Accounting, accountability and governance in upstream petroleum contracts: the case of local content sustainability in the Nigerian oil and gas sector.

Local Content is an oil sector governance and sustainability policy that aims at check-mating the dominance of the foreign oil companies in host countries, and encouraging the participation of the local oil firms in the petroleum value-chain. It is a burgeoning concept applied in the upstream petroleum contracts in the developing petro states. This study was conducted to examine the local content accounting, accountability and governance of the Nigerian Content Development and Monitoring Board (NCDMB) and the five major International Oil Companies (IOCs) operating in Nigeria (Shell, Chevron, ExxonMobil, Total and Agip). The soft and hard accountability of the two principal actors were determined. The work drew on the Chatham House Guidelines for Good Governance in Emerging Oil and Gas Producers (2013) to derive its conceptual and analytical models. The study used the convergent parallel design and a combination of the three accounting paradigms to draw its conclusions. Thematic analysis, descriptive and inferential statistics including the post hoc Kruskal-Wallis and Mann-Whitney tests with Bonferroni Corrected Alpha, and the logistic regression tests were used. The study also applied the mechanistic content analysis methodology on fifty sustainability reports of the selected IOCs in line with the Global Reporting Initiative (GRI) and the International Petroleum Industry Environmental Conservation Association (IPIECA) sustainability reporting guidelines. Disclosure index and paired-samples t-test were used to determine the existence and trends in the IOCs local content disclosure practices before and after the enactment of the Nigerias local content law. The study found the local content policy to be an accountabilitybased sustainability driver in the Nigerian petroleum sector. Although the NCDMBs performance was favourable to a large extent, the study found that corruption, fronting, and non-disclosure of the beneficial ownership of some oil firms remained the major challenges of local content in Nigeria. An expectation gap between the Board and the stakeholders on the financial accountability was established. The study found moderate and consistent local content disclosure indices of the periods before and after the Nigerias local content law, but higher volumetric disclosure in the period after the law, signifying likely impact of the local content law on the IOCs voluntary disclosure. It was recommended that the Board should tighten up its regulatory responsibilities and avoid questionable practices. It was also suggested that the Nigerian local content rules should incorporate more incentives such as unringfencing and crossfencing of upstream costs to encourage more investment. The study also suggested that the accounting standard-setting bodies should issue dedicated accounting standards or expand the existing IFRS 8 and IAS 21 to comprehensively address the preparation and presentation of local content information in the annual financial statements

