1. UGRC 140 : SCIENCE AND TECHNOLOGY IN OUR
LIVES
SECOND SEMESTER : 2011/2012 ACADEMIC YEAR
EARTH RESOURCES
1

2. WHAT ARE FOSSIL
FUELS?
 Theseare energy sources formed
from the remains of once living
organisms OR they are fuels
formed by natural resources such
as anaerobic decomposition of
dead organisms.
2

3. WHAT ARE FOSSIL
FUELS?
They are non- renewable resources
They include the following:
 Oil
 Natural Gas
 Coals
 Fuels derived from oil shale and tar
sand
3

4. Formation of Fossil Fuels –
common conditions
High Organic Production
Burial of organic material
Reducing conditions – little or no free
oxygen
Reducing conditions preserve organic
matter
Coal and Petroleum diverge from here
4

5. Formation of Petroleum and
Natural Gas
 Accumulation of
organic material –
typically marine mud
 Burial and preservation
of organic material –
reducing conditions
 Reducing conditions in
deep sea or on
continental shelves
during times of unusual
oceanic circulation
5

6. Formation of Petroleum and
Natural Gas
Black, organic-rich mud is
buried deeper and converted
to rock – shale
With burial, the organic
matter is heated
6

7. Formation of Petroleum and
Natural Gas
When heat is sufficient (but
not too great about100degrees C )
 The organic matter is
“cooked” and oil is formed
Process is called thermal
maturation 7

8. Formation of Petroleum and
Natural Gas
If heat is greater than 300
degrees C, the liquid
petroleum is further broken
down to form natural gas
8

9. Formation of Petroleum and
Natural Gas
If heat is too great, even the
natural gas is broken down to
form carbon dioxide, which
has no value as a fuel
9

10. Migration and Concentration
Petroleum must leave source rock
Process is called migration
Migration is essential because
most source rocks are too fine-
grained to enable easy extraction of
the oil
10

11. Migration and Concentration
To be economically
concentrated, petroleum must
migrate to a reservoir rock
with a trap
11

12. Petroleum Resources-Conditions
Conditions for source rock are rare
Conditions for maturation must be
just right
Migration must not let petroleum
escape to surface
Reservoir rock must be present
Trap must exist before migration
occurs 12

13. Distribution of Petroleum
Economic accumulations of petroleum
only occur when all of these conditions
are met
These conditions and the sequence of
occurrence do not occur everywhere
Conditions are most likely where there
are thick accumulations of sedimentary
rock – in sedimentary basins 13

14. Some of the world’s most
productive sedimentary basins
 Saudi Arabia
 Kuwait
 Alaska – north slope
 Texas – Louisiana Gulf Coast
 Iraq and Iran
 Mexico
 Venezuela
14

15. What about Ghana?
 Ghana has four (4)
sedimentary basins;
 Three (3) offshore and
 One (1) onshore

16. The offshore
(below the sea bed)
basins are;
 The Tano Basin
 Saltpond Basin
 Accra- Keta
Basin

17. The onshore
(land based)
basin is the
 Voltaian
Basin

18. The Origin of Oil and Gas:- Plankton
cache.eb.com/eb/image?id=93510
Plant plankton Animal plankton
would fit on a pinhead!
10,000 of these bugs
en.wikipedia.org/wiki/Image:Ceratium_hirundinella.jpg en.wikipedia.org/wiki/Image:Copepod.
Most oil and gas start life as microscopic
plants and animals that live in the ocean
18

19. The Origin of Oil and Gas:- Algal Blooms
serc.carleton.edu/images/microbelife/topics/red_tide_genera.v3.jpg
Today, most plankton can be
found where deep ocean currents
rise to the surface
This upwelling water is rich in
nutrients and causes the plankton
to bloom
Blooms of certain plankton
called dinoflagellates may give
© Miriam Godfrey
the water a red tinge
Dinoflagellate bloom
19

20. The Origin of Oil and Gas
On the sea bed
upload.wikimedia.org/wikipedia/en/0/04/Plankton.jpg
When the plankton dies it rains
down on sea bed to form an
organic mush
en.wikipedia.org/wiki/Image:Nerr0328.jpg
If there are any animals on the
Sea bed sea bed these will feed on the
organic particles
20

