Africa Oil reports New Gas discovery at Sala prospect in Block 9 in Kenya

Africa Oil reported that it has made a gas discovery in Block 9 onshore Kenya. The Sala-1 drilled a large 80 sq km anticlinal feature along the northern basin bounding fault in the Cretaceous Anza graben and encountered several sandstone intervals which had oil and gas shows. The well was drilled to a total depth of 3030 m and petrophysical analysis indicated three zones of interest over a 1000 m gross interval which were subsequently drill stem tested. An upper gas bearing interval tested dry gas at a maximum rate of 6 mmcfpd from a 25 m net pay interval.

The interval had net reservoir sand of over 125 m and encountered a gas water contact so there is potential to drill up dip on the structure where this entire interval will be above the gas water contact. A lower interval tested at low rates of dry gas from a 50 m potential net pay interval which can also be accessed at the up dip location. It should also be noted that there were oil shows while drilling and small amounts of oil were recovered during drilling and testing which indicates there may be potential for oil down dip on the structure. Africa Oil is the Operator of Block 9 with a 50% working interest. Marathon Oil Kenya has the remaining 50% interest.

An appraisal plan to follow up this discovery is currently being evaluated by the partnership in consultation with the Kenyan government. Plans being discussed include an up dip location to confirm the a real extent of the gas zones tested where the full net sand interval can be intersected above the gas-water contact. The partnership is also considering a down dip appraisal location to test an on lapping stratigraphic wedge on the flanks of the structure which is of the same age as the zones in the nearby Ndovu-1 well which had oil and gas shows.

In addition, the company is considering drilling an appraisal well on the crest of the large Bogal structure to confirm this large potential gas discovery which has closure over an area of up to 200 sq km. The gross best estimate of prospective resources for Bogal are 1.8 Tcf of gas based on a third party independent resource assessment. The company currently has two optional slots on the Great Wall drilling rig used to drill the Sala-1 well that are available for this appraisal program.

The company believes there is a very strong market for gas development in Kenya and have already engaged in discussions with power companies and the government to potentially fast track a gas to power project that could add significant value and create benefits for the people of Kenya. In 2013 the Government of Kenya launched its "+5000 MW by 2016 - Power to transform Kenya" initiative with ambitious plans to increase Kenya' s power generating capacity by 5,000 Mega Watts in 40 months. This plan includes significant generating capacity fuelled by imported LNG and coal which are currently being bid. The discovery of indigenous gas in significant quantities in Block 9 has the potential to offer a far more cost effective fuel source for these power projects that will also provide positive environmental and local development benefits. Significant interest exists with development agencies and commercial independent power producers to partner on power developments in Kenya.

The Company is also gave an update on additional exploration and appraisal activities in Kenya and Ethiopia.

In Kenya, the Company has 4 additional rigs active in the South Turkana Basin where oil discoveries have previously been at Ngamia, Twiga, Agete, Amosing, Ekales, Etuko and Ewoi.

The PR Marriott 46 rig has recently completed the Ngamia-2 well which was drilled 1.7 km from the Ngamia-1 discovery well to test the northwest flank of the prospect. The well encountered up to 39 m of net oil pay and 11 m of net gas pay and appears to have identified a new fault block trap north of the main Ngamia accumulation. The reservoirs were high quality with more than 200 m of net reservoir sands with good permeability inferred from MDT sampling. The well has been suspended for testing and the rig will continue to drill up to 4 additional appraisal wells in the Ngamia field area for an extended well test program. A 3D seismic program is currently being concluded over the field area which should allow for detailed mapping of the fault trends.

The SMP-5 rig has completed testing operations on the Agete-1 well where it confirmed the Auwerwer pay previously released, the well flow rate was tested at 500 bopd. This rig is now currently on location at the Ewoi-1 discovery and is preparing to test, after which it will continue to be used to test discovery and appraisal wells in this basin.

The Weatherford 804 rig is currently drilling the Agete-2 downdip appraisal well and will then move to drill the Etom prospect located 7 km north of the Agete discovery along the basin bounding ' string of pearls' trend.