Numerical simulation of heavy oil and bitumen recovery and upgrading techniques

As a result of the increasing energy demand but a heavy dependence on easy-to-produce conventional oil, vast reserves of recoverable heavy oil have been left untapped. According to the International Energy Agency, IEA, fossil fuels – oil, coal, natural gas – will still predominate, despite a decline in their overall share, towards meeting the increasing world energy demand. While heavy oil has been predicted to account for an increasing share, contributions from conventional light oil have been predicted to drop from 80% to 53% in the next two decades (IEA, 2013b). Therefore, the large reserves of the under-utilised heavy oil, if extracted cost-effectively and in an environmentally friendly manner, will facilitate the meeting of both the short and long term energy demands. In this work, different thermal heavy oil recovery processes were reviewed with particular attention given to the air injection processes. In-situ combustion, ISC, has been identified as the most efficient and environmentally friendly technique used to recover heavy oil. Until the last decade, there was only a small interest in the conventional ISC. This is due to the complex nature of the processes taking place during ISC and the lack of success recorded over the years. The successful pilot scale testing of the Toe-to-Heel Air Injection, THAI, by Petrobank has revived interest both industrially and in the academic environment. Experimentally, THAI has been consistently proven to exhibit robust and stable combustion front propagation. Among the advantages of THAI is the ability to incorporate the in-situ catalytic upgrading process, THAI-CAPRI, such that further catalytic upgrading is achieved inside the reservoir. To realise the theoretical promise offered by THAI-CAPRI, there is a need to develop a reliable numerical simulation model that can be used to scale laboratory experiments to full field scale. Even for 3D combustion cell experiments, only one such model exists and it is incapable of predicting the most critical parameters affecting the THAI process. Therefore, the subject of this work was the development and identification of an accurate and reliable laboratory scale model that can then be used to develop field scale studies and investigate the effect of reservoir geology on the THAI process. However, because of the significant uncertainty introduced by the kind of kinetics scheme used and the fact that the main mechanism through which fuel deposition takes place is still a contentious issue, three different kinetics schemes, based on Athabasca bitumen, have been tested for the model of the 3D combustion cell experiment. All the models offered an insight into the mechanism through which oxygen production begins. They revealed that oxygen production was as a result of the combustion front propagating along the horizontal producer (HP). They also showed that the presence of coke inside the horizontal producer is an essential requirement for stable combustion front propagation. It was also observed that LTO is not the main mechanism through which fuel is deposited as oxygen does not bypass the combustion front. The models also showed that the temperature around the mobile oil zone (MOZ), where catalytic reaction in the CAPRITM is envisaged to be located, will not be sufficient to make the hydro-treating catalysts effective. Therefore, it is concluded that some form of external heating must be used in order to raise the temperature of the catalyst bed. Two out of the three different Arrhenius kinetics schemes that were successfully used to history-match the 3D combustion cell experiment were adjusted and implemented in field scale simulations. This is because the kinetics parameters obtained from the laboratory scale model cannot be used directly for the field scale simulation as they led to excessive coke deposition. A comparative study, between the two kinetics schemes, showed that the adjusted direct conversion kinetics predicts higher oil rate, and higher air rate can be injected right from the initiation of the combustion compared to in the case of the split conversion kinetics. The direct conversion kinetics was then used to study the field performance because it provided a more realistic representation of the physicochemical processes than the split conversion kinetics. The study revealed that even if the combustion front swept the whole reservoir length, it has to propagate along the horizontal producer for oxygen production to take place. It was observed that the combustion zone does not only have to cover the whole reservoir length but also has to expand laterally in order to produce the whole reservoir. For heterogeneous reservoirs, the THAI process was found to have larger air-oil ratio (AOR) in reservoir containing a discontinuous distribution of shale lenses compared to the homogeneous model. However, overall, the THAI process is only marginally affected in terms of cumulative oil recovery. The combustion front was found to propagate in a stable manner just like in the homogeneous model. However, further study is needed to investigate the effect of different permeability distributions would have on the THAI process. This should allow the optimum location of the wells to be determined. Studies of the effect of bottom water (BW) on the THAI process have shown that the oil recovery is heavily affected depending on the thickness of BW zone. It was found that the location of the HP well relative to the oil-water interface significantly affects the oil production rate and hence the cumulative oil produced. More oil is recovered when the HP well is located inside the BW zone. It was found that a ‘basal gas layer’, just below the oil-water interface, is formed when the HP well is located in the BW zone. The study has shown that there is a limit to BW thickness above which the THAI process cannot be applied to a BW reservoir. However, future work is needed to determine this BW thickness. The reservoir cap rock, depending on it is permeability and porosity, only marginally affects the oil recovery in the THAI process. It was found that the cap rock aids in heat distribution to the extent that most of the upper oil layer is mobilised. However, the effect is observed to be less pronounced with increased permeability and porosity. Future work should look into whether longer operation period has an adverse effect on the stability of the combustion front, and thus on the overall performance of the THAI process