21. The Origin of Oil and Gas
Black Shale
upload.wikimedia.org/wikipedia/en/0/04/Plankton.jpg
However, if there is little or no
oxygen in the water then animals
can‟t survive and the organic mush
accumulates
Where sediment contains more than
5% organic matter, it eventually
forms a rock known as a Black
Shale
© Earth Science World Image Bank
21

22. Oil is found in the sedimentary rocks
what are they?
Sedimentary rocks are formed by the
deposition and cementation of fragments
derived from the breaking apart of ancient
rocks.
Frost, rain, wind and the heat of the sun
detach rock fragments, or debris, from the
mountain flanks . These fragments are
carried toward the valleys by streams and
rivers.
On their way, the rock fragments knock
together, and break. They are carried along
and laid down as sands and pebbles.
In time, the weight of new debris squeezes
and hardens the older debris which become
sedimentary rocks.
22

23. How has the Oil Been Generated?
Oil is generated from the organic matter
derived from the decomposition of
plants and animals deposited in the
sedimentary rocks. During millions of
years the organic matter is transformed
into oil by the action of
bacteria, temperature and pressure. 23

24. Origin of Oil and Gas
Cooking the Source Rock
As Black Shale is buried, it is heated.
Organic matter is first changed by the
increase in temperature into kerogen,
Kerogen which is a solid form of hydrocarbon
Around 90°C, it is changed into a liquid
state, which we call oil
Oil
Around 150°C, it is changed into a gas
Gas
A rock that has produced oil and gas in
www.oilandgasgeology.com/oil_gas_window.jpg
this way is known as a Source Rock
24

25. “Black” shale formation, a potential source rock found at Takoradi
Source Rock – Takoradi Shale, Takoradi
25

26. Hydrocarbon Expulsion and Migration
www.diveco.co.nz/img/gallery/2006/diver_bubbles.jpg Hot oil and gas is less dense than the
source rock in which it occurs
Oil and gas migrate upwards through
the rock in much the same way that the
air bubbles of an underwater diver rise
to the surface
Rising oil
The rising oil and gas eventually gets
trapped in pockets in the rock called
reservoirs
26

27. Hydrocarbon Expulsion and Migration - Oil Seeps
Pitch Lake, Trinidad Kalimantan
Indonesia
Iran, 1924
27

28. The Petroleum System
Entrapment
Migration Seal
Expulsion
Reservoir
Generation
P
Carrier
T Source Rock
28

29. The Petroleum System
Reservoir Rocks
The permeable strata in an oil trap
is known as the Reservoir Rock
Reservoir rocks have lots of
interconnected holes called pores.
These absorb the oil and gas like a
sponge
This is a highly magnified picture of
As oil migrates it fills up the pores
a sandy reservoir rock (water-filled
(oil-filled pores shown in black)
pores are shown in blue)
Earth Science World Image Bank Image #h5innl
29

30. The Physical Characteristics of Oil Bearing Rocks
The POROSITY is the volume of the empty The PERMEABILITY is the
spaces inside a rock
( it is the ratio between the empty spaces and
phisical property that allows the
the total volume of the rock. passage of some fluids through a
The porosity higher values can be about 30 - rock
32% but it is possible to produce oil from (it is measured in millidarcy. Only
rocks with a porosity
of 3- 4% )
permeable rocks can produce oil)
SOME EXAMPLES OF POROUS ROCKS THAT CAN BE OIL BEARING
( seen on thin sections)
NUMMULITES INVOLUTINA
(MIDDLE EOCENE) (LIAS)
50 Mil. years 190 Mil. years
30

31. Hydrocarbon Reservoir Rocks
Compattazione
>Compattazione
Classazione
< Classazione Cementazione
31

32. As the source rock undergoes further heating due to increased
temperature and pressure the resulting oil and gas migrate
upwards and eventually get trapped in pockets in the rock called
reservoirs
Reservoir Rock – Takoradi Shale, Takoradi
32

33. The Petroleum System
Hydrocarbon Traps
Impermeable  Some rocks are permeable
and allow oil and gas to freely
pass through them
 Other rocks are impermeable
and block the upward passage
of oil and gas
 Where oil and gas rise up into
a dome (or anticline) capped
by impermeable rocks it can‟t
Dome Trap
escape. This is one type of an
Permeable
Oil Trap.
33

