oil in puntland

Hey everyone, this was originally posted on the ii Board by Mr Right 33. I thought I'd post it here so us guys don't miss out on the party!
All credit should go to him, and so too should the blame if this isn;t genuine. Either way, just enjoy!

Over the weekend I emailed Mr O'Connor,

The gentlemen that carried out the World Bank coordinated study in 1991 which was intended to encourage private investment in the petroleum potential of eight African nations where Somalia and the Sudan topped the list of potential commercial oil producers!

He was kind enough to take the time to reply so I thought id post his message:

Dear Mr O'Connor

Sorry to impose on you like this but I was just wondering if it was possible to ask you a few questions regarding oil in Somalia as I understand you worked with the world bank and International finance corporations ongoing petroleum projects back in 1991. . I'm a large shareholder in Range Resources Ltd whom have an interest in two blocks in Puntland, Somalia where we'll be targeting oil later this year.

http://www.africaoilcorp.com/s/Somalia.asp?ReportID=352284


I wanted to get an Industry professional's view on potential oil in place?
Do you believe that Somalia has similarities to yemen?
Could we expect any problems drilling?

If you have any other information it would be deeply appreciated.

Thank you for your time

Kind Regards

xxxx xxxx

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Dear Mr. xxxxxxx:

It is a pleasure to hear from you and I am flattered that you have chosen to ask me these questions.

It is true that during the late 1980s and early 1990s I had quite a bit to do with the petroleum sector of Somalia at the time of the Said Barre regime collapse. I supervised a large, nation-wide geological assessment of the petroleum potential of Somalia, undertaken by a very well known and respected US consulting firm in Littleton, Colorado, with funding supplied by the World Bank. The report was completed, but since it was never paid for since no Government followed Barre, and undertook to recognize the previous regime's obligations, its results were never circulated nor directly made use of. Secondly, I conducted a highly regarded seven-nation study of the hydrocarbon potential of the Red Sea and Gulf of Aden, the results of which were issued as a series of scientific papers. This is the long way around of saying that the conclusions which have been shown on the hyperlinked brochure by Africa Oil of its prospects in Somalia are in agreement with current geological scientific thnking.

Through the Energy and Geoscience Institute of the University of Utah, I was asked by Jim Phillips, one of Africa Oil's Vice Presidents, to give a course on Geology for non-Geologists to the Puntland Head of State and most of his Cabinet. This took place in Addis Ababa the three days preceding Easter of this year. Its focus was very much on the type of geology that is to be found in East Africa in general, and Somalia in particular. It was concluded with a one hour presentation by Phillips of the petroleum geology surrounding the first prospect which should be just about started now.

My feeling on the subject of your question is that, yes, there is a functioning petroleum system within the area of both prospects and yes, the geology of Northern Somalia is similar in a great number of respects to that found in Yemen. Therefore the direction of exploration chosen by Africa Oil makes a great deal of sense. This leaves open the time of oil generation/migration with respect to time of trap formation and the effectiveness of the trap and seal. These can only be established through drilling.

It is very difficult to estimate the amount of reserves in place prior to any exploration drilling.

As regards potential drilling problems, yes, there are always problems of this kind and it is quite likely that they will be similar to those found in Yemen, since the geology is similar.
Assuming that the drilling contractor is competent and the drilling department of Africa Oil is well chosen, these types of risks can be offset through careful planning and logistics. Nothing in this business can be taken for granted, but my experience has been that good planning and competent management is in most cases highly successful in offsetting such risks. From what I have seen of Africa Oil's planning, management and logistics, I believe that they are competent.

The bigger problem is likely to lie in what to do if commercial amounts of petroleum are indeed found with these initial wells. It is a very unstable region and the current government of Puntland can be regarded from an investors perspective as speculative at best. That is to say, I view the political risks as being greater than the geological risks. But this goes beyond the question that you asked.

With best wishes for your future success in this venture,

sincerely yours,

Thomas E. O'Connor