Dai Jones, President and General Manager Tullow Ghana, and Stuart Wheaton, Ghana Development Manager, explain the significance of First Oil.

22 November 2010

Dai Jones

Dai Jones

Stuart Wheaton

Stuart Wheaton

Q1. Tullow has been very confident about First Oil by the end of the year – are we still on track for December?

Dai: Indeed we are - we're still on track. We're very happy that we're racing towards First Oil but that's not to say we aren't in the most challenging part of the process. We've done all the major construction, all the major building, have the majority of equipment in place and now it's just a case of connecting everything together which makes it sound very easy - but Stuart knows it really isn't.

Stuart: It certainly isn't easy and technologically it's the most challenging piece of what we want to do. You've got to remember we're in 1,300 -1,700 meters of water using robots and electronic signals to check everything works, moves and talks, to ultimately deliver oil to the FPSO (Floating Production Storage and Offtake vessel).

Q2. What are the next steps from now until First Oil on the 15 December?

Dai: The primary thing we are doing is something called 'commissioning' and also 'hook-up' – those are the two key words. We have a whole team here whose job is to literally 'hook-up', which means connecting everything on the sea-bed to the FPSO.

Stuart: We are also working hard on the FPSO topsides commissioning which has progressed well – the oil separation trains have been operating already on circulating hot diesel whilst the full water injection system is running. We expect the vessel to be declared ready for start-up in early November and subsea installation completion a little later.

Q3. Are we using a second rig at the Jubilee field to support the field development?

Dai: Yes, the Sedco 702 rig will come in to help us with the well completion – we've got 16 wells to complete and we've done five. It will help speed up the schedule of bringing the wells on-stream faster, working simultaneously with the Erik Raude.

Stuart: It is coming into the field for approximately three months.

Q1. Can you briefly explain what happens after First Oil? When is the first tanker lift, what happens to the oil, where does it go?

Dai: First we have to have a minimum amount of oil in the FPSO for it to be stable and balanced - this oil isn't taken out. Once we've achieved the amount to balance the FSPO, the oil on top of that is tankered out. Obviously though, we want sufficient amounts of oil to fill the size of the vessels coming in to tanker the oil out. We'd rather have one big ship, rather than lots of little ships to tanker away for many reasons, but primarily for safety. We want as few off-loads as possible.

Stuart: The first tanker lift is expected about one month after start-up – so we're working towards January or February. The physical lifting is done by an oil tanker which comes to the side of the FPSO and there's a special set of equipment that the tanker connects to and we discharge the oil from the FPSO to the tanker. Some of the oil will be landed by GNPC (Ghana National Petroleum Corporation) at the Tema refinery in Ghana but the vast majority of this good quality crude is expected to head to Europe or the USA.

Q2. How much oil do the tankers take away?

Dai: 600,000 barrels in each tanker - we're using the biggest tankers. It's all about efficiency at the other end. As we are selling our oil, the key to marketing it is to sell significant volumes at a time as there are costs associated with refining. We have to try and reduce the costs and reduce all the margins so we are getting the best value we can for the quality of the cargo we're delivering.

Q1. In this process it's vital we build good relationships with our stakeholders. Dai, how do you interact with the Ghana government and other external stakeholders?

Dai: It is a major part of my job and one of the main reasons for me being and living here in Accra. I have to interact on a very regular basis with all the different agencies within the government - the Ghana National Petroleum Company (GNPC), advisors to the government and any other key stakeholders that may or may not be involved in what we do - the list is endless.

There are key stakeholders within that list such as the Minister of Energy, the Minister of Environment, Science and Technology, the Minister of Finance and the President and Vice Presidents themselves.

Beyond our operations in Accra, there is the whole system in Takoradi, which is another town, in another district with regional and district commissioners, chiefs and communities - we have to connect with all of them.

Q2. From what you can tell, is there a sense of excitement in the Ghanaian community?

Stuart: Yes very much so. The expectations are very high, but we have to remind people that we are only on the first phase of development on one field - of course we hope there will be more developments in the future.

