New gas exploration to boost Tanzania power

(East Africa Business Week)

DAR ES SALAAM, Tanzania — ORCA Exploration Group, the main supplier of natural gas, has significantly increased supply of natural gas to from Songo Songo island in southern Tanzania’s Indian Ocean to Dar es Salaam power generation, from 37 million cubic feet per day (MMcfd) to 57 (MMcfd).

Orca Shifts Focus to Exploration Activities

Oil Voice

Orca Exploration now has a greater focus on exploration to balance its cash flow generative asset in Tanzania. This will commence with the drilling of the La Tosca well in the Po Valley Basin in Q4 2011 where the Company has signed a contract with a subsidiary of Northern Petroleum Plc to farm in on between 70% and 75% of its Longastrino exploration block.

East Africa basks in big gas strikes

17 February 2011 (Source: UPI)

DAR ES SALAAM, Tanzania, Feb. 17 (UPI) — A string of natural gas strikes along Africa’s east coast, with reserves currently estimated at 21 billion cubic feet, is transforming the region into a world-class energy producer after years of being in the shadow of the oil boom in West Africa.

Most of the gas discoveries are off Mozambique and Tanzania but exploration is also under way in Kenya, Ethiopia and the breakaway Somali state of Puntland.

The Indian Ocean island of Madagascar is believed to hold “enormous reserves” of gas, industry sources say.

Seismic data suggest that there are massive offshore oil and gas deposits along East Africa’s coastline, centered largely on a fault line running from war-ravaged Somalia south to Madagascar, making it one of the last great frontiers in the hunt for hydrocarbons.

Major energy companies such as Italy’s ENI, Malaysia’s state-owned Petronas and the giant China National Offshore Oil Corp. have all moved into the region in the last few years.

Plans are afoot to construct a liquefied natural gas export terminal, the region’s first, to supply ever-rising energy demand in Asia by tanker across the Indian Ocean.

The gas reserves are expected to feed a proposed regional pipeline network to meet energy demands in the five-nation East African Community, which are forecast to increase considerably.

“East African offshore oil and gas exploration, long eclipsed by … by activities in West Africa, is now gathering pace,” a Feb. 3 assessment by global strategic analysts Oxford Analytica observed.

“The discovery of hydrocarbon reserves along Africa’s eastern seaboard remains dwarfed by those on the Atlantic coast. They have also taken longer to locate than the early pioneers had hoped. “However, the oil industry majors — stung by the discoveries in Ghana and Uganda in areas they had long discounted — are reluctant to repeat the error, which is likely to help sustain interest in exploration in the east.”

In Tanzania, the main operator of the offshore Songo Songo gas field is the Toronto-listed Orca Exploration through its subsidiary PanAfrica Energy, in cooperation with the state-run Tanzania Petroleum Development Corp. and Bermuda’s Globeleq.

Orca plans to boost production by 60 percent by next year to meet Tanzania’s burgeoning demand for energy. The country has a generating capacity of 1,300 megawatts but can only produce 850MW, which entails power rationing.

Ophir Energy of London operating with BG International, also London-listed, says it made two significant gas strikes in the northern Rovuma Basin in 2010. France’s Maurel and Prom is exploring in that region, too.

To the south in the former Portuguese colony of Mozambique, production is limited to a pair of onshore fields.

But the state-owned oil and gas company, Empresa Nacional de Hidrocarburos, is to start drilling in central Mozambique’s Buzi field soon.

The Andarko Petroleum Corp., of The Woodlands, Texas, reported making three strikes in 2010 on the Mozambique sector of the Rovuma Basin. These are still being evaluated but Oxford Analytica noted that they “have changed the profile of East African natural gas potential.”

It concluded: “Combining Mozambique and Tanzania’s natural gas potential to supply a new regional gas pipeline network will take many years and require substantial investment.

“However, the precedent set by the West African Gas Pipeline demonstrates that such a project is politically and technically feasible.

