
some in the form of iron sulfide mineral pyrite (FeS2), some bound in the organic matter of the coal itself
Environmental impacts of coals use
When sulfur is burned along with coal, sulfur gases are produced and these gases are poisonous and are extremely irritating to eyes and lungs.
These gases also react with water in the atmosphere to produce sulfuric acid and then falls to earth as acid rainfall.
Acid rain falling into streams and lakes can kill fish and other aquatic life.
It can acidify soil , stunting plant growth. It can also dissolve rocks
Environmental impacts of coals use Ash
Coal use produces a great deal of waste.The ash residue left after coal is burned ranges
from 5 to 20 percent of the original volume.It consists mostly of noncombustible silicate
minerals and also contains toxic metals.
Environmental impacts of coals use
If released with waste gases, the ash fouls the air. It must be disposed when confined within the
combustion chamber. If exposed at the surface, fine ash, with its
proportionately high surface area, may weather very rapidly, and the toxic metals can be leached from it, thus posing a water-pollution threat.
Uncontrolled erosion of the ash can also cause sediment pollution.
The magnitude of this waste disposal problem should not be underestimated.
Coal mining hazards and environmental impacts
Coal mining poses further problems. It is notoriously dangerous, as well as
expensive. Mines can collapse; miners may contract black
lung disease from breathing the dust. There is also the danger of explosion from
pockets of natural gas that occur in coal seams.
Coal mining hazards and environmental impacts
OIL SHALE
The potential fuel in oil shale is a waxy solid called Kerogen, which is formed from the remains of plants, algae, and bacteria.
The rock must be crushed and heated to distill out the shale oil which is then refined somewhat as crude oil is to produce various liquid petroleum products.
OIL SHALE
TAR SAND
Tar sands are sedimentary rocks containing a very thick, semi-solid, tarlike petroleum.
Tar sand deposits may represent immature petroleum deposits, in which the breakdown of large molecules has not progressed to the production of lighter and gaseous hydrocarbons.
The lighter compounds may have migrated away, leaving this dense material behind.
TAR SAND
The tar is too thick to flow out of the rock and must be mined, crushed, and heated to extract the petroleum, which can be refined into various fuels.
PETROLEUM EXPLORATION ACTIVITIES IN
GHANA
Ghana has four sedimentary basins; three offshore and one
onshore.
The offshore (below the sea bed) basins are the Tano Basin,
Saltpond Basin, Accra- Keta Basin and the onshore (land based) basin
is the Voltaian Basin
Sedimentary Basins of Ghana
AFREN CELTIQUE
YEP
CHALLENGER
SOPCL
ORANTOAFREN CELTIQUE
VITOL
HESS
KO
SM
OS
AFREN
Offshore exploration activities
Accra /Keta basin
Saltpond
Cape Three Points
Tano
Vanco 3D
Kosmos 3D
1982-2004
Vanco 3D
1982-2005
TAPOIL
MIDWAY
ORANTO
STERLING
BRITISH BORNEO
EXPRESSION OF INTERESTACREAGES WITH APPLICATIONS
OVERTMONCRIEF
YEP
04/10/2023 VoltaianProjectUnit 107
COMPARATIVE SIZE OF VOLTA BASIN WITH REST OF GHANA’S SEDIMENTARY COVER
AREA SIZE (km²) AREA LICENSED
(%)UNDERLIC.
AREA UNLICENSED
Voltaian Basin (Inland) 103,600 0 0 103,600
Coastal Onshore 3,500 0 0 3,500
Shelf Region (0 – 200m)
23,000 4,869 21.2 18,131
Deepwater (200 – 3000m)
26,900 22,127 82.3 4,773
Area Total 157,000 26,996 17.2 130,004
04/10/2023 108
Potential of the Voltaian Basin
• The Voltaian Sedimentary Basin has a very bright outlook for its hydrocarbon exploration. There really exists a thick sedimentary cover of at least 6km in its deepest sections.
• There must certainly be oil + gas in the Voltaian Basin waiting to be tapped. On account of the thickness of its sedimentary cover and the bituminous and other hydrocarbon indications encountered in the Soviet wells of the 1960s, this Basin is deemed to possibly harbour favourable conditions for generation and accumulation of commercial quantities of hydrocarbon.
