Global oil super major, Exxon Mobil is expected to officially sign an exploration agreement with government this week to allow it undertake petroleum activities at the Deepwater Cape Three Points (DWCTP) Block off the western coast of the country.
Although, the entry of Exxon Mobil into the country has been described as a milestone achievement for government in creating an enabling business climate that is worthy of attracting global oil giant, industry watchers have raised concerns with mixed reactions and expectations.
They have opined that Exxon Mobil in spite of its sound financial capabilities in the global oil business operations, it has numerous negative environmental challenges regarding oil spillages and slow in cleaning up oil spills, therefore, the country’s industry authorities and agencies must strictly ensure that Exxon adheres to standards as it begins operations.
The Minister of Energy, Mr. Boakye Agyako, last year, officially invited Exxon Mobil Exploration and Production Ghana Limited for direct negotiations for a Petroleum Agreement to enable it undertake petroleum activities at the Deepwater Cape Three Points (DWCTP).
The negotiations were among the government of Ghana, the Ghana National Petroleum Corporation (GNPC) and the American multinational oil and gas company.
A public notice to that effect said the direct negotiations will be without public tender but will be carried out in accordance to section (10) subsection (9) of the Petroleum (Exploration and Production) Act 2016 (Act 919).
It explained that “the reasons for inviting Exxon Mobil for direct negotiation are based on value proposition for Ghana.”
It will also be in accordance with principles of good governance, transparency and accountability, it added.
The DWCTP block was relinquished twice by Vanco Energy and Lukoil and that has since increased its risks profile.
It lies in water depth ranging between 2,000 to 4,000 meters and is located approximately 150 kilometers (km) offshore Ghana, a release from the ministry said.
The release described the block as “one of the ultra-deep water blocks, which severely tests the limits of modern technology and would take research and development to optionally develop and exploit any discovered resources.”
It explained that on April 30, 2015, the Government of Ghana, represented by the then Minister for GNPC entered into a memorandum of understanding (MoU) with Exxon Mobil Exploration and Production Ghana (Venture) Limited for acquisition of a petroleum exploration and production rights and the parties agreed to negotiate in good faith a Petroleum Agreement, with exclusivity period of seven (7) months.
Exxon Mobil is touted as the world’s largest integrated international oil company with daily production of 3.921 million barrels of oil equivalent (BOE) and with revenue stream of US$218.6 billion as of 2016.
The statement said Exxon Mobil has the track record of delivering project on time and within budget, which is very good for the country.
The ministry’s reasons for the choice of direct negotiations over public tender include
Indication for future investment
Confirming the official entry of Exxon Mobil into the country’s oil and gas sector, the CEO of the Ghana Investments Promotion Centre (GIPC), Yofi Grant, said the move would mean an increase in Foreign Direct Investments (FDIs) for the country – a situation that could go a long way to make the Centre exceed its target.
He said the company’s participation in Ghana will open up more job opportunities for Ghanaians in the oil and gas sector, adding that “the interesting thing though is that there is a worry when foreign direct investors come in; they come and they don’t engage indigenous people.
“But I experienced and our research is telling us that a lot of the Foreign Direct Investors, who come into Ghana, actually would prefer to even employ Ghanaians than they want to employ expatriates. This is because it is expensive when they want to employ expatriates.”
Moreover, the Executive Director of KITE, Ishmael Egyekumhene described as good indication for future investments, the coming on board of Exxon Mobil and compelled the company to comply with the country’s local content policies will help retain enough revenue in the system.
“Anybody signing a petroleum agreement will have to have that at the back of their minds…We have targets as to how many Ghanaians should be employed, we have targets as to where they can source various products. These are all clearly spelt out in our local content policy. So unlike ten years ago, we are in a position where we seem to know what we like and what we expects for us so I expect them to go strictly by our local content policy,” he stated.
For this year (2018) alone, government is seeking to raise GHC3.2 billion in revenue from the oil sector. This is slightly higher than the GHC 3.1 billion estimated in 2017.
As at September 2017, Government has accrued GHC 1.45 billion from the oil sector. For this year, government has also projected crude oil price of US$57.36 per barrel. With production expected to come from the current oilfields which are the Jubilee, TEN and Sankofa Gye Nyame.
Why Exxon Mobil is oil super-major?
Exxon Mobil Corporation is an American multinational oil and gas corporation headquartered in Irving, Texas. It is the largest publicly traded international energy company, uses technology and innovation to help meet the world’s growing energy needs.
ExxonMobil holds an industry-leading inventory of resources, is one of the largest refiners and marketers of petroleum products, and its chemical company is one of the largest in the world.
It is the largest direct descendant of John D. Rockefeller‘s Standard Oil Company, and was formed on November 30, 1999 by the merger of Exxon (formerly Standard Oil Company of New Jersey) and Mobil (formerly the Standard Oil Company of New York).
The world’s 10th largest company by revenue, ExxonMobil is also the seventh largest publicly traded company by market capitalization. The company was ranked ninth globally in the Forbes Global 2000 list in 2016. ExxonMobil was the second most profitable company in the Fortune 500 in 2014.
ExxonMobil is the largest of the world’s Big Oil companies, or supermajors, with daily production of 3.921 million BOE (barrels of oil equivalent); but significantly smaller than a number of national companies.