“Construction of a new LNG export terminal to supply rising Asian energy demand — while significantly more ambitious — is likely to be tempting due to the region’s relatively shorter transshipment routes to eastern energy markets.”

In Uganda, the big Lake Albert oil field, discovered in 2006 by London’s Tullow Oil, is expected to start production later this year. It’s slated to reach 150,000-350,000 barrels per day.

Lake Albert, which lies in the center of Africa between Uganda and the Democratic Republic of Congo, is estimated to contain up to 6 billion barrels of oil but wars and political instability in the region could crimp exploration efforts, particularly in Somalia, the DRC and insurgency-ridden Ethiopia.

However, the prizes to be had may make the risk of operating in these zones irresistible.

Somalia, which has been wracked by war since the fall of dictator Mohammed Siad Barre in 1991, could contain as much as 10 billion barrels of oil.

Tanzania, partners discuss construction of gas pipeline to Mombasa

22 January 2011 (Source: Guardian IPP Reporter, Dar es Salaam, Tanzania

Recent discoveries of natural gas off the coast of Tanzania have taken the East African nation’s total reserves to 7.5 trillion cubic feet, sufficient to allow exports to the region, the East African Community said.

Tanzania and the regional grouping are discussing the possibility of building a pipeline from the commercial hub of Dar es Salaam north through Tanga to Mombasa, Kenya, according to a statement e-mailed to Bloomberg from the body.

Earlier reports last year said the Toronto-listed Orca Exploration (ORCb.V) plans to raise daily natural gas production at the Songo Songo field in Tanzania by 60 percent by the end of 2012 amid growing domestic power demand.

The company’s 2009 annual report, seen by Reuters said infrastructure constraints limited production capacity to 90 million cubic feet a day.

The reports said a target for 2010 was to “assist … in planning a permanent expansion of the infrastructure system to 144 million cubic feet … with the intention that the extra capacity will become operational by the end of 2012.”

The company said in November it saw capacity reaching 140 million cubic feet daily within two years.

Demand for power is surging in east Africa’s second largest economy and Tanzania is expected to save billions of dollars over the next 20 years using natural gas instead of oil imports.

Orca said it planned this year to increase its gas processing and transportation capacity on a temporary basis to 105 million cubic feet per day.

“To increase the overall capacity of the infrastructure system to operate at 200 mmcfpd, a twin onshore pipeline will need to be constructed. The timing of this will be dependent on the increase in gas demand, but it is forecast to be required by 2015/16,” the reports said.

Orca operates the Tanzanian project via its wholly-owned subsidiary PanAfrican Energy and in cooperation with power company Songas, a consortium including state-run Tanzania Petroleum Development Corporation and Bermuda-based Globeleq.

It supplies the gas to 35 industrial customers and for power generation for the national grid by Songas and state-run Tanzania Electric Supply Company.

“Based on the current reserves and anticipated field deliverability profiles, Orca intends to develop gas markets that will utilise approximately 100 to 120 million cubic feet of additional gas on an average annual basis.” said the reports.

New Trend Africa reported recently that natural gas production at Songo Songo in Lindi will be doubled to meet the growing demand of gas for electricity generation and for vehicles.

Production of gas from 5 out of 11 wells at Songo Songo is currently at the rate of 70 mm standard cfpd but processing facilities are inadequate. Plans are underway to expand the processing capacity to 140 mm cfpd so that more gas could be shipped to Dar es Salaam for additional power generation, compressed natural gas (CNG) for vehicles, industries and domestic use.

The plans are contained in a report by Tanzania to the 4th East African Petroleum Conference where Tanzanian officials to the three-day conference were led by the minister foe Energy and Minerals, William Ngeleja.

The offshore Songo Songo natural gas fields were discovered in 1974 and gas production started in July 2004. According to Tanzania Petroleum Development Corporation, in order to double gas production at Songo Songo, more wells have to be drilled to the north and west of the island to increase reserves for the growing multiple use of natural gas.

Gas production at the Mnazi Bay in Mtwara region is currently estimated at 0.9 mm cfpd and is used for generating 4.5 MW of electricity for Mtwara and Lindi.

