19 November 2003

West Africa Will Be "Fantastically Important" to U.S. Energy Sector, November 19, 2003

(Offshore wells offer huge potential for oil and gas development)

By Charles W. Corey
Washington File Staff Correspondent

Houston, Texas -- "West Africa is now and will be in the future fantastically important to the oil economy of the United States," declared Gene Van Dyke, president and chief executive officer of VANCO Energy Corporation.

In an interview with the Washington File at the opening of the Corporate Council on Africa's (CCA's) second annual Africa Oil and Gas Forum November 19, the energy executive stated that Africa -- West Africa in particular -- has "tremendous potential" to produce more oil and gas and thus achieve a greater level of economic growth and development, but that the greatest potential for future wealth lies in the further expansion of deep-water wells.

Assessing the operations in Africa of his company, which specializes in the development of offshore deep-water wells, Van Dyke noted, "A lot has happened in West Africa in the past year. Our operations are looking up, and so are the operations of other companies."

VANCO is working in seven African countries, he said, developing 23 million gross acres of offshore property in Morocco, Cote d'Ivoire, Equatorial Guinea, Ghana, Namibia, Gabon and Madagascar, all at depths between 1,000 and 10,000 feet.

"We have a 1.1 million acre bloc in Equatorial Guinea and have recently brought in two partners" to further develop that site, he said. The actual drilling of the first VANCO well there is planned for next June but VANCO is now bringing in partners to develop its other sites as well.

The expansion of projects to involve other partners, van Dyke declared, should be viewed as a sign of good things to come. "All of these projects are very, very costly. Each well costs in the range of $20 million (to drill), and the development of these fields is probably in the range of one billion dollars each. So even the major companies bring in partners.

"The fact that we are able to bring in partners," he said, "reflects the strong potential in these projects," with several companies all agreeing that there is sufficient potential for them to invest significant sums to develop these sites.

At present, the two leading West Africa oil-producing countries are Angola and Nigeria, van Dyke noted, followed by Equatorial Guinea. Although only about 15 percent of U.S. oil and gas imports come from Africa now, he said, that proportion could rise to 25 percent over the next several years.

Van Dyke said his company plans to drill four to five new wells soon: two in Equatorial Guinea, and one each in Morocco, Cote d'Ivoire and Namibia. "These all have big potential," he confidently predicted.

"In Cote d'Ivoire, we have one big geological structure that has the possibility of being a two billion barrel field. That would make it one of the biggest fields in West Africa," he said.

West Africa has published reserves of at least 46 billion barrels, he noted, but enthusiastically added that "reserves are going up very fast both in Nigeria and Angola." One field in Angola has recently been estimated to be in excess of 10 billion barrels, he said.

West Africa has advantages that make it particularly attractive to the U.S. energy sector, he said. "West Africa is a lot closer to the United States -- half the distance of the Middle East. There are no canals you have to go through, or anything like that," and many of the well sites are offshore, so are less subject to civil unrest and political instability.

As Africa is becoming progressively more important to the U.S. economy, van Dyke said, a great deal more importance is being placed on West Africa by both the United States government and its private sector. The recent reopening of the American Embassy in Equatorial Guinea illustrates the point, he said.

Describing the closer ties between West Africa and the U.S. private sector, Van Dyke pointed out that most U.S. companies now active in West Africa are headquartered in Houston. More than 1100 Houston-based companies, many of which are participating in the CCA oil and gas conference, are now doing business in Africa's energy sector. Those companies range, he noted, from the companies that deal specifically with oil and gas to peripheral businesses such as charter airlines, port inspectors, consultants and architectural firms.

With all this activity, he said, a commercial flight now leaves Houston daily for West Africa to ferry the large number of oil workers and other personnel -- and their attendant airfreight -- between the United States and Africa as part of this expanding business relationship.