34. Oil and Gas is Contained in the Sedimentary Rocks in “Traps”
The sediment thickness increases because the sea bottom sinks. Some rocks
contain a large amount of organic matter. They are named “SOURCE
ROCKS”. The source rocks produce oil & gas.
Movements inside the earth crust can fold and break the sedimentary rocks and
accumulation zones can be generated. These zones are named TRAPS. The oil & gas
produced by the source rocks is able to move through the rocks and becomes
trapped. The movement is called “MIGRATION”.
TRAPS
A trap needs the presence of an impermeable
rock SEAL ROCK
(a “SEAL ROCK”) with a convex shape and a
porous / permeable rock (a “RESERVOIR
ROCK”). GAS
When a trap is big enough to contain a OIL
substantial oil accumulation it is called a “
FIELD “ RESERVOIR
ROCK
34

35. Types of Oil and Gas Accumulations
STRATIGRAPHIC TRAPS may occur where the
reservoir rock thins laterally or is „pinched-out‟ into
surrounding seal rocks
STRUCTURAL TRAPS
are often found along the
edges of salt domes, in the
crests of „anticlirial‟ folds or
along fault lines.
Distances from the surface
are greatly reduced for
clarity in this cross-section
of underground strata.
Anticlinal folds exposed in sea cliffs south of Cardigan, West Wales
35

36. Accumulation
Types of petroleum traps (A)A simple fold trap (B) Petroleum
accumulated in fossilized ancient core reef (C) A fault trap (D)
Petroleum trapped against an impermeable salt dome.

37. Where oil & gas can be found
Oil and gas can be found
in traps created by
faults and folds
Source rock
Source
rock 37

38. Geophysicists find these reservoirs by bouncing sound waves off them, and timing how
long it takes for the sound to come back
Computers process the data to
construct pictures of what the
earth looks like underground.
Drill here!
Earth Science World Image Bank Image #h5inor
38
Earth Science World Image Bank Image #h5inpj

39. The Search for Oil and Gas - Seismic Surveys (Offshore)
Kashagan, Caspian, September 2007
39

40. The Search for Oil and Gas - Seismic Acquisition (Offshore)
Seismic Air Guns
Caspian Sea, September 2007
40

41. The Search for Oil and Gas - Seismic Acquisition (Onshore)
Seismic Survey Crew, Po Plain, Italy, 1950‟s
41

42. The Search for Oil and Gas - Seismic Acquisition (Onshore)
Vibroseis Trucks
42

43. The Search for Oil and Gas - Seismic Acquisition (Onshore)
Seismic Recording Cables
Nigeria, 2005
43

44. The Search for Oil and Gas - Seismic Acquisition (Onshore)
Shooting and recording the seismic data
44

45. The Search for Oil and Gas - Seismic Acquisition
Recording Seismic Data
Navigation Centre, Seismic Acquisition Vessel, Caspian Sea, 2007
45

46. • Once an oil or gas prospect has been identified, a hole is drilled to assess the potential
using a DRILLING RIG
en.wikipedia.org/wiki/Image:Oil_platform.jpg 46

47. Drilling Rigs
OFF-SHORE RIG
ON-SHORE RIG
DIFFERENT OFF-SHORE RIGS
Jack-Up Fixed Semisub rig Drilling ship
platform
100 m
500 m
1000 m
2500 m
47

48. Oil Fields
Oil is Trapped in Sedimentary Rocks
48

49. A Drilling Rig is an equipment used in drilling holes into the earth.
Here’s a sequence showing how holes are drilled,
Then, steel casing is run and cemented
First, a large drill bit is used to on the outside to keep the hole from
drill a short interval of hole. collapsing.
0m
100m
TAS Oct. 1998 49

50. 0m
Next,
a smaller bit is Then, this
run inside the new hole is
first casing. also cased off
and cemented.
This bit drills
out the bottom
of the
casing, and
drills new hole.
100m
180m
TAS Oct. 1998
50

