Assessment of the economic and socio-environmental potential of small-scale mining of oil sands in Ondo State, Nigeria

Abstract

Despite the vast abundance of oil sands in Nigeria, a comparative economic assessment is yet to be carried out to evaluate the feasibility of different mining arrangements to exploit it. This research investigates the appropriate approach for the exploitation of the oil sands deposits in order to improve the local economy and to minimise the natural contamination associated to the oil sands. A preliminary economic assessment and sensitivity analysis were carried out on the variables. The results indicate that the mining scenario with synthetic crude oil production is not likely to be feasible because of the significant capital expenditure required and the competition from higher-quality oil reservoirs both onshore and offshore oil. The results show that social license to operate scenario, even with an additional investment of CAD$3 M, delivers a net present value 11% higher than the scenario without a specific allocation for social license to orientated investments.