Sustainable production

This interview was originally published in the Africa Energy Series: Equatorial Guinea book.

 Pat Sanders
, General Manager of Marathon Oil Corporation

Through local entity Marathon EG Production Ltd. (MEGPL), US company Marathon Oil produces gas from the Alba field and has an operating stake in the gas processing plants of the Punta Europa complex, including EG LNG.

MEGPL’s B3 compression platform was commissioned in 2016. How has this project impacted your production operations?

The addition of the B3 compression platform to the Alba infrastructure has resulted in increased production through greater recovery at lower reservoir pressures. The operational availability of the B3 platform has been greater than 99 percent through almost two years of operation. The project execution was achieved on time, on budget and met or exceeded all project health, environment and safety goals. The B3 compression platform prolongs the life of the Alba field, which in turn extends energy security for Bioko Island.

What are the next major projects planned by Marathon Oil at its production facilities and at Punta Europa?

The next key focus at Punta Europa will be preparation for backfill gas from gas sources outside the Alba field. This will require the addition of onshore gas receiving and metering facilities. For offshore, there is an ongoing data acquisition wire line and perforation campaign on the Alba B and C platforms to refine the reservoir

Are there any plans for expansion of LNG facilities and exports at Punta Europa?

Expansion of EG LNG is dependent on finding and securing additional gas resources and Marathon Oil is actively pursuing these resources. The first priority is to ensure that EG LNG Train 1 is kept full for the foreseeable future.

With EG LNG Train 1 capable of producing in excess of 4 mtpa, significant new gas resources are required to provide the necessary feedstock over the coming years. These resources are likely to come from within and outside Equatorial Guinea.

Once sufficient gas volumes have been sourced to maintain full production from EG LNG Train 1, then expansion of the LNG facilities with additional LNG trains becomes a possibility. This will always be subject to sufficient long-term gas resources and the right market conditions.

How is Marathon Oil supporting the Equatorial Guinea government in its LNG2Africa project?

Marathon Oil and EG LNG are supporting the government by facilitating the evaluation of EG LNG plant’s ability to cater for the very small LNG ships that are an inherent part of this initiative.

EG LNG was designed to accommodate large LNG ships that deliver their cargo to countries such as Japan, China, South Korea and countries in South America. Given that design criteria, we have to undertake engineering studies of the existing facilities to ensure that it is feasible and safe to accommodate these smaller LNG vessels.

Can you provide an update on the Bioko Island Malaria Control Project (BIMCP) in 2018? What are the most successful types of corporate social responsibility projects?

Marathon Oil has invested in a long term, 14-year multi-system health program to control malaria while striving for malaria elimination on Bioko Island and the rest of the country, where malaria is endemic to the entire country and region. BIMCP and the Equatoguinean Malaria Vaccine Initiative (EGMVI), in partnership with the Equatorial Guinea government through its Ministry of Health and Social Welfare, have invested more than $120 million since inception in 2004.

During this time, through BIMCP’s efforts, malaria infection for 2 to 14 year olds has dropped over 75 percent to 11 percent of youth on the island; for under 5 year olds mortality has decreased by 85 percent; and both malaria infection and anemia in pregnant women have been reduced to just 5.5 percent. These trends have universal impacts across all economic sectors and socio-economic levels of Equatoguinean society, especially affecting those with the least means, as all services are free of charge to residents.

Marathon Oil and its BIMCP partners also continue to fund three trials of a highly promising malaria vaccine product, PfSPZ Vaccine®, developed by Sanaria, Inc., a US biotechnology company, to block malaria transmission in humans and mosquitoes. In 2018, the standard interventions will continue as well, and efforts will be made to further transfer certain interventions and responsibilities to the Ministry of Health and Social Welfare.

Additionally, the BIMCP and EGMVI will work together to run two important studies to prepare Bioko Island for a Phase 3 clinical trial. This trial will provide critical data that will allow Sanaria to license its PfSPZ Vaccine® with the US Food and Drug Administration.