51. Again, a smaller
hole is drilled
and smaller
out,
casing is run
to keep the
hole from
falling in.
TAS Oct. 1998
51

52. In this way, the hole is drilled in stages, until the target reservoir rock is penetrated.
TAS Oct. 1998
52

53. How do Geologists tell if the reservoir has oil or gas?
They do this by running logs across the zone. Logs are tools run on electric cable
which record the physical properties in the rock such as
resistivity, porosity, density, radioactivity, and pore pressure.
TAS Oct. 1998
53

54. Here’s an example of what a log looks like. Geologists look at logs to decide
whether or not to complete a well (if there is oil), or abandon it (if there’s no oil).
Gamma Electrical Porosity
Radiation Resistivity
Sand good
porosity
Shale 200 m
Siltstone
poor
resistivity,
Shale probably poor
water porosity
Siltstone
Dolomite 500 m
Shale
good
good porosity
resistivity,
Looks may have
like oil or gas poor
good porosity
sand
quality poor
3000 m
resistivity, good
probably porosity
water
TAS Oct. 1998
54

55. If the well looks good on the logs, we run a final string of casing across the production
zone, and cement it in place.
TAS Oct. 1998
55

56. Then, we run perforating guns in the hole and perforate (shoot holes ) in the casing
across the productive zone.
56
TAS Oct. 1998

57. Production tubing is run, with a packer to isolate the produced zone from the casing
above.
tubing
Packer
57
TAS Oct. 1998

58. Finally, the well is produced into a
pipeline, which takes it to production
facilities on surface.
TAS Oct. 1998
58

59. • To enhance recovery, in some situations, a hole is drilled adjacent to the well and
steam is pumped down. The hot water helps to push the oil out of the rock and up into
the well.
© California Department of Conservation 59

60. Off-shore production facilities may include various pipelines on the sea floor
channeled to a Floating Production Storage and Offloading (FSPO) Vessel for further
processing.
60

61. Oil and Gas Production
At the Refinery
Distillation
Oil refinery
Plant
Car fuel
Jet fuel
Road tar
en.wikipedia.org/wiki/Image:Anacortes_Refinery_31911.JPG
en.wikipedia.org/wiki/Image:Crude_Oil_Distillation.png
 Before it can be used crude oil must be refined.
 Hydrocarbons can be separated using distillation, which
produces different fractions (or types) of oil and gas
61

62. The production facilities on land (eg Tema Oil Refinery, TOR) separates out the
gas, oil, and water into their separate phases.
Produced Gas
Oil
Production Separator
Produced
Water
TAS Oct. 1998
62

63. From there, the oil and gas may be refined
further before being ready to market.
Produced Gas
Storage Tanks
Oil
Production Separator Oil Refinery
Produced
Water
Finally, the gas and oil can be sold to power cars and heat houses.
TAS Oct. 1998
63

64. Exploration and Production
Today’s Major Oil and Gas Producing Areas
USGS
Global oil and gas occurrences are now well understood
(Main producing areas shown in green). Only the
Antarctica and the Arctic remain unexplored.
64

65. How Much Oil is there in the World ?
Where is it ?
In 2000 the world total oil reserves In 2000 the world total gas reserves were
were 143 Giga Tons, so distributed: 146,000 Giga cubic meters, so distributed:
With the current yearly consumption, world
With the current yearly consumption, world gas reserves will last about 63 years
oil reserves will last about 41 years
THE PRODUCTION (2007) IS ABOUT
86 MILLION BARRELS EVERY DAY.
THIS IS EQUIVALENT TO A CUBE HAVING A
FACE EQUAL TO SIX FOOTBALL FIELDS.
1 barrel = 159 litres of oil
65

66. With Oil We Produce Energy !
Car fuel
Airplane fuel
Truck fuel
Oil to produce electricity Ship fuel
Cooking gas Road
asphalt
Gas or oil healting
66

67. Oil in your Everyday Life
67

68. Oil in your Everyday Life
Other uses
en.wikipedia.org/wiki/Image:CD-R.jpg
en.wikipedia.org/wiki/Image:Konserveri
ng.jpg
en.wikipedia.org/wiki/Image:Lilit.jpg
Food additives
CDs and DVDs
Plastic Fertilizers and
Pesticides
The remaining 16% of crude oil is used for a range of purposes
shown above as well as synthetic fibres, dyes and detergents
68

