p.17 IAEE Energy Forum Singapore Issue 2017 The Technical and Economic Viability of Producing Marginal Oil Fields in the Niger-Delta Using Water Injection By Rita U. Onolemhemhen, Sunday O. Isehunwa, Akin P. Iwayemi, Adeola F. Adenikinju IntroductIon and overvIew Marginal felds are economically sensitive to develop which is why marginal felds are faced with challenges ranging from technical to economic challenges. Producing marginal felds conventionally is one of the ways operators of marginal felds cut cost of development and production. Marginal Fields are currently estimated to contribute about 30% to 40% of global oil produced and are gaining ever growing importance due to the natural production decline of large, mature felds. Large International Oil Companies (IOCs) and smaller independent com- panies are developing skills and capabilities to unlock the potential from marginal felds and small developments. However, since the beginning of Petroleum exploration in Nigeria in the 1930’s, many oil felds have been left undeveloped and termed marginal by the International oil companies (IOCs) (Ofa 2011). This is as a result of the volume of the oil and gas in such felds (small reserves) and the economic sensitivity attached to developing them. According to the US Legal.com, marginal feld refers to an oil feld that may not produce enough net income to make it worth developing at a given time. However, should technical or economic conditions change; such felds may become commercial felds. Given that the era of easy to fnd oil is coming to an end and the persistent plunge in crude oil prices, the future of marginal feld operators seem less assured due to the economic sensitivity of such felds. This study, therefore investigated one of the ways of increasing production from marginal oil felds within an economic framework through the improvement of recovery factor. overvIew of MargInal fIeld PolIcy In nIgerIa Marginal Fields development is an ofshoot of Federal Government policy to kick-of indigenous participation in the upstream sector of the petroleum industry. The government sought to achieve this objective by ensuring the farm out of marginal felds within the concessions of the major multinational oil operators to the indigenous operators. The principal legislation of the Nigerian Petroleum Industry is the Petroleum Act 1969 Laws of The Federation of Nigeria (The Act) which vests ownership and control of all petroleum to the Federal Government. The Act provides for the grant of three types of interest in oil blocks by the Minister of Petroleum Resources as well as a provision for assignment/ farm out of rights held under such licenses. The licenses are exploration licenses, oil prospecting license (OPL) and oil mining lease (OML). Marginal oilfeld became a policy of Government under the Petroleum (Amendment) Decree No 23 of 1996, which introduced paragraph 16A to the 1st schedule to the Petroleum Act. The legislation provides that the holder of an Oil Mining Lease may with the consent of the Head of State farm-out any oil Field within its leased area or the Head of State may cause the farm-out of a marginal feld that has been left unattended to for a period of not less than 10 years from the date of frst discovery. This can hardly be regarded as a defnition. Furthermore there were serious implications attached to this form of defnition - that of the arbitrary classifcation of felds as marginal. In order to restrict the arbitrary classifcation of felds as marginal, the Department of Petroleum Resources issued guidelines enumer- ating the features, which must exist before a feld can be classifed as marginal. They are as follows: 1. Low stock tank oil initially in place (STOIIP) and therefore low reserves. 2. Long distance from existing production facilities, thereby making them uneconomically viable to put on stream. 3. Fields with crude characteristics that is diferent from current streams (such as crude with very high viscosity and low API gravity) which cannot be produced through conventional methods. 4. Fields not yet considered for development because of marginal economics under current mar- ket and fscal conditions. 5. Field with one or more wells which have not been developed by the operating companies as R. U. Onolemhemhen is a PhD candidate at the Centre for Petroleum, Energy Economics and Law, University of Ibadan. Nigeria (Corresponding author, e-mail: ritaonos@gmail. com). S. O. Isehunwa is a Professor of Petroleum Engineering at the University of Ibadan. P.A. Iwayemi and A.F Adenikinju are Professors of Economics and Principal ofcers at the Centre for Petroleum, Energy Economics and Law, University of Ibadan.