Namibia Gas Insights: Who Checks the Technical Answer?

When an operator says gas must be reinjected, delayed or produced at a particular rate, Namibia needs the capacity to test that answer. The same applies to the resource numbers used to justify pipelines, power plants and the industrial sector.

In the previous article, I ended with a question: when an operator says gas must be reinjected, delayed or produced in a particular way, who independently checks that technical answer?

It matters because technical assumptions eventually become national decisions. They influence how much oil is recovered, when gas becomes available, how large a pipeline should be, whether a power plant has fuel for twenty years and whether an industrial project is viable at all.

Throughout this series, I have argued that Namibia’s gas can create value well beyond export revenues – through electricity, industry, jobs, local companies, hydrogen, renewables and wider economic development. But those ambitions ultimately depend on something more basic: how much gas can Namibia actually count on?

FROM HEADLINE NUMBERS TO USABLE GAS

Large discovery numbers attract attention, but not every number means the same thing.

One useful way of understanding the difference is as a funnel.

At the top is the basin endowment – the hydrocarbons that geology suggests may exist across a basin. The number can be very large, but uncertainty is also greatest at this stage.

Further down are discovered hydrocarbons in place – volumes believed to exist in accumulations actually encountered by wells and supported by seismic and other data. Discovery provides much greater confidence, but it still does not mean that all those hydrocarbons can be produced.

The next question is what is technically recoverable using available or foreseeable technology. Then comes commerciality: what portion makes economic sense given expected prices, development costs, fiscal terms and access to markets.

Even a commercially attractive resource does not tell us how much can be supplied every day for the next twenty years. Well performance, reservoir behaviour, facility capacity, production rates and natural decline determine what can actually be produced reliably over time.

For gas, there is one further narrowing that is particularly important. Not all gas produced from a reservoir is necessarily available for sale. Some may need to be reinjected, some may be consumed as fuel in operations, and there can be processing losses and contractual commitments.

Only after these requirements are understood can Namibia know how much gas is realistically available for electricity, industry, a domestic market obligation or export.

The numbers, therefore, generally become smaller as we move down the funnel, while confidence in what those numbers actually mean should increase.

WHY THE NUMBERS MATTER

These distinctions are not academic.

A power plant expected to operate for twenty years needs reasonable confidence in twenty years of fuel supply, and so does a fertiliser, ammonia or other gas-based industrial plant. A pipeline built around volumes that never materialise can become an expensive stranded asset; one built too small may constrain discoveries and industries that follow.

This is why infrastructure decisions should not be based on headline estimates of what a basin might contain. Namibia needs credible supply scenarios showing what resources are discovered, what can be recovered commercially, what production profiles might look like and, especially for associated gas, how much gas may actually become available and when.

That requires more than looking at each field in isolation.

THE STATE NEEDS ITS OWN VIEW

An operator quite properly develops geological, reservoir, production and economic models to determine whether and how it should invest its capital.

Namibia has an additional responsibility.

The state must consider how several fields, future discoveries and alternative development sequences fit together. It needs to understand what they could mean collectively for national oil and gas production, future gas availability, infrastructure, domestic industry, exports and government revenues.

Namibia has a responsibility to manage its own portfolio in the best interests of its citizens, in the same way multinational investors manage their international portfolios in the best interests of their shareholders.

Vice president Lucia Witbooi recently emphasised the need for the state to have the capacity to negotiate, monitor and manage increasingly complex petroleum operations. Kornelia Shilunga, head of the upstream petroleum unit in the Presidency, has similarly stressed the government’s responsibility to provide investor certainty while protecting Namibia’s interests.

Independent technical capability is one place where those ambitions become very practical.

The state does not need to duplicate every operator’s technical organisation. It does, however, need enough expertise, data and independent analytical capacity to understand the assumptions being presented, test reasonable alternatives and develop its own national view of the resource.

WHEN REINJECTION MAY BE THE RIGHT ANSWER

Consider associated gas.

Gas may be dissolved in oil or occur above it in a gas cap. Reinjection can be necessary to maintain reservoir pressure and maximise oil recovery.

So when an operator says gas should initially be reinjected, that may be entirely correct.

But Namibia should still be capable of determining how much reinjection is required, for how long, what alternative production scenarios have been examined, when surplus gas might become available and what different gas-production rates would do to ultimate oil and gas recovery.

Those are not anti-investor questions. They are questions a competent resource owner should be able to ask and evaluate.

The same principle applies to gas-condensate reservoirs. If reservoir pressure falls too far, valuable liquids can drop out underground and become much harder to recover.

A decision that appears to accelerate gas production may, therefore, reduce the total value ultimately recovered.

Physics places real limits on policy. But technical complexity should not become a reason for the state simply to accept one development case without understanding what reasonable alternatives may exist.

Guyana illustrates why sequence matters. Oil development moved rapidly and associated-gas planning subsequently had to take place within an upstream system already principally designed around oil production.

Namibia still has the opportunity to build its own technical and national understanding before early project decisions begin to determine the options available later.

PRODUCTION ALSO MEANS DEPLETION

There is another reason to maintain that national view once production starts.

Every barrel and every molecule produced represents depletion. If Namibia wants a petroleum and gas industry that supports electricity, industry and government revenues over an extended period, it must monitor not merely how much is being produced, but how quickly new resources are being discovered, appraised and converted into reserves.

Exploration does not cease to matter when first oil arrives. On the contrary, reserve replacement becomes increasingly important once production begins. This is fundamental to the strategies of multinational oil companies.

A country adding plants and other long-lived gas consumers, therefore, needs to look simultaneously at existing reserves, production decline, likely new developments and the exploration programme expected to replenish supply.

This brings us back to the funnel. It is not a calculation performed once and filed away. New seismic, appraisal wells, production performance, prices, technologies and discoveries continually change what Namibia knows and what choices become available.

FROM TECHNICAL ASSURANCE TO NATIONAL STRATEGY

Citizens do not need to become reservoir engineers. But they should understand enough to ask whether billion-dollar decisions are being based on geological potential, discoveries, technically recoverable resources, commercial reserves, production profiles – or gas actually capable of reaching the market.

Those differences can determine whether infrastructure prospers or becomes stranded, whether factories receive gas for decades or only a few years, and whether public expectations match what the resource can realistically deliver.

They also point to the final question in this series.

If Namibia must bring together its understanding of the resource, the pace and sequence of field development, reserves replacement, domestic demand, pricing, infrastructure, industrialisation, hydrogen, renewables and governance, where are all of those decisions made coherent?

The final article makes the case for a natural gas master plan built around Namibia’s development objectives – not simply around the requirements of individual projects.

– Anthony Paul is a senior energy governance, policy and strategy adviser

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