69. Oil and Gas
Fuel source
http://en.wikipedia.org/wiki/Image:Shellgasstationlosthills.jpg
84% of crude oil is refined into
fuel, principally for cars and
planes
Demand is ever increasing,
especially due to growth of
Chinese economy
blogs.sun.com/richb/resource/NBC_at_the_Pump.jpg
69

70. Oil spills
 Natural oil seeps are
not unknown
 It is estimated that oil
rising up through
permeable rocks
escapes into the
ocean at the rate of
600000 tons per year.
 Tankers that flush out
their holds at sea
continually add to the
oil pollution of the
oceans. Oil spillage

71. Oil spills
 The oil spills occurs in two principal ways:
 From accidents during drilling offshore oil wells
 From wrecks of oil tankers at sea
 Oil spills represent the largest negative impacts
from the extraction and transportation of
petroleum.
 However, as a source of water pollution, they
are less significant volumetrically than
petroleum pollution from careless disposal of
used oil.

72. Oil and Gas
 Drilling accidents
may also
unexpectedly hit a
high pressure
pocket that causes a
blowout . An
example occurred in
the Gulf of Mexico in
1979 and in 2010
that released
millions of gallons of
An animal in an ocean where
oil. oil spillage has occurred.

73. Gulf of Mexico spillage
 You may have heard the news about the
Deepwater Horizon drilling rig which caught
fire, burned for two days, then sank in
5,000 ft of water in the Gulf of Mexico
 The rig belongs to Transocean, the world’s
biggest offshore drilling contractor.
 The rig costs about $500,000 per day to
contract.
 The rig cost about $350,000,000 to build in
2001 and would cost at least double that to
replace today.

74.  The rig represents the cutting edge of
drilling technology.
 It is a floating rig, capable of working in
up to 10,000 ft water depth.
 It is thought that somehow formation
fluids – oil /gas – got into the wellbore
and were undetected until it was too late
to take action.

75. Deepwater Horizon on location
in better days

76. Taken shortly after the rig
caught fire – the mast is still
there

77. The drilling mast has toppled over here –
they usually melt pretty fast when fire breaks
out

78. Support vessels using their fire
fighting gear to cool the rig

79. About noon Day 1

80. Day 2, morning

85. COAL
 Coal is not formed
from marine
organisms, but from
the remains of land
plants.
 The process requires
anaerobic
conditions, in which
oxygen is absent or
nearly so, since
reaction with oxygen Fig 6: Picture of Coal
destroys the organic
matter.

86. COAL
 The first combustible product formed under
suitable conditions is peat.
 Further burial, with more heat, pressure
and time gradually dehydrates the organic
matter and transform spongy peat into soft
brown coal and then harder coals.

87. Formation of Coal
 Accumulation of land plant material
 Reducing conditions – coastal and
inland swamps

88. Formation of Coal
 Organic accumulation
is greater than
destruction (because
of reducing
conditions)
 Organic matter builds
up to form peat

89. Formation of Coal
 Peat is compressed to
form lignite – brown coal
 Lignite is compressed and
volatile compounds are
lost to form bituminous
coal – soft coal
 Bituminous coal is further
compressed and heated
to form anthracite – hard
coal

90. COAL (continued)
Fig 7: Change in character of coal with increasing
application of heat and pressure.

91. COAL (continued)
 As the coals become harder , their carbon
content increases, and so does the amount of
heat released by burning a given weight of coal.
 The hardest, high carbon coals are the most
desirable as fuels because of their potential
energy yield.
 However, the heat to which coals can be
subjected is limited when compared with oil.
 Overly high temperatures lead to
metamorphism of coal into graphite.

92. Environmental impacts of coals use
 A major problem posed by coal is the pollution
associated with its mining and use.
 Like all fossil fuels it produces carbon dioxide
(CO2)when burned
 It produces significantly more carbon dioxide
per unit energy released than oil or natural
gas.
 Sulfur in coal
 Sulfur content of coal can be more than 3
percent, some in the form of iron sulfide mineral
pyrite (FeS2), some bound in the organic matter of
the coal itself

93. Environmental impacts of coals use
 When sulfur is burned along with coal, sulfur
gases are produced and these gases are
poisonous and are extremely irritating to eyes
and lungs.
 These gases also react with water in the
atmosphere to produce sulfuric acid and then
falls to earth as acid rainfall.
 Acid rain falling into streams and lakes can kill
fish and other aquatic life.
 It can acidify soil , stunting plant growth.
 It can also dissolve rocks

94. Environmental impacts of coals
use
 Ash
 Coal use produces a great deal of waste.
 The ash residue left after coal is burned ranges
from 5 to 20 percent of the original volume.
 It consists mostly of noncombustible silicate
minerals and also contains toxic metals.

