KENYA OIL AND GAS WORKING GROUP

Building Communities and Promoting Accountability

Kenya has extended exploration contracts of Zarara Oil and Gas ltd for blocks L4 and L13 in Lamu basin by 18 months to December 2018. The extensions of production sharing contracts (PSCs) of onshore and offshore acerages will enable Zarara to drill Pate-2 and Pate-3 wells of natural gas to be used for generation of power for injection into Kenya's national grid. 

Zarara a subsidiary of Midway Resources International (MRI) was granted by the Energy Ministry on May 24, 2017 PSCs extension to December 2018 as first additional exploration period of 18 months expired on June 3rd 2017. MRI's chairman Mr. Mark Bristow said extensions will enable Zarara to drill to the Pate-2 and Pate-3 wells in natural gas discovery in Lamu county where Pate-1 well drilled in 1071 by Shell/BP encountered the fossil fuel. 'Pate campaign is currently at an advanced stage of preparation with mobilization of initial preparatory site civil engineering expected in July and spudding (starting drilling) of first well will be before end 2017,' he said.

Zarara owns 75 per cent equity in block L4 and L13. Swiss Oil Holdings International (SOHI) Ltd has 15 per cent stake and National Oil Corporation of Kenya (NOCK) holds 10 per cent carried interest of the government. Building of 1,000 megawatts coal fired plant in Lamu has been opposed by residents due to fears of pollution. Natural gas as a clean source of energy is globally used for power generation, fueling vehicles and other applications.

Pate-2 success will lead to sinking of second well from single enlarged well-pad on Pate island. Zarara will spend $30 million on the wells and use gas for power generation 70 kilometers south west of Kenya Somali border. Pate-1 was abandoned in 1971 as shell and BP were looking for crude oil.  Pate-2 will take 120 days to drill, test and complete. Pate 3 well will be sunk from Pate 2 well pad using deviated directional drilling to vertical depth of 4,500-5,000 meters and will take over 120 days to finish.

MRI's Chief Executive Officer Mr Peter Worthington said Zarara's strategy is to bring wells to production and to supply phase 1 of Lamu Integrated Gas to Power Project (LIGPP) and appraise Pate field natural gas discovery. Gas and electricity production will depend on well flow-rates expected to range from 10 to 20 million standard cubic feet per day (MMSCFD) based on Pate-1 data. Electricity generated will also be sold to Kenya Power. ' The wellheads and phase 1 of LIGPP will be located on Pate Island, less than 20 kilometers from the proposed Lamu Port and Lamu Port-South Sudan-Ethiopia-Transport (LAPSSET) corridor terminus,' said Mr. Worthington.

He said building phase 1 of LIGPP planned to start in second half of 2018 and is likely to be undertaken by MRI affiliated company as an early production system depending on regulatory approvals, the success of Pate-2 and 3 wells. Feasibility study for phase 1 was in progress and would be completed by end of 2017 and targets 50 to 200 megawatts. Subsequent phases are likely to be done with leading electrical power generation development and operating partners.

MRI said power generation will expand in phases of up to 1,000MW depending on successful drilling and proved potential of gas field in to provide clean reliable electricity to among others Lamu Port and LAPSSET. MRI is using $996,600 grant of United States Trade and Development Agency (USTDA) issued in September 2016 to evaluate technical, economic and environmental aspects of Lamu gas to power on Pate Island.

'The project will add 50 to 200 megawatts of new electricity generation capacity to the island, located off Kenya's mainland in the Indian Ocean,'said MRI's Chief Operating Officer Mr. Austen Titford. The feasibility covers conceptual designs of gas production, collection systems, gas treatment plant, technology selection, technical configuration and conceptual designs of a power generation plant. The electricity to be generated will be connected to the national grid which was extended in 2015 up to a sub station at Port Lamu, located less than 15 kilometers from the Pate well location.

Article by KOGWG member.