Oil in Libya

Materials World magazine
2 Sep 2011
Libya sand dunes

Michael Forrest talks to Professor Richard Moody and Dr Danny Clark-Lowes about the Libyan oil industry and its future.

Oil-producing nations with relatively small populations are both blessed and cursed. Libya is such a country, whose curse is worsened by the current civil war, the outcome of which indicates a seachange in government. The Libyan economy is dependent on oil exports. They account for 95% of export earnings and 80% of government revenue, and gave, until recently, its 6.5 million citizens one of the highest per capita GDPs on the African continent.

This makes oil exploration and production paramount to the country’s leaders, whoever they may be in the future, and central to the economy of the nation. In 2003, Colonel Gaddafi renounced weapons of mass destruction. Three years on, all sanctions were lifted from the country, prompting foreign investment to flow into the country, and especially into the oil and gas sector. The National Oil Corporation announced plans to nearly double oil production to three million barrels of oil per day (a barrel is 42 US gallons or 159 litres), targets that were never met.

Then, on 15th February 2011, the conflict began between Libyan rebels and the forces loyal to Colonel Gaddafi. By mid March, oil production had fallen by 50% and many expatriate workers in the sector had left the country. Subsequently damage to infrastructure has occurred.

Back to the beginning

Geological surveys started under the auspices of the Italian National Academy when, in 1926, an expedition led by Ardito Desio traversed the country from the coast to the Sudanese border and back via the Fezzan region. In 1935, in consultation with other Italian geologists, he reported that there was little expectation of finding oil in commercial quantities in the country.

Professor Richard Moody explains, ‘Active exploration for oil began in 1953, following the discovery of oil in Algeria. The first discovery well was drilled in western Fezzan (the southwest third of Libya) three years later, followed by the first commercial discovery by Esso (now ExxonMobil) in 1959.’ By 1961, the first oil flowed by pipeline from Esso’s concession at Zelten to its export facilities at Masra al Burayqah and four years later Libya was the world’s sixth largest exporter of oil. According to the BP statistical review, Libyan production in 2010 was 1,628,000 barrels per day. Placed in context, it is some way behind the largest producer, Russia at 10,270,000bbl/d, followed by Saudi Arabia at 10,007,000 bbl/d but ahead of UK production at 1,339,000 bbl/day.

Libya has five major onshore oil basins, three in the east and two in the west, with the Sirte Basin being the most productive. Sirte is the youngest of the Libyan oil basins and is attributed to the collapse of a structural high that existed 400–140 million years ago. Early sediments in the basin were coarse clastics that were common in North Africa in the early Cretaceous, but from the late Cretaceous to the Tertiary Period, carbonate deposition predominated. Sirte is the largest basin, and contains 16 giant oil fields. It accumulated large quantities of organic-rich source rock in the late Cretaceous, which gave rise to two sources rocks, the Rachmat and Sirt Shale.

In the south west of the country, the Murzuk Basin forms a large intracratonic basin between Algeria, Niger and Chad and has some 3,000m of sediments from Cambrian (540Ma) to the Quaternary age. The Silurian-aged Tannezuft Shale is the major source rock. The western Ghadames Basin has a maximum thickness of around 7,000m, with the deepest part found in neighbouring Algeria. It contains many small fields based on Silurian and Devonian reservoirs. The Cyrenaica platform has potential from a series of troughs and uplifted blocks.

‘The size and importance of the Sirte Basin to Libyan reserves and production can be illustrated by comparison with the UK North Sea oil province,’ says Moody. The Sirte Basin was discovered 10 years before those in the North Sea, although their geology is remarkably similar in structure, both dominated by a series of horsts (uplifted blocks) and grabens (downthrown blocks) that allow the juxtaposition of source rocks, reservoirs and seal cap lithologies to create oil deposits. They are also of a similar size, with Sirte extending over 700km. This same area encompasses most of the northern North Sea province. They are also similar in age – both are Mesozoic. The mainly clastic infilled basins of the North Sea are Jurassic-age (200Ma), while the mainly carbonate infill of Sirte are around 55 million years younger.

Calculating reserve estimates in oilfields has never been easy, with a number of high profile overestimates (such as Shell’s 2004 estimates in Nigeria and Australia) and subsequent revisions. So far Sirte has dominated production with around 23 billion barrels (Bbbls) of historical production, with Murzuq around 0.5 Bbbls and NW Offshore around 0.1 Bbbl. Other oil provinces have produced only minor amounts. Identified unproduced reserves at Sirte are around 10 Bbbls. In second place is Murzuq with possibly three Bbbls unproduced reserves.

In reserve

Overall the published data by the Libyan National Oil Company have maintained a 44 Bbbls reserve, despite production at around the 1.2-1.6 million barrels of oil per day or circa 0.5 Bbbls per annum, presumably accounted for by upward reserve revisions during production. A review by Nubian Consulting indicates that remaining reserves are in the range 12-20 Bbbls for conventionally recoverable with another circa 10 Bbbls potentially available from ‘reserves growth’ and ‘enhanced recovery’, and with further yet to be found reserves of 6-10 Bbbls. Some 28 Bbbls have already been produced. In comparison, the North Sea has some 11.1 bbls remaining conventionally recoverable oil, with historical production at the much higher figure than that for Libya of 52.5 Bbbls.

There has been considerable investment in oil exploration from 2005 to 2010, mainly by foreign companies, but also by government, yet the results have been disappointing. Dr Danny Clark-Lowes explains, ‘Last year some of the exploration companies petitioned the National Oil Company and said without a downward revision of taxation levels, future exploration would cease’. However, Shukri Ghanem, head of the National Oil Company and former prime minister, has stated that government investment would be focused on rehabilitating existing fields. Areas of particular exploration potential include glacial deposit reservoirs in the late Ordovician of the Ghadames Basin, Jurassic and Cretaceous of the offshore Sirte embayment and potential Nubian sandstone stratigraphic traps in the southern Sirte basin.

Considering the future

The end of the present conflict is in sight, although inevitably oil production and its revenues will be a necessary requirement to rebuild the country. During the conflict, one million barrels were loaded at Tobruk from a pipeline (later destroyed by Gaddafi’s airforce) from the southern Sirte basin. Since the imposition of UN sanctions, only three tanker-loads have been shipped. Significant investment in infrastructure for the oil industry will be required after the conflict to rehabilitate and advance the industry. Past oil revenues were spent on schemes such as the Great Man Made river, which cost US$42bln yet is based on unsustainable fossil groundwater, and on large housing schemes that struggled to find occupants. What is significant is that little was spent on exploration and that there is no refinery in Libya capable of producing consumer products, both requisites for the future of the industry and the country.

Further information

Richard Moody, Emeritus Professor of Geology, Kingston University, London. Email: rtj.moody@virgin.net
Dr Danny Clark-Lowes, Principal Consultant, Nubian Consulting. Email: d.clarklowes@btopenworld.com