Numerical simulation of heavy oil and bitumen recovery and upgrading techniques

As a result of the increasing energy demand but a heavy dependence on easy-to-produce conventional oil, vast reserves of recoverable heavy oil have been left untapped. According to the International Energy Agency, IEA, fossil fuels – oil, coal, natural gas – will still predominate, despite a decline in their overall share, towards meeting the increasing world energy demand. While heavy oil has been predicted to account for an increasing share, contributions from conventional light oil have been predicted to drop from 80% to 53% in the next two decades (IEA, 2013b). Therefore, the large reserves of the under-utilised heavy oil, if extracted cost-effectively and in an environmentally friendly manner, will facilitate the meeting of both the short and long term energy demands. In this work, different thermal heavy oil recovery processes were reviewed with particular attention given to the air injection processes. In-situ combustion, ISC, has been identified as the most efficient and environmentally friendly technique used to recover heavy oil. Until the last decade, there was only a small interest in the conventional ISC. This is due to the complex nature of the processes taking place during ISC and the lack of success recorded over the years. The successful pilot scale testing of the Toe-to-Heel Air Injection, THAI, by Petrobank has revived interest both industrially and in the academic environment. Experimentally, THAI has been consistently proven to exhibit robust and stable combustion front propagation. Among the advantages of THAI is the ability to incorporate the in-situ catalytic upgrading process, THAI-CAPRI, such that further catalytic upgrading is achieved inside the reservoir. To realise the theoretical promise offered by THAI-CAPRI, there is a need to develop a reliable numerical simulation model that can be used to scale laboratory experiments to full field scale. Even for 3D combustion cell experiments, only one such model exists and it is incapable of predicting the most critical parameters affecting the THAI process. Therefore, the subject of this work was the development and identification of an accurate and reliable laboratory scale model that can then be used to develop field scale studies and investigate the effect of reservoir geology on the THAI process. However, because of the significant uncertainty introduced by the kind of kinetics scheme used and the fact that the main mechanism through which fuel deposition takes place is still a contentious issue, three different kinetics schemes, based on Athabasca bitumen, have been tested for the model of the 3D combustion cell experiment. All the models offered an insight into the mechanism through which oxygen production begins. They revealed that oxygen production was as a result of the combustion front propagating along the horizontal producer (HP). They also showed that the presence of coke inside the horizontal producer is an essential requirement for stable combustion front propagation. It was also observed that LTO is not the main mechanism through which fuel is deposited as oxygen does not bypass the combustion front. The models also showed that the temperature around the mobile oil zone (MOZ), where catalytic reaction in the CAPRITM is envisaged to be located, will not be sufficient to make the hydro-treating catalysts effective. Therefore, it is concluded that some form of external heating must be used in order to raise the temperature of the catalyst bed. Two out of the three different Arrhenius kinetics schemes that were successfully used to history-match the 3D combustion cell experiment were adjusted and implemented in field scale simulations. This is because the kinetics parameters obtained from the laboratory scale model cannot be used directly for the field scale simulation as they led to excessive coke deposition. A comparative study, between the two kinetics schemes, showed that the adjusted direct conversion kinetics predicts higher oil rate, and higher air rate can be injected right from the initiation of the combustion compared to in the case of the split conversion kinetics. The direct conversion kinetics was then used to study the field performance because it provided a more realistic representation of the physicochemical processes than the split conversion kinetics. The study revealed that even if the combustion front swept the whole reservoir length, it has to propagate along the horizontal producer for oxygen production to take place. It was observed that the combustion zone does not only have to cover the whole reservoir length but also has to expand laterally in order to produce the whole reservoir. For heterogeneous reservoirs, the THAI process was found to have larger air-oil ratio (AOR) in reservoir containing a discontinuous distribution of shale lenses compared to the homogeneous model. However, overall, the THAI process is only marginally affected in terms of cumulative oil recovery. The combustion front was found to propagate in a stable manner just like in the homogeneous model. However, further study is needed to investigate the effect of different permeability distributions would have on the THAI process. This should allow the optimum location of the wells to be determined. Studies of the effect of bottom water (BW) on the THAI process have shown that the oil recovery is heavily affected depending on the thickness of BW zone. It was found that the location of the HP well relative to the oil-water interface significantly affects the oil production rate and hence the cumulative oil produced. More oil is recovered when the HP well is located inside the BW zone. It was found that a ‘basal gas layer’, just below the oil-water interface, is formed when the HP well is located in the BW zone. The study has shown that there is a limit to BW thickness above which the THAI process cannot be applied to a BW reservoir. However, future work is needed to determine this BW thickness. The reservoir cap rock, depending on it is permeability and porosity, only marginally affects the oil recovery in the THAI process. It was found that the cap rock aids in heat distribution to the extent that most of the upper oil layer is mobilised. However, the effect is observed to be less pronounced with increased permeability and porosity. Future work should look into whether longer operation period has an adverse effect on the stability of the combustion front, and thus on the overall performance of the THAI process

Effect of Ownership Structure on Working Capital Management of Listed Downstream Oil and Gas Companies in Nigeria

This paper examines the effect of ownership structure on working capital management of listed Downstream Oil and Gas Companies in Nigeria. The study uses panel data for eight (8) companies for the period 13 years (2005 – 2017). There are several aspects and dimensions of ownership structure, which may influence a firm’s working capital management but this study focuses on three characteristic of ownership structure: namely ownership concentration, managerial shareholding and institutional ownership. Firm’s working capital management has been measured through Cash Conversion Cycle (CCC). Findings indicate that there is a positive significant relationship between ownership structure and firm’s working capital management as measured by CCC. This paper recommends that the code on owner's equity of listed downstream oil and gas companies in Nigeria should be sustained and encouraged so that the firms can have a perpetual life, because the stake of this owners could serve as a check and balance mechanism to further strengthen the corporate governance of the downstream oil and gas companies in order to give room for enhanced effective  working capital management