95. Environmental impacts of coals
use
 If released with waste gases, the ash fouls the air.
 It must be disposed when confined within the
combustion chamber.
 If exposed at the surface, fine ash, with its
proportionately high surface area, may weather
very rapidly, and the toxic metals can be leached
from it, thus posing a water-pollution threat.
 Uncontrolled erosion of the ash can also cause
sediment pollution.
 The magnitude of this waste disposal problem
should not be underestimated.

96. Coal mining hazards and
environmental impacts
 Coal mining poses further problems.
 It is notoriously dangerous, as well as
expensive.
 Mines can collapse; miners may contract black
lung disease from breathing the dust.
 There is also the danger of explosion from
pockets of natural gas that occur in coal seams.

97. Coal mining hazards and
environmental impacts

98. OIL SHALE
 The potential fuel in oil shale is a waxy
solid called Kerogen, which is formed
from the remains of plants, algae, and
bacteria.
 The rock must be crushed and heated to
distill out the shale oil which is then
refined somewhat as crude oil is to
produce various liquid petroleum
products.

99. OIL SHALE

100. TAR SAND
 Tar sands are sedimentary rocks
containing a very thick, semi-solid, tarlike
petroleum.
 Tar sand deposits may represent immature
petroleum deposits, in which the
breakdown of large molecules has not
progressed to the production of lighter and
gaseous hydrocarbons.
 The lighter compounds may have migrated
away, leaving this dense material behind.

101. TAR SAND
 The tar is too thick to flow out of the rock
and must be mined, crushed, and
heated to extract the petroleum, which
can be refined into various fuels.

103. Sedimentary Basins
of Ghana
Ghana has four sedimentary
basins; three offshore and one
onshore.
The offshore (below the sea bed)
basins are the Tano Basin,
Saltpond Basin, Accra- Keta Basin
and the onshore (land based) basin
is the Voltaian Basin

104. CHALLENGER
SOPCL
AFREN
AFREN ORANTO
CELTIQUE
CELTIQUE
KOSMOS
VITOL YEP
HESS

105. Offshore exploration activities
Accra /Keta basin
Saltpond
Tano Cape Three
Points

106. EXPRESSION OF INTEREST
1982-2004
ACREAGES1982-2005 APPLICATIONS
WITH
STERLING
ORANTO
MONCRIEF
OVERT
MIDWAY
BRITISH
BORNEO
YEP
TAPOIL
Kosmos 3D
Vanco 3D
Vanco 3D

107. COMPARATIVE SIZE OF VOLTA BASIN WITH REST
OF GHANA’S SEDIMENTARY COVER
(%)
AREA AREA
AREA SIZE (km²) UNDER
LICENSED UNLICENSED
LIC.
Voltaian Basin
103,600 0 0 103,600
(Inland)
Coastal Onshore 3,500 0 0 3,500
Shelf Region
23,000 4,869 21.2 18,131
(0 – 200m)
Deepwater
26,900 22,127 82.3 4,773
(200 – 3000m)
Area Total 157,000 26,996 17.2 130,004
10/19/2012 VoltaianProjectUnit 107

108. Potential of the Voltaian Basin
• The Voltaian Sedimentary Basin has a very bright outlook for its
hydrocarbon exploration. There really exists a thick sedimentary
cover of at least 6km in its deepest sections.
• There must certainly be oil + gas in the Voltaian Basin waiting to
be tapped. On account of the thickness of its sedimentary cover
and the bituminous and other hydrocarbon indications encountered
in the Soviet wells of the 1960s, this Basin is deemed to possibly
harbour favourable conditions for generation and accumulation of
commercial quantities of hydrocarbon.
• There are possible structural and stratigraphic leads that could
provide favourable architecture for generation and accumulation of
commercial quantities of hydrocarbon.
• The occurrence of sandstones and limestones in the
succession, may serve as suitable reservoir rocks.
• Known oil and gas discoveries and production already exist in
analogous basins in North Africa and elsewhere in the world.
10/19/2012 VoltaianProjectUnit 108

110. Definitions
 The Upstream Petroleum Industry
involves Exploration, Development and
Production.
 On the other hand, the Downstream
refers to the refining/processing and
distribution of petroleum products.