Engineer Joyce Kisamo told the conference organised by the East African Community secretariat that natural gas was ideal as a source of energy in urban areas because it is environment friendly. According to her, Tanzania currently has four gas sites at Songo Songo (1974), Mnazi Bay (1982), Mkuranga (2007) and Nyuni (2008).

More gas fields are likely to be discovered given the production sharing agreements the Government has signed with more than 20 oil and gas exploration companies. Eng. Kisamo said the Government’s long term plans were to use natural gas for electricity generation and for cooking.

East African Community Plans to Build Natural Gas Pipeline From Tanzania

21 January 2011 (Source: Bloomberg.net – Nairobi, Kenya)
– By Sarah McGregor

The East African Community said it’s discussing the possibility of building a pipeline to carry Tanzania’s natural gas to other members of the bloc.

The proposal would send the fuel north from Tanzania’s commercial hub of Dar es Salaam to Kenya’s port city of Mombasa, the EAC, based in Arusha in northern Tanzania, said in an e- mailed statement yesterday. The group’s other members are Uganda, Rwanda and Burundi.

COWI A/S, a Danish engineering consultant, in July began studying the cost and environmental impact of the proposed pipeline with a $561,700 grant from the Tunis-based African Development Bank, the statement said.

Recent discoveries of natural gas off the coast of Tanzania have taken the country’s total reserves to 7.5 trillion cubic feet, sufficient to allow exports to the region, according to the statement. It didn’t provide more details.

Gas was found at two sites off Tanzania in a drilling program led by Ophir Energy Plc., a U.K.-based oil and gas explorer, in October, Halfani R. Halfani, director of exploration at Tanzania Petroleum Development Corp., said on Dec. 6. The company was due to start drilling a third deep-water well off Tanzania in December in partnership with BG Group Plc.

There are two gas deposits in commercial production in Tanzania. Songo Songo holds 1.5 trillion cubic feet of gas, while the Mnazi Bay field, near the border with Mozambique, has 2 trillion cubic feet, Halfani said.

Tanzanian waters have seen increased oil and gas exploration over the last several years. The Songo Songo West field may contain about 500 billion cubic feet, Peter Clutterbuck, deputy chairman of Orca Exploration Group Inc., said on Nov. 5. Aminex Plc, an Irish oil and natural-gas explorer, said in July 2008 that its Kiliwani-North gas discovery in Tanzania was commercially viable.

Tanzania: Orca Exploration Announces its Results

4 January 2011 (Source: Tanzania Daily News, Dar es Salaam)
– Abduel Elinaza

ORCA Exploration, through its subsidiary Pan African Energy – Tanzania, has generated a revenue from exploration activities that increased by 44 per cent, thanks to domestic high natural gas demand.

The increase of fund flow in the third quarter of 2010 was attributed to the country’s “hydro generation output declines during the dry season.”

The Orca Exploration Group chairman and Chief Executive Officer, Mr W. David Lyons, said the firm generated USD 6.1milion which is an increase of 44 per cent compared to the same period in 2009.

“Orca’s cash flows are forecast to continue to grow on an annualized basis,” Mr Lyons said in a financial results statement released recently. The big share of the revenue flow came from industrial gas sales volumes which increased by 33 per cent to 8.4 million cubic feet per day (MMcfd).

The utility gas sales also were increased by 17 per cent to 31.7 MMcfd in the same quarter under review. Despite is turnover increase, the company said it may deplete its cost recovery pool that has been brought forward from previous years during the course of the next few months.

Accordingly, Mr Lyons said, until higher capital expenditures are incurred on activities such as the drilling of Songo Songo West, the company’s revenue will reflect the costs incurred during each period plus the relevant profit share.

Nevertheless the year outlook is good for Orca because of number of gas exploration activities and demand. The first EastCoast Transmission and Marketing, Orca’s project, currently being evaluated is the feasibility of a 207-kilometre onshore pipeline that could run parallel to the existing onshore pipeline from the Songo Songo field area to Dar es Salaam.

