When the oil explorers came to Nigeria, the locals assumed they were searching for palm oil. Whereas they were trying to find crude oil, and it was first discovered by the Nigerian Bitumen Corporation around 1905-1908, in Eastern Dahomey (Benin basin). Commercial quantity was only discovered in 1956 – Oloibiri, Bayelsa State.
Domestic crude refers to crude that is meant for YOU (the everyday Nigerian). This crude meant for local refining and consumption (that one wey you from dey get petrol for your ‘I pass my neighbour’, kerosene for your stove and diesel for your generators amongst other by-products). When domestic crude is sold, the money goes into CBN/NNPC Naira account.
Export crude is share of production that is supplied to counties worldwide. Nigeria is the 8th largest exporter of crude oil in the world. When export crude is sold, the money goes into the CBN/NNPC JP Morgan Chase Dollar Account.
No, it isn’t crude oil that tastes sweet! Crude is considered “sweet” if it is low in sulphur content (sulphur content is less than 0.5% of its weight). Sweet crude is cheaper and easier to refine, hence it is in high demand. Nigeria produces about 15 types of crude oil. All of Nigeria’s crude is “sweet crude”. The opposite crude is “sour crude”.
One of the most important factors that determine the price of crude oil is its density. The lighter the crude, the higher the price. Crude density is measured using API Gravity. Crude with API Gravity of 34 or higher is considered “Light”. “Medium” and “Heavy” are classifications for denser crude. Most of the crude Nigeria produces is “light crude”.
“Easy oil” refers to conventional types that are relatively faster and cheaper to find, produce and refine. On the other hand, marginal oil or unconventional oil from tar sands and shale are harder, complex and more expensive.
42 billion barrels of extractable “Heavy oil” from large Bitumen reserves lays dormant according to Ministry of Mines & Steel Development, mostly found in Ondo state. This type of oil is the same as the tar sands that Canada is producing crude oil from. Probable reserve of Bitumen and heavy oil in the entire belt are estimated at double that of Ondo state.
Sometime after the standardized barrel was set at 42 gallons in 1860, the oil industry scrambled to find containers that size. Standard Oil Company began manufacturing barrels to that specification and painted them blue to identify them. Transactions referred to the oil as coming in blue barrels or bbls.
Crude oil prices measure the spot price of various barrels of oil, most commonly either the West Texas Intermediate or the Brent Blend. The PEC basket price and the NMEX futures price are also sometimes quoted.
The reservoirs in Nigeria are very deep underground, commonly 6,000 to 12,000 feet below ground level, which is more than one to two miles deep. To recover the oil and gas within, a hole is drilled into the reservoir and pies installed to enable the reservoir and pipes installed to enable the reservoir contents to flow to the surface. This is called the well. A cluster of oil wells can be found on an oil field/block.
The producing life of an oil well is related to the amount of energy or pressure in the reservoir. At the beginning, oil flows easily from a well. With time, a well gets older and the production rate drops. When oil stops flowing from a well, or becomes uneconomical to extract, the well is shut down.
Oil production is the volumes of crude oil that are extracted from oil reservoirs. It is typically measured in barrels per day. Nigeria produces an average of about 2.28 million barrels per day. This make Nigeria the 10th largest oil producer in the world. The largest oil producer in the world is Saudi Arabia which produces about 11.545 million barrels per day.
Oil reserves are the amount of technically and economically recoverable oil. Nigeria has the largest oil reserves in Africa and the 11th largest in the world – estimated to be 37.2 billion barrels. Note however that this estimate has stayed the same since 2006. Venezuela has the largest oil reserves in the world at 296.5 billion barrels.
The Nigerian government doesn’t simply pocket all the money made from the sale of all oil produced in Nigeria. There’s room for other stakeholders like mining companies to make money too. Oil revenue accruing to the Nigeria federation is money realized from:
Periodically, OPEC sets a production limit or quota for each of its member countries, in an attempt to manage the supply and hence price of oil. The OPEC quota applies to black oil only, and does not apply to condensates or natural gas. Nigeria’s OPEC oil quota is 2.5, barrels per day.
If the reserves remaining at the end of any year are divided by the production in that year, the result is the length of time that those remaining reserves would last if production were to continue at that rate. Nigeria’s R/P ratio is estimate at 42 years; meaning that the country has 42 years’ worth of oil reserves.
It look like a ship but it is not a ship. However, it is a Floating Production Storage and Offloading facility. Consider if a floating oil rig. Oil and gas companies use it for offshore exploratory activities.
An oil block is a large area either onshore or offshore, typically in thousands of sq. kilometres, which is covered by a license awarded to oil drilling and exploration companies by a country’s government.