San Leon, the independent oil and gas production, development and exploration company focused on Nigeria, notes the announcement made today by Decklar Resources Inc. ("Decklar") in Canada. San Leon has a 11.5% shareholding in Decklar Petroleum Limited ("DPL"), the local subsidiary of Decklar operating in Nigeria, and has also made a US$5.5 million loan to DPL, via 10% per annum unsecured subordinated loan notes.
Part of the text of Decklar's announcement is set out below:
· "Decklar and its co-venturer Millenium Oil & Gas Company Limited ("Millenium") have signed a crude handling agreement with Umugini Pipeline Infrastructure Limited ("UPIL") whereby oil produced at the Oza Oil Field will be trucked to the UPIL crude handling facilities and further transferred to the Shell Petroleum Development Company of Nigeria Limited ("SPDC") JV Forcados Oil Export Terminal via the Umugini Pipeline.
· A permit from the Nigerian government regulatory authorities to transport the crude oil by truck is in the final stages of approval, and it is anticipated that the first shipments of oil will be delivered to the UPIL facilities in early April 2022.
· As previously announced, due to unforeseen downtime, maintenance and other issues with the Shell-operated Trans Niger Pipeline, Decklar has suffered delays in establishing crude export activities and commercial production from the Oza-1 well.
· A second alternative delivery strategy incorporating barging oil from the Oza field to an offshore floating storage facility is also being pursued and would allow for higher shipping volumes once in place. Negotiations with local firms are in advanced stages to secure exports through barging oil to an offshore floating storage and offloading facility.
Decklar Resources Inc. is pleased to announce the signing of a Crude Handling Agreement ("CHA") between the Company's wholly-owned subsidiary Decklar Petroleum Limited ("DPL"), its co-venturer Millenium and UPIL to deliver oil produced at the Oza Oil Field to the UPIL crude handling facilities for injection into the Umugini Pipeline for ultimate delivery to the SPDC JV Forcados Oil Export Terminal for export and sale of Oza crude oil production.
Oza Field Oil Export Operations - Trucking and Barging
Decklar has been pursuing logistics and export activities and made progress on several options, including:
- Completion and signing of the CHA between DPL, Millenium and UPIL to deliver oil produced at the Oza Oil Field to the UPIL crude handling facilities for injection into the Umugini Pipeline which will transport the crude oil to the SPDC JV Forcados Oil Terminal for export and sale.
- A permit from the Nigerian regulatory authority to transport the crude oil by truck is in the final stages of approval. It is anticipated that the first shipments of oil to the UPIL export facilities commence in early April 2022.
- The next phase, and the most likely mid- to long-term solution for an alternate export option is barging oil directly from storage facilities at the Oza Oil Field along the Imo River to a floating storage and offloading ("FSO") facility located offshore in shallow waters off the Bonny River.
- Options and logistics to transport oil by barge from the Oza field to an offshore floating storage facility are currently at advanced stages of negotiations. Shipping and exporting the Oza crude oil using the barge and FSO system could enable higher crude oil volumes per shipment and greater transportation and cost efficiency.
In terms of operations, Decklar has successfully finalized the re-entry, re-completion, and flow testing of the Oza-1 well, as detailed in the press release dated November 5, 2021. Crude oil storage tanks on site now hold approximately 20,000 barrels of oil, awaiting export and sale. Once Oza-1 is brought onto commercial production, the Company expects a stabilized flow rate of between 1,200 - 1,500 barrels of oil per day ("bopd").
Decklar and Millenium had initially planned to utilize the Shell-operated Trans Niger Pipeline ("TNP") to the Bonny Export Terminal; however, the link to the TNP between Isimiri, where Oza crude would enter the Shell operated pipeline network, and the TNP tie-in at Owaza, has been down for maintenance with an uncertain timeline to restart operations.
As previously announced, 2022 development plans for the Oza Field include:
- Currently in advanced stages of finalizing arrangements with local communities and contractors to begin construction of the access road and associated infrastructure for a new oil well drilling pad;
- Drilling the first new development well;
- Re-entry, re-completion, and flow testing of the other two existing wells (Oza-2 and Oza-4), including tie-in to existing production facilities;
- Installation of a Central Production Facility and infrastructure tie-ins for new well locations to replace the current Early Production Facility;
- Completion of an inter-field evacuation pipeline and all related infrastructure; and
- Drilling of up to two additional development wells.
Development plans for the Oza Field beyond 2022 include up to five additional development wells."