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.

Libyan rebels say two oil ports reopened after yearlong blockade

Rebels who helped decimate Libyan oil production by blockading eastern ports said the nation’s largest and third-largest export facilities can ship crude again, in a gesture of support for the newly elected parliament.

Es Sider and Ras Lanuf, which have combined capacity of 560,000 bpd, will reopen today, July 2, according to Ali Al-Hasy, a spokesman for the rebels’ Executive Office for Barqa. Libya’s state-run National Oil Corp. hasn’t been informed of the move, said Mohamed Elharari, company spokesman. The two terminals would increase Libya’s crude-export capacity almost five-fold.

The loss of Libya’s oil production boosted the price of Brent, a benchmark for half the world’s traded crude. Brent futures for August settlement fell as much as 0.7% to $111.54 a barrel today, the lowest intraday level in almost three weeks. The restart of operations at the two ports would probably send Brent down to $110 a barrel, Commerzbank AG said.

“The Petroleum Facilities Guards in Es Sider and Ras Lanuf have been instructed to allow the two ports to resume operations,” Al-Hasy said by phone from eastern Libya. “This is an initiative from the Executive Office for Barqa to welcome the newly elected parliament that includes well-known patriots, and to encourage them to fight corruption and protect the natural resources of the nation.”

The self-declared Executive Office for Barqa seeks self-rule for the eastern region of Libya known also as Cyrenaica. It occupied oil ports in the region at the end of July 2013, demanding an oil-revenue-sharing agreement to make up for the neglect the area experienced under Muammar Qaddafi’s 42-year rule.

Brent Falls

Libya is now producing about 320,000 bpd, or about a fifth of its output before Qaddafi was overthrown in 2011, according to state-run National Oil Corp. “We will lift the state of force majeure in Es Sider and Ras Lanuf when we receive confirmation of this agreement from the government,” said Elharari. Force majeure is a legal step that protects a company from liability when it can’t fulfill a contract for reasons beyond its control.

The premium of the front-month Brent contract over the second month, a structure called backwardation that signals tight near-term supplies, narrowed to as little as 7 cents a barrel on the ICE Futures Europe exchange in London today, the least since April 15. Brent’s premium to U.S. benchmark West Texas Intermediate narrowed as much as 41 cents to $6.54 a barrel on ICE.

Government representatives including Justice Minister Salah al-Mirghani and a delegation of the Barqa federalists sealed the agreement yesterday in the eastern city of Tobruk, Al-Hasy said. “The facilities in Es Sider and Ras Lanuf are in very good shape, they are ready to operate.”

‘Ready to Operate’

Es Sider has 340,000 bbl in daily loading capacity and Ras Lanuf 220,000 bbl, according to the oil ministry. The nation has a total of nine oil export terminals, of which three - Brega, Jurf and Bouri - are operating with a combined daily loading capacity of 145,000 bbl.

While the other terminals - Zawiya, Mellitah, Hariga and Zueitina - are under government control, they are not exporting because of protests at the ports or connected oilfields unrelated to those of the Barqa federalists.

The government has agreed to pay “in the next few days” the salaries of Petroleum Facilities Guard who defected to the Barqa group during the blockade and to implement a preliminary agreement reached on April 6, Al-Hasy said. The rebels handed over the oil ports of Hariga and Zueitina after this accord in exchange for amnesty and salary payments for the guards, and an audit of the National Oil Corp.’s oil sales since the overthrow of Qaddafi.

The Barqa federalists in May threatened to re-occupy Hariga and Zueitina 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.

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.

Statoil makes high-impact gas discovery offshore Tanzania

The discovery of an additional 2 Tcf to 3 Tcf of natural gas-in-place at the Piri-1 well brings the total of in-place volumes up to approximately 20 Tcf in Block 2, offshore Tanzania.

“Since 2012, we have had a 100% success rate in Tanzania and the area has become a core exploration area in a very short period of time. We quickly went from drilling one well to a multi-well program, and with Piri-1 we are continuing the success,” said Nick Maden, senior V.P. for Statoil' s exploration activities in the Western Hemisphere.

