Tullow Oil starts flaring to sustain Jubilee output in Ghana

July 30, 2014 | Africa, Company Operations

London, United Kingdom | –  Tullow Oil Plc a leading independent oil & gas, exploration and production group with a focus on  Africa, has started burning gas off Ghana to sustain production at its largest project.

“We are still injecting majority of the gas,” COO Paul McDade said in a phone interview. Flaring “is assisting us, while we are waiting for the gas plant” to “sustain target production,” he said.

The company has permission to flare 500 MMcf of gas a month, which is pumped together with crude oil, at the Jubilee field, it said in a statement. The gas must be expended to avoid damaging the reservoir, which is expected to start producing about 100,000 bopd this year. Tullow expects to start processing the gas once a treatment plant comes on stream in the fourth quarter.

“The focus of these six months has really been on West Africa, keeping the Jubilee production up while the gas plant is getting ready,” CEO Aidan Heavey said in a phone interview.

Tullow, based in London, reported a $95 million loss in the first half, compared with a $313 million profit a year earlier, after writing off $402 million in exploration costs. Part of this charge is related to a project delay in Uganda, CFO Ian Springett said in a phone interview.

The shares fell as much as 1.4% to 753.50 pence and traded at 760% as of 9:31 a.m. in London.

In East Africa, Tullow has exited exploration off Mozambique after failing to make a discovery. The company is reassessing its drilling plans to conserve cash, McDade said.

“The cost environment in the industry is making exploration in ultra-deepwater and drilling complex deepwater wells rather expensive,” Exploration Director Angus McCoss said. “So we are moving to more cost effective plays on the shelf and onshore.”

Bloomberg.