In 2008, this was approximately 3 percent of world production, which is less than several of the largest state-owned petroleum companies. When ranked by oil and gas reserves, it is 14th in the world—with less than 1 percent of the total. ExxonMobil’s reserves were 20 billion BOE at the end of 2016 and the 2007 rates of production were expected to last more than 14 years.
With 37 oil refineries in 21 countries constituting a combined daily refining capacity of 6.3 million barrels (1,000,000 m3), ExxonMobil is the largest refiner in the world, a title that was also associated with Standard Oil since its incorporation in 1870.
ExxonMobil refinery in Baton Rouge
Oil discovery offshore Guyana
Exxon Mobil announced last week of positive results from its Ranger-1 exploration well, marking ExxonMobil’s sixth oil discovery offshore Guyana since 2015.
“This latest success operating in Guyana’s significant water depths illustrates our ultra deepwater and carbonate exploration capabilities”
The Ranger-1 well discovery adds to previous world-class discoveries at Liza, Payara, Snoek, Liza Deep and Turbot, which are estimated to total more than 3.2 billion recoverable oil-equivalent barrels.
ExxonMobil affiliate Esso Exploration and Production Guyana Ltd. began drilling the Ranger-1 well on Nov. 5, 2017 and encountered approximately 230 feet (70 meters) of high-quality, oil-bearing carbonate reservoir. The well was safely drilled to 21,161 feet (6,450 meters) depth in 8,973 feet (2,735 meters) of water.
“This latest success operating in Guyana’s significant water depths illustrates our ultra deepwater and carbonate exploration capabilities,” said Steve Greenlee, president of ExxonMobil Exploration Company. “This discovery proves a new play concept for the 6.6 million acre Stabroek Block, and adds further value to our growing Guyana portfolio.”
Crisis authorities must watch
Oil spills & environmental impact
ExxonMobil’s environmental record has been a target of critics from outside organizations such as the environmental lobby group Greenpeace as well as some public employee pension funds that disagree with its stance on global warming.
The Political Economy Research Institute ranks ExxonMobil sixth among corporations emitting airborne pollutants in the United States.
The ranking is based on the quantity (15.5 million pounds in 2005) and toxicity of the emissions. In 2005, ExxonMobil had committed less than 1 percent of their profits towards researching alternative energy, less than other leading oil companies
Exxon Valdez oil spill
The company has also been criticized for its slow response to cleanup efforts after the 1989 Exxon Valdez oil spill in Alaska, widely considered to be one of the world’s worst oil spills in terms of damage to the environment.
The March 24, 1989, Exxon Valdez oil spill resulted in the discharge of approximately 11 million US gallons (42,000 m3) of oil into Prince William Sound, oiling 1,300 miles (2,100 km) of the remote Alaskan coastline. The Valdez spill is 36th worst oil spill in history in terms of sheer volume.
Carcasses were found of over 35,000 birds and 1,000 sea otters. Because carcasses typically sink to the seafloor, it was estimated the death toll may be 250,000 seabirds, 2,800 sea otters, 300 harbor seals, 250 bald eagles, and up to 22 killer whales. Billions of salmon and herring eggs were also killed.
Exxon’s Brooklyn oil spill
New York Attorney General Andrew Cuomo announced on July 17, 2007 that he had filed suit against the Exxon Mobil Corp. and ExxonMobil Refining and Supply Co. to force cleanup of the oil spill at Greenpoint, Brooklyn, and to restore Newtown Creek.
A study of the spill released by the US Environmental Protection Agency in September 2007 reported that the spill consists of 17 to 30 million US gallons (64,000 to 114,000 m3) of petroleum products from the mid-19th century to the mid-20th century.
The largest portion of these operations were by ExxonMobil or its predecessors. By comparison, the Exxon Valdez oil spill was approximately 11 million US gallons (42,000 m3).
The study reported that in the early 20th century Standard Oil of New York operated a major refinery in the area where the spill is located. The refinery produced fuel oils, gasoline, kerosene and solvents.
Baton Rouge Refinery pipeline oil spill
In April 2012, a crude oil pipeline, from the Exxon Corp Baton Rouge Refinery, burst and spilled at least 1,900 barrels of oil (80,000 gallons) in the rivers of Point Coupee Parish, Louisiana, shutting down the Exxon Corp Baton Refinery for a few days. Regulators opened an investigation in response to the pipeline oil spill.
Yellowstone River oil spill
The July 2011 Yellowstone River oil spill was an oil spill from an ExxonMobil pipeline running from Silver Tip to Billings, Montana, which ruptured about 10 miles west of Billings on July 1, 2011, at about 11:30 pm.
The resulting spill leaked an estimated 1,500 barrels of oil into the Yellowstone River for about 30 minutes before it was shut down, resulting in about $135 million in damages.
Mayflower oil spill
On March 29, 2013, the Pegasus Pipeline, owned by ExxonMobil and carrying Canadian Wabasca heavy crude, ruptured in Mayflower, Arkansas, releasing about 3,190 barrels (507 m3) of oil and forcing the evacuation of 22 homes. The Environmental Protection Agency has classified the leak as a major spill.
In 2015, ExxonMobil settled charges that it violated the federal Clean Water Act and state environmental laws, for $5.07 million, including $4.19 million in civil penalties. It did not admit liability. Additional sources from wikipedia