Numerical simulation of the impact of geological heterogeneity on performance and safety of THAI heavy oil production process

The Toe-to-Heel Air Injection (THAI) in-situ combustion process is an efficient way to extract heavy oil and bitumen. However, such reservoirs are often geologically heterogeneous. This work studied the impact of a range of different geological heterogeneities, often found in bitumen deposits, on the performance and safety of THAI. These heterogeneities included random heterogeneity, layered reservoirs, shaly reservoirs, and semi-permeable cap-rocks. A further aim was to also develop potential remedial measures, such as selective well placement. It was found that the degree of symmetry assumed for the reservoir model had a substantial impact on the predicted level of oil production. This is of particular relevance to otherwise apparently symmetrical well placement designs such as staggered line drive. While the presence of impermeable zones resulted in the decrease in the overall oxygen utilisation for shaly reservoirs, compared to simply low permeability reservoirs, there was no evidence of oxygen breakthrough due to preferential channelling into the production well. In layered reservoirs, the development of a rich oil bank during THAI operation depended upon the distribution of permeability around the horizontal producer (HP), and did not occur when there was high permeability just above the HP. It has been shown that the proper representation of the cap-rock in reservoir models for the simulation of THAI is essential in order to accurately mimic the full pattern of heat distribution into the oil zone of the reservoir, and, thence, fuel lay-down. While THAI can operate stably with a permeable cap-rock, vertical permeabilities above ∼1–3 mD led to significant loss of combustion gases from the reservoir

Dynamic simulation of the THAI heavy oil recovery process

Toe-to-Heel Air Injection (THAI) is a variant of conventional In-Situ Combustion (ISC) that uses a horizontal production well to recover mobilised partially upgraded heavy oil. It has a number of advantages over other heavy oil recovery techniques such as high recovery potential. However, existing models are unable to predict the effect of the most important operational parameters, such as fuel availability and produced oxygen concentration, which will give rise to unsafe designs. Therefore, we have developed a new model that accurately predicts dynamic conditions in the reservoir and also is easily scalable to investigate different field scenarios. The model used a three component direct conversion cracking kinetics scheme, which does not depend on the stoichiometry of the products and, thus, reduces the extent of uncertainty in the simulation results as the number of unknowns is reduced. The oil production rate and cumulative oil produced were well predicted, with the latter deviating from the experimental value by only 4%. The improved ability of the model to emulate real process dynamics meant it also accurately predicted when the oxygen was first produced, thereby enabling a more accurate assessment to be made of when it would be safe to shut-in the process, prior to oxygen breakthrough occurring. The increasing trend in produced oxygen concentration following a step change in the injected oxygen rate by 33 % was closely replicated by the model. The new simulations have now elucidated the mechanism of oxygen production during the later stages of the experiment. The model has allowed limits to be placed on the air injection rates that ensure stability of operation. Unlike previous models, the new simulations have provided better quantitative prediction of fuel laydown, which is a key phenomenon that determines whether, or not, successful operation of the THAI process can be achieved. The new model has also shown that, for completely stable operation, the combustion zone must be restricted to the upper portion of the sand pack, which can be achieved by using higher producer back pressure

Carcass characteristics and meat quality of Red Sokoto Bucks fed treated and untreated bagasse with or without enzyme supplementation

study was conducted to evaluate the effect of feeding treated or untreated bagasse with or without enzyme supplementation on the carcass characteristics and meat quality of Red Sokoto bucks. Sixteen Red Sokoto bucks averaging one year and weighing 10 ± 2 kg were used for the study. Four bucks were assigned per treatment and allotted to two dietary treatments with two level of supplementation in a completely randomized design. The enzyme was included based on the manufactures recommendation. The bucks were slaughtered and dressed according to normal dressing procedure and meat samples were analysed for moisture, protein and ash content. The result of the trial showed that there was no significant difference (p>0.05) in hot carcass weight and protein content between bucks fed bagasse with enzyme and bucks fed bagasse without enzyme. Bucks fed untreated bagasse without enzyme had significantly (p<0.05) higher dressing percentage (44.11 %) when compared to bucks fed treated bagasse with enzyme (42.58 %). The study concluded that treated and untreated bagasse with or without enzyme has no adverse effect on carcass and meat quality of Red Sokoto bucks