1 Brulpadda Total Offshore Discovery: Find
The finding of significant quantities of gas condensate on the Brulpadda, Total’s offshore discovery prospects, is located on Block 11B/12B in the Outeniqua Basin, 175 kilometres off the southern coast of South Africa. The finding has ramifications for the energy sector, especially the gas economy in South Africa, and everyone, including our president, is talking about it. But what does the find mean, and how will it impact our industry?
Figure 1: Exploration Block 11B/12B indicating the Paddavissie fairway and the approximate location of the Brulpadda well. (Adapted from Oil & Gas Journal)
2 What Does the Discovery Mean for SA’s Energy Future
The Brulpadda find has the petrochemical industry in a buzz, but what does it mean for the industry and the greater South African energy landscape? We will not be paying less for fuel due to this finding, even though the communicated volume of gas and condensate is estimated to be 1 billion barrels of oil equivalent.
To put that into perspective, that is enough to run all of South Africa’s refineries (cumulative volume of 700,000 barrels per day) for just less than 4 years. A find is a form of gas condensate, which is more of a light crude oil than an LPG or natural gas mixture, and fortunately for our nation, Mossgas is the only refinery in SA ready and equipped to run on condensate. So it would naturally be assumed that the condensate will be extracted for use in the Mossgas refinery, which couldn’t come too soon since this refinery has been on the verge of closing down for the last year or two due to the dwindling gas resources feeding the facility.
The gas/condensate find is still far from being commercially exploited. The gas is present over a relatively large vertical distance (57 metres), but it’s unclear how extensive the gas-rich area is. We won’t know until more holes are drilled and three-dimensional seismic surveys are completed. The latest indications are that these three-dimensional seismic surveys will take the rest of the year to complete, with the next drilling in the area commencing in December 2019. These processes are merely to understand the layout, make-up, and volume of the gas deposits to plan the gas extraction correctly.
Given the complexity of the geology, the harsh deepwater environment of the find, and policy uncertainty in South Africa, the first gas from the well supplied for commercial purposes is estimated to come online only in 2027. So, this finding still has a long way to go before it proves itself and becomes a viable resource for exploitation.
3 Impact on the SA Gas Industry
Upstream production in South Africa has fallen by over half in the past decade, and recent exploration has proven unsuccessful. Despite the positive statements regarding the potential resource size of up to 1 billion barrels of oil equivalent in this discovery and the four nearby prospects, previous upstream projects in South Africa have been technically challenging to develop. The area’s geology is very complex and in a harsh deepwater environment. Due to these difficulties, projects such as Ikhwezi and Ibhubesi have undergone delays and reserve write-downs.
South Africa’s only local source of natural gas was developed in the 1980s, with the Mossgas facility built to beneficiate the gas. Additional natural gas is imported from Mozambique to supply the gas industry around Gauteng and Mpumalanga. The Brulpadda discovery could have a similar impact on Mosselbay and the Mossgas facility as the Zohr discovery did in Egypt. At the time of the Zohr discovery, Egypt was starting to plan for a future where domestic gas production would not be enough to keep up with local demand for gas.
Offshore gas production is supplied to the Mossel Bay GTL refinery, one of PetroSA’s primary revenue generators. Over the past few years, it has struggled to source the necessary gas to continue operations and has used more costly condensate imports. With existing gas sources declining rapidly, an additional supply of around 200-300 million cubic feet per day (mmcfd) by the early 2020s is required to continue operations at the refinery.
Compared to nearby gas discoveries that face significant delays, such as the Kudu development in Namibia or the giant fields in Mozambique and Tanzania, Brulpadda could tap into a pre-existing local market where the infrastructure and demand are already present. This resurgence in gas supply to Mossgas and its potential yield for PetroSA might reignite the slowly waning interest in the LNG import options and gas-fired power stations the government has been considering without real action over the past few years.
4 Impact on South African Ports
The first benefit to the South African ports directly from the Brulpadda find will be through support services. The new find has been welcomed by the Transnet National Ports Authority (TNPA) and Mossel Bay Port Manager Shadrack Tshikalange, who said that so far, the port’s role in the drilling expedition involved providing land and quay space for the logistics base operations, as well as marine services such as piloting, berthing, craft services, and vessel and traffic control to the vessels involved in the exercise.
With other oil majors like ENI and Exxon also holding blocks for prospecting in the area, it would be reasonable to assume that more exploration activities will come in the short term. These exploration activities will require support from the local ports, necessitating upgrades and expansions to accommodate them.
The end of February saw the initial works at the site of the Port of Ngqura’s future liquid bulk tank farm which will connect to a newly equipped liquid bulk berth. This comes ahead of the planned decommissioning and rehabilitation of the existing liquid bulk facilities at the neighbouring Port of Port Elizabeth. This will pave the way for Ngqura’s establishment as a new petroleum trading hub for Southern Africa. These projects have been in the pipeline for some time but could not have been timed better to use the industry’s momentum.
In the medium term, once the upstream projects have been given the go-ahead, the ports and surrounding industries will definitely be required to supply materials and services to support the project execution. The required expansions will bring much-needed economic growth to the region, and with the support of Operation Phakisa, the major support mechanisms should be developed and in place.
5 Brulpadda Total’s Offshore Discovery: Conclusion
It’s too early for South Africa to count its chickens. It takes years to develop a gas field to the point where it produces gas, and many things can change in that period. The Brulpadda find is at great depth, below the sea surface and the sea floor. Developing in an area notorious for high winds and heavy seas will be challenging. However, the likelihood is that a modest-sized gas found on the South Coast would mostly be used in South Africa.
Compressing natural gas for long-distance export by sea is expensive. It requires major infrastructure, which South Africa currently lacks. The country also doesn’t yet have a well-developed infrastructure for using gas, so the supply may initially be more than South Africa can consume.
But since there’s a captive market nearby, Total; an international, for-profit company that will charge a market-related price for its gas – will almost certainly try to sell it locally rather than incur the cost of transporting it elsewhere. The most likely first candidates will be the PetroSA gas-to-liquids plant and the Gourikwa (diesel) power station near Mossel Bay.
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