The CEO said: “There is an increasing exploration activity” offshore East Africa with four gas discoveries by Anadarko in Mozambique and by British Gas 65 kilometres from Songo Songo Island offshore Tanzania.

British Gas is expected to drill a further two wells over the next six months. Statoil and Exxon Mobil also have offshore blocks that are expected to be drilled in 2011. To lead in the development of natural gas markets in East Africa, Orca recently announced the creation of a new infrastructure division, EastCoast Transmission and Marketing.

“This will accelerate the commercialisation of Orca’s Tanzanian gas reserves whilst also creating a new revenue stream for the company,” Mr Lyons said. If successful, Orca plans to lead in the establishment of a coastal gas pipeline network that can be accessed by other upstream operators and used to transport their gas to the principal industrial hubs in East Africa including Mombasa in Kenya.

Northern Petroleum farms out La Tosca prospect to Orca Exploration

8 December 2010 (Source: Northern Petroleum News Release)

Northern Petroleum (LON:NOP) has agreed to farm out the Longastrino Permit in the eastern part of the Po Valley Basin, onshore Italy, in a deal with Orca Exploration (TSX-V:ORC).

Longastrino’s main target is the La Tosca prospect, which is just 2 kilometres away from the Alfonsine gas field. “We are delighted to welcome Orca as a new partner and to this permit,” NOP director Graham Heard said. “This third farm-out in Italy is part of Northern’s ongoing farm-out campaign which to date has involved eight permits. We look forward to further farm-outs.”

Initially Orca will earn a 70 percent stake in the permit by drilling the first well, at a cost of up to €4.3 million. It can then earn a further 5 percent when the well is flow tested and completed, with costs up to €1.3 million.

Once it has taken the full 75 percent stake it will also have to pay back costs of €0.6 million to NOP.

“Orca is delighted to be partnering with Northern Petroleum drilling the La Tosca well,” Orca chairman and chief executive David Lyons said. “We see this as a low risk exploration opportunity in a proven hydrocarbon basin with significant upside potential, “This acquisition is Orca’s second entry into Italy which we believe has substantial reserves and has been overlooked by the major players.”

Drilling is expected to get underway in 2011. La Tosca-1 will be drilled to around 2,500 metres.

NOP estimates that La Tosca has 45 billion cubic feet of gross mean prospective resources, based on 3D seismic. And NOP said that drilling on La Tosca will target the upside to this resource – 85 billion cubic feet gross prospective gas resources.

Italy: Orca Exploration farms into Northern Petroleum’s Longastrino Permit, Po Valley, onshore Italy

8 December 2010 (Source: energy-pedia exploration news)

Northern Petroleum has announced an agreement to farm-out to Orca Exploration an interest in the Longastrino Permit in the eastern part of the Po Valley Basin, onshore Italy.

Under the terms of the farm-out agreement, Orca will pay 100% of the costs of the first well up to Euro 4.3 million and 70% thereafter to complete the drilling phase. If the well is tested and completed, then Orca will earn an additional 5% by paying 100% of the testing costs up to Euro 1.3 million and 75% thereafter. Orca will also pay back costs of Euro 0.6 million.

Northern’s equity will reduce to 30% during drilling and then by a further 5% if the well is flow tested in which case Northern will retain 25%.

The principal target within the Longastrino Permit is the La Tosca Prospect. The prospect is just 2 kms to the northeast of the Alfonsine gas field and the 3D seismic that covers the prospect shows a well defined seismic amplitude anomaly within the mapped closure. The La Tosca-1 well will be drilled to an estimated total depth of approx. 2,500 metres. The well is scheduled to be drilled in 2011.

In Italy Northern has pursued a focussed approach to licencing and now holds 14 permits and 22 applications and established a position of strength. Using modern 3D seismic, Northern has interpreted the La Tosca Prospect, with 45 billion cubic feet of gross mean prospective resource. Work is being progressed to secure a well site from which to drill the well for this farm-out. The drilling of the La Tosca Prospect will target an upside of 85 billion cubic feet gross prospective resource of gas.

