Staff Reporter
DESPITE Shell’s downgrade of its Namibian deepwater oil discoveries, there is still a possibility that Namibia will become a deepwater oil producer in the coming years.
This is according to the global energy analytics firm Wood Mackenzie, which specialises in data concerning the renewables, energy, and natural resources sectors. According to the firm, Shell’s recent downgrade of its Namibian deepwater oil discoveries – resulting in Shell having to write off $400 million from exploration activities – may be a setback, but it does not necessarily signal the end of subsurface exploration in the Orange Basin for either the oil major or Namibia.
“Shell operates two offshore blocks in Namibia’s Orange Basin under the PEL39 licence. It holds a 45% stake in the venture, as does QatarEnergy. Namcor, Namibia’s national oil company, owns the remaining 10%. Shell has drilled nine wells on the licence ‒ six exploration wells and three appraisal wells ‒ targeting three different plays: an Upper Cretaceous deepwater turbidite clastic play in the Graff complex, a Lower Cretaceous deepwater turbidite clastic play in Jonker and Enigma, and a Lower Cretaceous carbonate play in Cullinan-1X,” the firm explained.
Wood Mackenzie described Shell’s exploration campaign as intense, but broad, covering all possible plays in its acreage. However, the firm pointed out that challenging subsurface conditions have hindered commercial success.
“Exploration is fraught with risk – technical success rates average below 40% globally. For frontier basins, the risks are greater, with lower technical and commercial success rates relative to established and mature basins. Namibia stands out with a high technical success rate, but commercial success is now looking like a real challenge. While the Cretaceous deepwater turbidite clastic play is effective in the Orange Basin, well-level risks, such as reservoir complexity and distribution, have to be taken into account,” Wood Mackenzie added.
The firm highlighted that Shell had drilled three successful exploration wells in the Graff complex – Graff-1X, La Rona, and Lesedi – targeting Santonian and Coniacian reservoirs in a complex channel system. Additionally, a sidetrack (Graff-1A) was drilled on Graff-1X in 2023, a frac was completed in the Coniacian interval, and the well was flow-tested.
“In March 2023, Jonker-1X targeted the same Albian stratigraphic level as the Venus discovery and found light oil. This was followed by two appraisal wells and a flow test on Jonker-2A. In March 2024, the Enigma well confirmed the presence of hydrocarbons in what we assume to be a reservoir at the same stratigraphic level as the nearby Jonker field,” Wood Mackenzie explained.
The firm added that the Cullinan-1X was the only exploration well that resulted in a dry hole. They revealed that it focused on the carbonate build-up at the top of the outer high created by seaward-dipping reflectors, thought to be charged by the marine Aptian source rock.
“We think Shell will probably hold on to its Orange Basin acreage, awaiting results from other wells. In Namibia, it may let the blocks lapse, but in South Africa, it is likely to retain and possibly extend its blocks, gathering more data from ongoing and planned wells to better understand the basin’s geology. The recent setback will not necessarily derail the exploration campaign or damage the perceived perspectivity of other Orange Basin blocks. Different parts of the basin have different geology. Namibia will still become a deepwater oil producer in the coming years, in our view; it just won’t be from Shell’s licence area. TotalEnergies and Galp have had more luck, discovering larger volumes and better-performing wells. Commerciality is looking much more likely,” Wood Mackenzie analysts argued.
Picture for illustrative purposes only.
