16-07-08 A significant new gas discovery has been made in Tanzania by an Australian-based company, Key Petroleum, which says it now plans to develop its Kiliwani North field near the existing SongoSongo gas-processing plant in Kilwa district.
The company said that up to 500 bn cf of gas in place in the offshore field is commercially viable.

The Kiliwani North field is contained in the company’s Nyuni block, which is believed to hold vast gas reserves in excess of 2 tcf. According to available estimates, there is proven natural gas located in the SongoSongo island offshore on the Indian Ocean, with reserves there estimated to be 726 bn cf. There is also a significant gas field at Mnazi Bay near Mtwara.
’’Flow testing of the Kiliwani North number 1 gas discovery well is complete after confirmation of the previously-announced 40 mm cfpd flow rates,’’ said the company.

It said following the series of tests, it believed the Nyuni block -- including Kiliwani North field -- contains substantial upside potential following identification of a number of additional prospects and leads in the area. Key Petroleum estimates that the total potential undiscovered gas within the block could be in excess of 2 tcf.
’’The additional prospects in the Nyuni block and the growing demand for gas and condensate in Tanzania provides confidence for the Nyuni joint venture to commit to the development programme for the block,’’ Key Petroleum managing director and chief executive officer (CEO) Ken Russell said.

He said the Kiliwani North number 1 gas discovery in the country has been declared a commercially viable development option after a series of ’’highly successful’’ production and flow rate tests.
’’At a recent Nyuni joint venture meeting in Dubai, plans for commercialisation of the Kiliwani North number 1 well were advanced. A number of scenarios are now being reviewed by the operator on behalf of the venture,’’ said Russell. ’’Development options include the installation of a pipeline linking Kiliwani North number 1 well to the nearby SongoSongo gas-processing plant and assorted gas-processing surface equipment, if required, to commence gas production quickly,’’ he added.

According to the Key Petroleum boss, drilling at the Kiliwani North number 1 well ’’has proved that stand-alone fields surrounding the SongoSongo gas field are capable of producing commercial hydrocarbons.’’
’’Specific reserves for Kiliwani North are proving difficult for the joint venture to establish at this stage, due to the structure extending to the north and beyond the limit of the existing seismic coverage,’’ he further explained.

The Nyuni joint venture has agreed to conduct further seismic acquisition, mainly marine, in the Kiliwani North field to allow further delineation of the structure and define additional drillable prospects.
Said Russell: ’’Key Petroleum has been actively reviewing and evaluating the results from Kiliwani North number 1. Confirmation of the results and the high stabilised flow rate of 40 mm cfpd is very good news, as the project can now move forward with confidence to commercialisation.’’ He described the gas potential for the area as ’’something very special in today’s market place for oil and gas.’’

The latest announcement by Key Petroleum is further evidence of Tanzania’s fast emergence as a major player in oil and gas exploration activities in Africa, and the commencement of gas production from the SongoSongo field in 2003 is officially regarded as a significant first step in energy self-sufficiency. Much of the natural gas from SongoSongo is now being used to generate electricity, although this has not led to a drop in power tariffs as expected by many people.
According to Key Petroleum’s statement, the company has secured entry into the country’s energy sector by acquiring the right to earn a 20 % interest in the prospective Nyuni Block, adjacent to the producing SongoSongo field that provides gas to Dar es Salaam through under-utilized infrastructure.

Key Petroleum and its jointventure partners in the Nyuni Block say they have a right of access to these relatively new facilities and pipeline through the terms of the production sharing agreement (PSA) in place with the Tanzania Petroleum Development Corporation (TPDC).
But despite the significant gas and expected oil discoveries, Tanzania -- with an estimated 38 mm inhabitants -- is still struggling with widespread poverty. Analysts say the country’s main economic sectors -- mining, tourism and agriculture -- have failed to generate enough wealth for Tanzanians mainly due to mismanagement of the natural resources available, bad policies, and the absence of proper regulatory controls.