111. The framework is established and given legal backing by
two main statutes:
• PNDC Law 64
• Petroleum Exploration and Production Law
(PNDC Law 84)
• These laws are supplemented by the
Petroleum Income Tax Law (PNDC Law
188)

112. PNDC Law 64
 PNDC Law 64 established the Ghana
National Petroleum Corporation and
made it responsible for managing the
petroleum resources in Ghana.
 The Law, in the main, spells out the
organizational structure, the objects and
modus operandi of GNPC.
 The supervising Ministry of the activities
of GNPC is the Ministry of Energy

113. PNDC Law 84
 The Petroleum Exploration and Production
Law (PNDC Law 84) provides the framework
for the management of oil and gas
exploration, development and production.
 The Law establishes the contractual
relationship between the State, GNPC and the
prospective investor in the upstream
operations.
 It defines the basic terms and conditions of
any Petroleum Agreement, spelling out the
rights and obligations of each party with
appropriate sanctions.

114. Model Petroleum
Agreement
 The area that has been applied for and awarded;
 Exploration Period and the related Work
Programme, Cost of the Work Programme, and
Sanctions in case of default;
 Benefits: Clearly defined benefits to be derived by
the State which in the case of Ghana is through the
Royalty Tax System:
 Rate of Royalty
 Carried Interest
 Additional Interest
 Additional Oil Entitlement (AOE)
 Income Tax
 Annual Surface Rentals

115. Monitoring Of Operations
 A Joint Management Committee (JMC) which is
established by the Petroleum Agreement, comprising
equal number of representatives from GNPC and
Investor and chaired by GNPC.
 GNPC is empowered to review the work programme
of Investor and audit:
 the cost of operations,
 procurement processes of Investor,
 employment contracts made by Investor and has the
power to approve, reject or ask for modification
 The Law empowers GNPC to attach its officers
to operations during all phases of operations

117.  The benefits accruing to the State from
any petroleum exploration and
production venture is predetermined in
the Petroleum Agreement and approved
by Cabinet and ratified by parliament
before the commencement of the
exploration activity.

118.  Because of the risky nature of the
exploration and production business and
the State’s desire to avoid high exposure in
petroleum exploration and production
activity, it has adopted the Royalty Tax
System instead of the Joint Venture
System.
 The main advantage of the Royalty Tax
System, is that the resource owner, that
is, the State, can get its resources
exploited and receive benefits without
making any financial contribution

119.  Under the system, the State derives its
benefits from levies on production. The
levies are:
 Royalty;
 Carried Interest;
 Paying Interest;
 Additional Oil Entitlement;
 Petroleum Income Tax; and
 Annual Surface Rental

120. Hypothetical benefits to the
nation in the current discovery
 The benefits from any discovery is spelt
out in the Petroleum Agreement before
its execution.
 Let us assume a production of 100,000
barrels per day, which is the minimum
expected from the Mahogany/Hyedua
Field in full field development

122.  From the above computation, oil
accruing to the State is calculated as
38,209 barrels per day out of 100,000
barrels per day production
 US $60 a barrel Χ 38,209 = US
$2,292,540.00 per day
 365 Χ $2,292,540.00 = US
$836,777,100.00 per annum.

123. Concluding remarks
 All these fossil fuels are running out
 and burning them increases carbon dioxide in the
atmosphere which increases the greenhouse
effect, causing global warming.
 Some fossil fuels contain sulphur and when they burn
this becomes sulphur dioxide, a poisonous gas which
reacts with water in the atmosphere to form sulphuric
acid or acid rain.
 To solve the problems of fossil fuels, we need to
develop renewable forms of energy such as:
 Hydropower
 Wind Energy
 Biomass 123