Northern will be the Operator during the drilling and testing phase and Orca will assume Operatorship of the permit thereafter.

Graham Heard, Exploration & Technical Director, Northern, stated: ‘We are delighted to welcome Orca as a new partner and to this permit. This third farm-out in Italy is part of Northern’s ongoing farm-out campaign which to date has involved eight permits. We look forward to further farm-outs.’

David Lyons, Orca Exploration Chairman and CEO added ‘Orca is delighted to be partnering with Northern Petroleum drilling the La Tosca well. We see this as a low risk exploration opportunity in a proven hydrocarbon basin with significant upside potential. This acquisition is Orca’s second entry into Italy which we believe has substantial reserves and has been overlooked by the major players.’

Orca plans Songo Songo boost

4 December 2010 (Source: Baklon Oil & Gas Forum )

Toronto-listed Orca Exploration says it plans to drill a new well next year to boost natural gas production at the Songo Songo field in Tanzania amid growing local energy demand.

Orca said in April it planned to raise daily natural gas production at the Songo Songo field – with 490.2 billion cubic feet of proven and probable gas deposits– by 60% by the end of 2012 to 144 million cubic feet.

The company’s third quarter report, seen by Reuters today, said there was an urgent need to expand the infrastructure that processes and transports natural gas from Songo Songo island to Tanzania’s port city, Dar es Salaam.

“During Q3 2010, gas sales from the field averaged 81.3 million cubic feet per day (MMcfd) against an installed infrastructure capacity of 90 MMcfpd,” David Lyons, Orca’s boss said in a letter to shareholders yesterday.

“We are on track with plans to drill the low risk, high potential Songo Songo West prospect in 2011,” said Lyons.

The company said it has working capital of $48 million following a fully-subscribed rights offering that raised 19.3 million Canadian dollars ($18.92 million).

“The company intends to use the proceeds of the rights offering primarily to drill the Songo Songo West exploration prospect in Tanzania in the latter half of 2011,” it said.

Orca said there was a possibility of boosting natural gas output by 40 million cubic feet per day through the expansion of existing wells.

Orca said in July it had created a new infrastructure unit called EastCoast Transmission and Marketing to help it build a natural gas pipeline network in East Africa.

The pipeline could ultimately be extended to the Kenyan port city of Mombasa and to the southern Tanzanian town of Mtwara.

Lyons said the state-run Tanzania Electric Supply Company (Tanesco) is expected to complete a $500 million project by 2014 to strengthen the transmission grid in the country.

“This will lead to increased construction of gas fired generation as Tanesco connects significant industries and consumers around Lake Victoria,” he said.

He said Tanesco was negotiating with a private power company to re-commission a 112 MW plant in Dar es Salaam, which would create a 24 MMcfpd maximum demand for additional gas by Orca.

“Power demand continues to surge,” Lyons said.

“There is increasing exploration activity offshore East Africa with four gas discoveries by Anadarko in Mozambique and by British Gas 65 kilometres from Songo Songo island offshore Tanzania.”

Tanzania has energy demand close to 900 MW capacity, but produces less than 800 MW. Only 14% of its 40 million people are hooked to the grid, while demand grows by 10 to 15% annually.

Chrispi Bakunda, Kigoma, Tanzania

Orca aims to double gas output from Tanzania’s Songo Songo fields by 2013

5 November 2010 (Source: Bloomberg)

Orca Exploration Group Inc., the largest natural-gas supplier in East Africa, plans to more than double output from its Songo Songo project off Tanzania’s east coast within 2 1/2 years.

Production should rise to 200 million cubic feet a day from 90 million cubic feet currently, Peter Clutterbuck, deputy chairman of the Dar es Salaam-based company, told the Africa Upstream oil conference in Cape Town today.

Orca plans to drill for gas in the Songo Songo West field late next year, Clutterbuck said. The field may contain 500 billion cubic feet of reserves, while the main field has about 900 billion cubic feet, he said.

– by Mike Cohen