Dai: Oh yes there's huge excitement – I think some people think we're going to be the next Saudi Arabia the day after First Oil arrives! But it's very important we try to manage the expectations against reality. Often it's said in the media about Ghana's oil industry and where it's going but reality is we are not an oil industry, we are one oil field which is the first step to creating an oil industry. As Tullow says, this is a 30 year project with a 30 year vision about where we should go.

Q3. How are you dealing with environmental aspects of the Jubilee project?

Dai: The Jubilee project has been subject to a very extensive Environmental Impact Statement (ESIA) and a number of measures are being taken to address potentially negative impacts.

Stuart: In terms of atmospheric and liquid discharges, the FPSO Kwame Nkrumah has been designed using industry best practice and emissions and discharges have been engineered out, or minimised as far as technically possible. We have plans and protocols in place to measure any outputs to ensure they do not exceed limits set by the Ghana government.

We have developed a waste management plan of "Reduce, Re-use, Recycle/Recover, Dispose" - in that order. This system will be applied to all of Tullow Ghana's waste materials – in the field or in the office. We are also working with local waste management contractors to build storage, handling and disposal facilities where these do not currently exist.

Dai: We also recognise the potential impact an oil spill could have on the environment and shoreline communities. A very important part our ability to respond to a spill is our Oil Spill Contingency Plan (OSCP). This plan has extensive investment in state-of-the-art prevention and response measures which will minimise, as far as possible, the potential impacts.

The fishing communities are key stakeholders and we take our commitment to them very seriously. We have developed a number of initiatives in partnership with local and community leaders and agencies – all of which involve considerable investment and careful planning by the Social Enterprise committee.

Q4. We've stated that we expect 90% of our in-country team employee to be Ghanaian by 2013. Does this still seem likely?

Dai: It seems very likely as we are already at 86%. The very early decision by Tullow to run Tullow in Ghana is one of the key factors for us being in the place we are now. Two years ago we had approximately 20 people and now here in Accra we are close to 300 people, in Takoradi we are close to 150 people. There is a very good, talented pool of people in Ghana, in engineering, finance, accounting, construction and with very little training these people can effectively be employed here.

Stuart: Also as further projects take place, there will be further "waves" of growth and training.

Q1. 3.5 years from discovery to First Oil is a great achievement - Is Tullow setting an industry benchmark with the speed from discovery to development?

Dai: Last year, the big oil and gas companies were saying "you're never going to do it", then in late January this year they started saying, "you are going to do it" and now they are saying "Tell us how?" We've done an absolutely incredible job. No doubt next year I'll have to send various people to go to all the professional conventions to tell people how we did it, as everyone will want to know.

Stuart: The pace has definitely been top class using experienced people and a can-do attitude. The proof will soon be in the eating with start-up coming. It's now important to have a safe and speedy ramp-up to plateau production levels.

Dai: Tullow has never operated something like this before and we had no pre-mindset about the right or wrong way to do things. The motivation its generated, which I don't think can be replicated by others, is just about everybody wanting to be part of this project and be part of the great history. So overall yes, we think it's a new bench mark which is unique to Tullow and I don't think it can be replicated - unless it's by us!

Q1. What is the long-term outlook mean for Tullow and Ghana?

Stuart: We already see around 10 infill drilling locations at Jubilee to extend the duration of Phase 1 plateau production. Planning work for the first phase of infill drilling (Phase 1a) has already started, given the two-three years lead time often required for deepwater subsea developments. With some successful further appraisal drilling, we hope to have future projects with the Owo and Tweneboa area looking especially promising. With discoveries made by other operators offshore Ghana, there is every chance that Ghana can become a medium sized oil producer/exporter.

Dai: We plan to produce Jubilee for 25 years, but most of us who've been in the business for a while know that during that 25 years some other technology may come along that will change how we manage the field. I've worked in various projects in my time where the field was due to be abandoned, then new technology came in and the field was kept alive for another six or seven years and produced another 50 million barrels of oil. There is a definite path and historical records that show these things happen.

Like Stuart said, Owo and Tweneboa are also going to be new fields in Ghana with the same kind of life as Jubilee, so overall, the outlook for Tullow and Ghana is a positive long-term one.