Fix Ageing Equipment to Protect Oil Asset Value, Seplat CEO Tells Operators

The value of Nigeria’s independent oil and gas assets could suffer unless operators fix ageing equipment, extend asset life and keep critical facilities running, Seplat Energy CEO Effiong Okon has said.

Okon made the point at the 49th Nigeria Annual International Conference and Exhibition organised by the Society of Petroleum Engineers in Lagos. He said asset integrity is essential for companies seeking better returns on their investments and more resilient operations.

He said oil and gas producers must also deal with obsolete equipment and consciously work to extend the life of their assets.

Keeping oil and gas assets productive

Okon said critical equipment should maintain top-quartile performance of 95 per cent. This means equipment should be operating 95 per cent of the time.

“When you do all that, you drive down unscheduled deferment. In fact, you must follow your oil and gas molecules from reservoir to export. The approach is all encompassing – you must understand your reservoir capacity, well capacity, your flow line and surface facilities. These mean a total understanding of the asset,” he said.

His comments came during the second panel session of the conference, which had the theme, “Building Resilient Energy Systems in a Rapidly Evolving Energy Landscape”.

Okon said companies could also cut operating costs through better water treatment and by ending routine gas flaring.

He said producers should monetise every gas molecule instead of paying penalties on flared gas. He also listed fewer redundancies on evacuation routes, better logistics capacity and outsourcing as measures that could affect operating costs.

The Seplat chief executive also stressed the need for investment in human capital so workers can better understand the sub-surface, wells and facilities.

He said the right knowledge, supported by the needed capital, could help companies get more value from their assets.

Okon also called on the Society of Petroleum Engineers to produce more engineers to address the skills gap and improve efficiency in Nigeria’s oil and gas sector.

He said Seplat Energy had returned substantial value to shareholders through share appreciation and dividend payments over the year.

At the same time, he said the company had balanced those returns with capital allocation to build the business for the future.

Okon also pointed to Seplat Energy’s work in domestic gas development, saying the company had distinguished itself in the sector.

He said its shallow-water business has about 12 trillion cubic feet (TCF) of gas that would be unlocked, accelerated and monetised at a level higher than the company had achieved before.

“We are indeed trailblazers when it comes to domestic gas development. We are also doing a lot of Liquefied Petroleum Gas (LPG) in the domestic market to displace biomass and contribute in addressing carbon intensity issues,” he said.

The company’s gas activities therefore sit alongside its focus on asset performance, cost control and skills as part of its approach to getting value from its oil and gas operations.

Okon’s message to independent producers was that understanding an asset from its reservoir through to export is necessary for companies seeking to improve re turns and keep their operations resilient.