Also, in 2018 the Ministry of Health and Social Welfare is in the process of opening a reference laboratory in which the current research team working on the EGMVI will train and then support a team of Equatoguinean laboratory and clinical professionals to carry out diagnostics and biological analytics at an international level. This laboratory will then seek certification as a World Health Organization certified reference laboratory.

The most successful CSR projects are those that are sustainable. For example, simply building a school is not enough. We have to ensure that the school is situated where there is an evident need. There has to be sufficient teachers available and thereafter the will and resources to maintain the building and staffing. The same applies to other similar projects like water wells.

Marathon Oil is now focusing less on infrastructure development and more on projects that yield a greater multi- plier effect in terms of the breadth and numbers of people that are positively impacted. One example is the midwife training program. In partnership with the Foundation for Nursing Development, the Ministry of Health and Social Welfare and the National University of Equatorial Guinea (UNGE) School of Medicine and Nursing, Marathon Oil implemented a midwife-training program. In 2017, 60 nurse midwives graduated from an 18-month training program. The midwives came from every health district in the country and we expect to see a decrease in neonatal and maternal deaths. Due to the success of this program, Marathon Oil will further invest approximately $800,000 to support the partnership to train another 70 nurses starting in August 2018, with an expected graduation in June 2020.

What lessons can be learned from your experience in Equatorial Guinea with regard to gas utilization in other African nations?

The main lesson to be learned for those fortunate to be blessed with hydrocarbon resources is don’t waste your gas by flaring it. Marathon and the government of Equatorial Guinea largely eliminated flaring from the Alba field by expanding the gas plant and building a new LNG plant. Both have yielded significant income and employment for the state and made Equatorial Guinea largely self sufficient in terms of LPG use. It is disappointing to see so much gas flared in the region, much of which could instead be monetized for the benefit of those countries and the welfare of their citizens. Equatorial Guinea is leading by example.

How do you think the industry has changed with regard to African gas utilization in the past five years?

LNG has become a game changer in terms of being able to deliver large quantities of gas to countries and locations without hydrocarbon resources or the necessary physical infrastructure such as pipelines. Delivered LNG, once regasified, can be put to several different uses such as power generation, domestic use and via CNG as vehicle fuel.

The flexibility of LNG has made it particularly attractive in Africa in terms of both supply and demand. In sub-Saharan Africa, only Equatorial Guinea, Nigeria and Angola are suppliers of LNG. Angola is a relatively recent entrant and other African countries are currently evaluating this type of investment opportunity.

The demand side is becoming extensive with Morocco, Senegal, Namibia and South Africa all in various stages of importing LNG for power. Benin, Togo, Ghana, Cote d’Ivoire and Kenya are also considering the import of LNG. This change in demand for LNG presents a significant opportunity for Equatorial Guinea given its strategic location and existing LNG infrastructure at Punta Europa to deliver on its vision of LNG2Africa.

What is your mid-term vision for Equatorial Guinea and where does the country fit into your portfolio?

We support Equatorial Guinea’s vision to see Punta Europa develop into a major regional gas hub, whereby it receives and processes gas from both within and outside Equatorial Guinea. For the foreseeable future, Punta Europa will continue to be a major source of revenue for the country and also a significant employer of approximately 1,300 nationals whose families depend on our success as do many local businesses, many for whom we are the major source of their income.

Equatorial Guinea is one of five core assets for Marathon Oil and of significant importance in our portfolio.

What would be your message to investors considering entering Equatorial Guinea today?

Marathon Oil, for its part, has enjoyed a long, supportive, mutually rewarding and stable relationship with the government of Equatorial Guinea that no doubt will offer encouragement to new investors.

 

This interview was originally published in the Africa Energy Series: Equatorial Guinea book.

 

 Pat Sanders
, General, Manager of Marathon Oil Corporation