Anxiety as Kenya awaits commercial viability of oil find

The discovery of oil and gas deposits across the region has made the East Africa region more attractive to energy investors.  [PHOTO: FILE/STANDARD]

By Macharia Kamau

A clearer picture of the oil resources in Kenya is expected in the course of this year.

This is as oil exploration and production intensify activities as well as test the  already drilled wells.

Kenya is yet to determine the amount of oil reserve it has but all points to commercial viability. The Lokichar Basin where Africa Oil and its partner Tullow oil have acreage is estimated to have upwards of 20 billion barrels.

The various firms exploring are in a race to be the first to announce the actual deposits and proclaim commercial viability in their blocks.

Tullow expects to drill more than 10 wells this year as well as other prospecting firms.

The firm last September said it expected to drill at least a well a month in its various exploration blocks over a year, beginning October last year.

Drilled wells

The firm has been successful in Kenya making discoveries in five consecutive wells since Ngamia 1 in March 2012. In addition to drilling, the firm will this year be testing its recently drilled wells to ascertain their potential.

“The exploration, appraisal and development studies in the proven South Lokichar Basin continue to be our main focus, but we are still confident we will unlock other productive basins on this trend,” said Keith Hill, chief executive Africa Oil, in its recent update progress in Kenya.

“This fully funded increased level of activity, with a minimum of six rigs working full time for the foreseeable future, should continue to deliver high potential upside value for shareholders this year and beyond.”

The firm started drilling Amosing-1 exploration well in Turkana late last year and is scheduled to be completed by end of this month. It will also  undertake evaluation of the Paipai 1 well in Marsabit.

“The Amosing well has spud and is drilling ahead on schedule. It is located seven kilometres southeast of the Ngamia discovery, which had over 200 metres of net pay and is a similar basin bounding fault trap in which has been referred to as the ‘string of pearls’ trend. The well is expected to be completed by the end of this month,” said Hill.

“A well test for Paipai-1 is being scheduled for 2014. Paipai-1 fully satisfied the remaining work obligations for the initial exploration period, which was extended to January 2014 to allow for evaluation of the well results.” It also plans to test the Etuko and Ekales wells and test results for both are expected early in the first quarter of 2014.

Taipan Resources Ltd – operating in Kenya as Lion Petroleum Corporation – plans to spend $29.5 million that will partly go to drilling a well in its Block 2B in North Eastern Kenya.

Maxwell Birley, chief executive Taipan Resources said the firm will drill an exploratory well in the block in the third quarter of this year to a depth of 3,000 metres.

“This includes the drilling and testing of a Pearl-1 prospect that is estimated to have gross prospective resources of 200 million barrels of oil.  The remaining lead inventory on Block 2B in addition to Pearl-1 is capable of delivering in excess of 500 million barrels gross,” he said in a recent communication. Taipan is partnering with Premier Oil in the North Eastern Kenya venture.

Australian firm Pancontinental said it would spend between $300 million  and $400 million (Sh25.8 billion  to Sh34.5 billion) over the next one and a half years in exploration activities in Kenya and Namibia.

Lamu offshore

In a statement early December, the firm said it is in the final preparations for drilling in offshore Lamu and expects to start the drilling mid this month.

“Pancontinental Oil & Gas announces that final preparations are under way for the Sunbird-1 exploration well in licence area L10A offshore Kenya, with a best-estimate commencement date between January 9 and 12,” said the firm in a statement to the Australian Stock Exchange on December 9.

“We are pleased to have been allocated the Deepsea Metro 1 for drilling next month. The Sunbird Prospect is one of a number of Miocene Reefs that have never before been properly tested offshore East Africa,” said Barry Rushworth, chief executive Pancontinental.

“Miocene Reefs globally have a high record of success for oil and gas and they are often highly productive, due to high porosity and permeability.”

The firm plans to drill another well later this year. “Oil shows in reservoir-quality sands (Kubwa-1), the discovery of gas from a possible mixed gas and oil source rock (Mbawa-1) offshore Kenya,” he said.

“The nearby Pemba Island oil seep and oil slicks on satellite imagery all lead us to believe that Pancontinental and its partners are pursuing an important oil play offshore Kenya.”

A number of other prospects have been mapped for possible drilling after Sunbird-1. In the western sector the large Crombec lead continues to be mapped.

Crombec is a large faulted anticline covering 550 sq km, with vertical relief of about 400m.

“It is one of a number of prospects and leads that are being considered for drilling mid-late 2014.”