The new gas discovery was made in the same Lower Cretaceous sandstones as the gas discovery in the Zafarani-1 well drilled in 2012.

The Piri-1 discovery is the venture' s sixth discovery in Block 2. It was preceded by the high-impact gas discoveries Zafarani-1, Lavani-1, Tangawizi-1 and Mronge-1, and a discovery in Lavani-2.

Piri-1 was drilled by the drillship Discoverer Americas. The well is two km southwest of the Lavani-1 well at 2,360 m water depth. The Discoverer Americas has now moved location and is currently drilling the Binzari prospect in Block 2.

“Additional prospectivity has been mapped and will be tested throughout 2014 and 2015. We expect to drill several additional exploration and appraisal wells and hope that the results from these wells will continue to add gas volumes for a future large-scale gas infrastructure development,” said Maden.

Statoil operates the license on Block 2 on behalf of Tanzania Petroleum Development Corporation (TPDC) and has a 65% working interest. Exxon Mobil Exploration and Production Tanzania Limited holds the remaining 35%. Statoil has been in Tanzania since 2007, when it was awarded the operatorship for Block 2.

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.

Sunbird-1 oil zone verified offshore Kenya

Pancontinental Oil and Gas reported it has verified that the recently completed Sunbird-1 well off the southern Kenyan coast has intersected an oil column the first ever oil discovered off the East African coast.

The gross oil column is assessed to be 14 m thick beneath a gross gas column of 29.6 m in a reefal limestone reservoir in the Sunbird Miocene Pinnacle Reef in area L10A. The corresponding net values are 9.2 m for the oil zone and 28.3 m for the gas zone. The Sunbird Reef is an ancient Miocene pinnacle reef buried beneath approximately 900 m of younger sediment.

Pancontinental believes the results are highly significant because they are the first proof of the presence a prospective oil system in the Lamu Basin offshore Kenya. The oil and gas have been geochemically typed in detail and the prospective source rocks have been dated and characterised for use in future exploration.

Analysis of the Sunbird results has been complicated by the loss of drilling mud, seawater and remedial cement pumped into the limestone reservoir during drilling operations.

Pancontinental has an 18.75% interest in the well and block L10A. Pancontinental has three extensive exploration areas in this highly prospective Basin covering a total area of approximately 15,000 sq km, including L10A. The detailed oil and gas geochemical data, which are confidential to the L10A Joint Venture partners, give the age and type of the oil source rocks, as well as other crucial data that Pancontinental believes places the L10A Joint Venture in a leading position to find commercial oil offshore Kenya.

The Operator of the Block L10A Petroleum Sharing Contract, BG Group, is continuing to analyse the well data and will recommend a future exploration programme using the well results.

The top of the Sunbird Miocene Pinnacle Reef was reached at 1,583.7 m sub-sea. The water depth is 723 m. Below the upper oil and gas zone, indications of low Wet Gas saturation were seen, although these are not considered to be volumetrically significant. The age and depositional environment of the oil source rocks have been determined by geochemical analysis, and remain commercially confidential to the L10A Joint Venture.

The presence of oil is supported by geochemical analysis of MDT samples, the pressure gradient of MDT samples, numerical modelling of the invasion of the oil zone and also fluorescence attributable to oil in samples. The reservoir zone was heavily flushed during well control operations, making determination of the oil and gas zones difficult.

Porosity and permeability of the hydrocarbon zone were favourable overall, and were very high in parts of the reservoir as evidenced by the loss of a large volume of drilling fluid.

L10A Consortium:

The Kenya L10A consortium consists of: BG Group (Operator) 50.00%, PTTEP 31.25% & Pancontinental 18.75%.

Pancontinental increases interest in L10B. Pancontinental advises that it has increased its interest in licence L10B, immediately to the south of L10A. The increase in interest is subject to the completion of documentation; however Ministerial approval has already been given.

The Kenya L10B consortium now consists of : BG Group (Operator) 75.00% & Pancontinental 25.00%.

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.