• There are possible structural and stratigraphic leads that could provide favourable architecture for generation and accumulation of commercial quantities of hydrocarbon.
• The occurrence of sandstones and limestones in the succession, may serve as suitable reservoir rocks.
• Known oil and gas discoveries and production already exist in analogous basins in North Africa and elsewhere in the world.
VoltaianProjectUnit
UPSTREAM PETROLEUM
INDUSTRY IN GHANA
Definitions
The Upstream Petroleum Industry involves Exploration, Development and Production.
On the other hand, the Downstream refers to the refining/processing and distribution of petroleum products.
Framework for managing upstream petroleum industry in Ghana
The framework is established and given legal backing by two main statutes:
• PNDC Law 64 • Petroleum Exploration and Production Law
(PNDC Law 84)• These laws are supplemented by the
Petroleum Income Tax Law (PNDC Law 188)
PNDC Law 64
PNDC Law 64 established the Ghana National Petroleum Corporation and made it responsible for managing the petroleum resources in Ghana.
The Law, in the main, spells out the organizational structure, the objects and modus operandi of GNPC.
The supervising Ministry of the activities of GNPC is the Ministry of Energy
PNDC Law 84 The Petroleum Exploration and Production Law
(PNDC Law 84) provides the framework for the management of oil and gas exploration, development and production.
The Law establishes the contractual relationship between the State, GNPC and the prospective investor in the upstream operations.
It defines the basic terms and conditions of any Petroleum Agreement, spelling out the rights and obligations of each party with appropriate sanctions.
Model Petroleum Agreement The area that has been applied for and awarded; Exploration Period and the related Work Programme,
Cost of the Work Programme, and Sanctions in case of default;
Benefits: Clearly defined benefits to be derived by the State which in the case of Ghana is through the Royalty Tax System: Rate of Royalty Carried Interest Additional Interest Additional Oil Entitlement (AOE) Income Tax Annual Surface Rentals
Monitoring Of Operations
A Joint Management Committee (JMC) which is established by the Petroleum Agreement, comprising equal number of representatives from GNPC and Investor and chaired by GNPC.
GNPC is empowered to review the work programme of Investor and audit: the cost of operations, procurement processes of Investor, employment contracts made by Investor and has the
power to approve, reject or ask for modification
The Law empowers GNPC to attach its officers to operations during all phases of operations
Benefits to the state from exploitation of its petroleum resources
The benefits accruing to the State from any petroleum exploration and production venture is predetermined in the Petroleum Agreement and approved by Cabinet and ratified by parliament before the commencement of the exploration activity.
Because of the risky nature of the exploration and production business and the State’s desire to avoid high exposure in petroleum exploration and production activity, it has adopted the Royalty Tax System instead of the Joint Venture System.
The main advantage of the Royalty Tax System, is that the resource owner, that is, the State, can get its resources exploited and receive benefits without making any financial contribution
Under the system, the State derives its benefits from levies on production. The levies are:Royalty;Carried Interest;Paying Interest;Additional Oil Entitlement;Petroleum Income Tax; andAnnual Surface Rental
Hypothetical benefits to the nation in the current discovery
The benefits from any discovery is spelt out in the Petroleum Agreement before its execution.
Let us assume a production of 100,000 barrels per day, which is the minimum expected from the Mahogany/Hyedua Field in full field development
From the above computation, oil accruing to the State is calculated as 38,209 barrels per day out of 100,000 barrels per day production
US $60 a barrel Χ 38,209 = US $2,292,540.00 per day
365 Χ $2,292,540.00 = US $836,777,100.00 per annum.
Concluding remarks
All these fossil fuels are running out and burning them increases carbon dioxide in the
atmosphere which increases the greenhouse effect, causing global warming.
Some fossil fuels contain sulphur and when they burn this becomes sulphur dioxide, a poisonous gas which reacts with water in the atmosphere to form sulphuric acid or acid rain.
To solve the problems of fossil fuels, we need to develop renewable forms of energy such as: Hydropower Wind Energy Biomass 123