The Sakson PR-5 rig is drilling ahead on the Amosing-2 downdip appraisal well, with a planned sidetrack, and will then move to drill the Kodos and Epir (formerly Aze) prospects, which will be the first exploratory wells to test the Kerio Basin, located immediately adjacent to the prolific S. Lokichar basin.

Finally, the Exalo 205 rig is drilling ahead on the Gardim prospect, located in the Chew Bahir basin in the South Omo block in Ethiopia. The partnership is in discussions on the next prospect to be considered for drilling in this block.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Giftelyon Multi-Sevices Int'l Ltd and services, UK, online.

Libya’s biggest oil port may open in August, rebels say

Libya’s largest oil-export terminal, the port of Es Sider, may re-open in August after the North African nation’s new parliament takes office, said a spokesman of the rebel group that shut the facility almost a year ago.

“It’s possible to solve all issues and get to an agreement to re-open Es Sider and Ras Lanuf when the new parliament starts working, God willing, after Ramadan,” Ali Al-Hassy, a spokesman of the Executive Office for Barqa, said by phone from eastern Libya.

Ras Lanuf is the second of two ports still under control of the Barqa rebels. The Muslim fasting month of Ramadan started today, June 29, in Libya and will finish with the Eid El Fitr holiday at the end of July.

The rebels’ Executive Office for Barqa seeks self-rule for the region known also as Cyrenaica. It occupied oil ports in eastern Libya at the end of last July, demanding an oil-revenue sharing agreement to make up for the neglect the area experienced under Muammar Qaddafi’s 42-year rule.

Libya, with Africa’s largest oil reserves, is now producing about 300,000 bpd, or a fifth of its output before Qaddafi was overthrown in 2011. The loss of the country’s oil production has boosted the price of Brent, a benchmark for half the world’s traded crude.

Deal

Under an agreement reached on April 6, the Barqa federalists handed over control of Zueitina and Hariga, two of the four oil ports they seized a year ago. In return, they received an amnesty and the payment of salaries for defectors from Libya’s Petroleum Facilities Guard who joined the rebels.

The accord calls for a second round of talks aiming at a comprehensive deal that would allow the re-opening of the two remaining ports, Es Sider and Ras Lanuf.

The Barqa federalists last month threatened to cancel the April agreement in protest over the appointment as prime minister of Ahmed Maiteg, whom they see as allied with the nation’s Islamists. His appointment was later withdrawn, and elections were held last week for a new parliament.

Danske Bank on June 19 raised its third-quarter forecast for Brent crude to $107 a barrel, from $104, on the turmoil in Iraq and the protests at oil sites in Libya. “We expect the oil price to stay in the $108-114 a barrel range over coming months, as it will take some definitive progress in Iran and Libya for the oil price to break below this range,” it said.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Giftelyon Multi-Sevices Int'l Ltd and services, UK, online.

Oil falls as Libyan supply seen rising, Iraq output remains safe

West Texas Intermediate fell for a sixth day, the longest losing streak since May 2012, while Brent slid amid speculation that crude supplies will increase after Libyan rebels agreed to hand over two export terminals.

Futures dropped as much as 0.5% in New York. Libya is reopening the Es Sider and Ras Lanuf facilities after reaching an agreement yesterday, July 2, with a group that blockaded ports in the country’s east in the past year, said Ahmed al-Amin, a government spokesman. Fighting in Iraq, OPEC’s second-largest producer, still hasn’t spread to the south, home to more than three-quarters of its crude output.

“Libya will just add more supply, and the world is awash with oil,” Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney, said by phone. “There’s nothing new from Iraq and investors are starting to realize that there’s not going to be a major affect in terms of supply.”

WTI for August delivery declined as much as 53 cents to $103.95 a barrel in electronic trading on the New York Mercantile Exchange and was at $104.11 at 2:38 p.m. Sydney time. The contract fell 86 cents to $104.48 yesterday, the lowest close since June 11. The volume of all futures traded was about 5% above the 100-day average. Prices have gained 5.8% this year.

Libyan Supply

Brent for August settlement dropped as much as 52 cents, or 0.5%, to $110.72 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of $6.95 to WTI. The spread narrowed for a third day yesterday to close at $6.76.

