Ghana’s Oil Production: Approaching Peak or Poised for Growth?

Peak oil is the hypothetical point at which global crude oil production reaches its maximum rate, after which production will decline. Multiple countries have experienced peak oil, such as the United States in 1970, when geologist M. King Hubbert predicted it in 1956; Iran in the 1970s; Canada; and many more. Fortunately for the United States, the shale revolution 2009 caused the country’s natural gas reserves to jump significantly. The new drilling technologies ultimately accounted for a 35% surge in gas reserve estimates nationwide.

Ghana’s oil was discovered in 1869 when seepages of hydrocarbons were chased in shallow wells. Ghana was not left behind when global activities moved offshore. The first and only exploratory well in the Voltaian basin was drilled in 1974 by Shell, following the acquisition of a 206-kilometer 2D seismic data line at the southern part of the Voltaian basin. Oil and gas production in the Saltpond Field started in 1978 and peaked at 4,500 bopd.

The discovery of significant oil and gas accumulations in 2007 and the commencement of production in the Jubilee field in November 2010 were the most significant events in Ghana's O&G sector in the late 2000s. Seismic data coverage has increased: 2D seismic data totaled about 70,000 line kilometers in 2011, while 3D seismic coverage is over 24,000 sq. km. Over 160 wells have so far been drilled in Ghana's sedimentary basins.

Will Ghana’s Oil Production Peak at Any Point Soon?

The concept of peak oil has sparked a range of perspectives, depending on the source of information. For instance, international organizations such as the Organization of the Petroleum Exporting Countries (OPEC) anticipate that global oil production will peak around 2045. In contrast, the International Energy Agency (IEA) forecasts an earlier peak occurring between 2028 and 2035.

Let us examine the trajectory of Ghana’s oil production over the years. Ghana’s oil production has experienced considerable fluctuations since 2010, when major production activities commenced. According to Mr. Dwamena from the Petroleum Industry Advisory Committee (PIAC), between 2011 and 2015, Ghana’s oil output rose significantly from 10,669,046 barrels to 19,038,084 barrels. However, this upward trend was interrupted in 2016 when production declined to 11,440,120 barrels. Production began to recover and reached 34,236,059 barrels in 2020. Nonetheless, this momentum did not last long, as production began to decline once again. By July 2024, Ghana was producing 24,857,780 barrels.

This raises the question: does Ghana’s oil sector have a sustainable future, given these fluctuations and recent declines? Will Ghana’s oil production trend align with the predictions made by OPEC and the IEA, or is there a pathway to avoid a premature peak?

The answer is yes!

Ghana can mitigate the risk of an early production peak by enhancing its oil refining and processing capabilities. Moreover, improving energy efficiency across all sectors will further support the longevity and sustainability of the country’s oil industry, although that is a discussion for another day.

REFERENCE: starter.com, gosco.com, GNPC Ghana, PIAC, International Energy Agency, Wikipedia, forbes.com