Libya’s biggest and third-largest oil ports were handed over in a gesture of support for the newly elected parliament, according to a spokesman for the group that calls itself the Executive Office for Barqa. Es Sider and Ras Lanuf, which can handle a combined 560,000 bpd of crude, may boost Libya’s export capacity almost five-fold.

The rebels, who are seeking self-rule for a region known as Cyrenaica, occupied the facilities in July last year, demanding to share oil revenues to make up for neglect experienced under Muammar Qaddafi’s 42-year rule. Libya, a member of the Organization of Petroleum Exporting Countries, holds Africa’s biggest reserves.

U.S. Stockpiles

In Iraq, oil production has mostly been unaffected by an Islamist insurgency in the north. The country will ship 2.8 MMbpd this month, close to a record high, loading programs obtained by Bloomberg show.

Crude inventories in the U.S., the world’s largest oil consumer, shrank by 3.2 MMbbl to 384.9 million in the week ended June 27, the Energy Information Administration reported yesterday. Supplies were projected to decrease by 2.4 million, according to the median estimate in a Bloomberg News survey of 10 analysts.

Gasoline stockpiles slid by 1.24 MMbbl, the first drop in five weeks, said the EIA, the Energy Department’s statistical arm. Distillate fuels, including heating oil and diesel, climbed by 975,000 bbl to 121.5 million, the highest level since Jan. 10.

WTI’s decline may stall as it approaches technical support, data compiled by Bloomberg show. Futures are trading along an upward-sloping trend line extending from the intraday lows of May 1 and June 5, at about $104 a barrel today. Buy orders tend to be clustered along chart-support levels.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Giftelyon Multi-Sevices Int'l Ltd and services, UK, online.

Total’s 'Disappointment' with Angola LNG adds to output gap

Angola LNG, a $10 billion LNG plant halted in April due to a leak, has proved to be a disappointment for Total.

“The real concern is that we are at least one year late and even much more than that in terms of start of production,” Yves-Louis Darricarrere, head of upstream, said in an interview.

Angola LNG, which produces the super-chilled fuel for spot deliveries to destinations from South Korea to Brazil, is expected to restart in the middle of next year. The plant has experienced halts since production started last June after an 18 month delay caused by several fires and accidents.

Total, with a 13.6% stake, is “missing” about 25,000 boepd in natural gas due to the halt, Darricarrere said. “It’s a disappointment, but at the same time for us it’s marginal.” The French company has sent experts to the site, he said.

The halt adds to output gaps this year for Total at Kashagan in Kazakhstan, where leaky pipelines must be replaced, and the loss of a concession in Abu Dhabi. The company targets increased production over the coming years, a goal that will be helped by the start of production at the Clov field off Angola in June, 2014.

Angola LNG was running at about 50% of planned capacity before the latest incident because the composition of the plant’s associated gas supply required additional equipment, Chevron, the operator and largest shareholder, has said.

The April incident took place during the commissioning and testing phase as part of a ramp up to full LNG production.

Chevron holds 36.4% of the project, with Sonangol EP owning 22.8%. Total, BP and Eni each hold 13.6%, according to Angola LNG’s website.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Giftelyon Multi-Sevices Int'l Ltd and services, UK, online.

Sonde seeks alternatives for Joint Oil block in North Africa

Sonde Resources reported the following operational updates of North Africa.

In March 2014, Sonde retained Taylor-DeJongh to initiate a process to explore and evaluate potential strategic alternatives to enhance shareholder value with regard to the Joint Oil Block. The process has included discussions with in excess of twenty international petroleum entities and financial institutions. Several interested parties have executed confidentiality agreements, met with management and staff and are evaluating the data provided in the virtual data room.

The preparations for drilling the Fisal-1 well have progressed. All long lead materials (casing and drilling support material) have been ordered and initial deliveries have arrived in Sfax, Tunisia (shore base).
 
Preparations are underway to perform the site surveys in anticipation of commencing drilling operations in early Q4 of 2014.

The 3D seismic survey acquired in late 2013 has been processed and initial evaluation of the data confirms the potential nature of the Hadaf structure in Libyan waters. Detailed interpretation work of the processed seismic data is underway.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Giftelyon Multi-Sevices Int'l Ltd and services, UK, online.