Oil discovery in Uganda brings hope to residents

Jan 02, 2007 01:00 AM

by Elias Biryabarema and Ausi Balyesiima

Here, in this vast plane that stretches for several dozen miles up to the shores of lake Albert in Hoima, a number of freshly opened roads crisscross each other, leading to the four exploration wells that have now officially been confirmed to have commercial deposits of oil.
These earth roads-some already finished and others still under construction are marked by numerous mini-bridges built over the countless streams that quickly form and cut gullies through a sandy stretch whenever it rains, bogging down trucks transporting supplies for petroleum exploration.

Still, as bad and treacherous as these roads might be, they have suddenly opened up this isolated and inaccessible part of Uganda to a new life. And the clouds of dust and constant thundering of passing trucks plying these routes are a sign of the new economic pulsation.
But these earth roads are also foreshadowing the enormous logistical difficulties that the oil extraction industry willinevitably encounter here when commercial production starts and the scale of operations expands. Currently, more than 60 km of roads have been constructed by both Heritage Oil and Gas and Hardman Resources, the two companies that have registered tremendous progress in their bid to exploit petroleum deposits in Western Uganda.

Yet, while that work was estimated to have cost about $ 1 mm (about Sh 1.8 bn), it seems only a tiny fraction of what is needed to get even a fairly reliable road infrastructure to support a full-scale oil production industry about to unfold in the area.
Heritage's Uganda Country Manager Bryan Westwood said the company has budgeted about $ 500,000 (about Sh 900 mm) for maintenance work on the worst sections of the already existing roads. This is in addition to the more than $ 200,000 (about Sh 360 mm) the company spent on the road to Mbegu camp in Kaiso-Tonya area (Buseruka sub county), a transit point for all of the company's supplies destined for the drilling on Kingfisher well in Buhuka area, 80 km West of Hoima town.

Mr Westwood was non-committal on whether Heritage would attempt to upgrade these roads if they breakdown.
"Any future planning will depend on the government planning, after all we are here to explore for oil not as road contractors."
At the Buhuka camp (Kyangwali sub-county), drilling on Kingfisher 1A well is progressing full throttle. Jurgens Bence who is overseeing operations at the site said flow testing is anticipated around February.
"We can't be precise because basically we can't know when we'll reach our desired depth," he said.

Kingfisher 1A well, located in exploration area 3B was deviated from Kingfisher 1 when the drilling unexpectedly encountered a hard rock before reaching the target depth of 4,000 metres. A decision was made to bypass the rock by drilling a sidetrack, with the company emboldened by the discovery at Kingfisher 1 well, which, during flow testing, showed capacity to output 4000 barrels of per day.
"We believe that there're more oil traps deep there and that is why it was determined that further drilling be done," said Robert Tugume the Principal Geophysicist with the Department of Oil Exploration and Production.

Heritage's stakes on the two Kingfisher wells are particularly so high: it is the first place where they have discovered oil, after years of frustrating explorative activities. In Semliki Basin, in the exploration area 3A where work commenced in 1997, the field turned up a disappointing result after spending nearly $ 50 mm (about Sh 90 bn).
Oil was discovered but was found to contain high concentrations of carbon dioxide. Then in January 2006, Hardman Resources, a latecomer to the exploration business quickly reported the first find of viable oil deposits at Waraga-1 well in Kaiso Tonya. Combined, Hardman's three wells-Waraga 1, Mputa 1 Mputa 2, which have all been flow tested and indicated commercial oil deposits, can produce more than 12,000 bpd.

Just right now, the total number of oilmen working onthe various exploration wells is actually modest. Still, their economic power is starting to register on the locals. Perhaps in preparing for the bonanza that will start flowing from along the lakeshore, which is also dotted with a multiplicity of impoverished fishing villages, the company has started low-level involvement of the locals in the spin-off economic activities.
"There are so many small scale economic activities that we are undertaking to keep our camp and for some of these it is the locals doing them. Of course as our operations expand, which is coming, we will employ lots of more extra people," Mr Bence said.

Some of the jobs currently available for the locals include planting and maintenance of trees, earthworks, store keeping and laundry services. Some of the food supplies to the camp, with an average of about 100 people, are sourced locally.
"We are now buying milk, sweet and Irish potatoes, onions, tomatoes, fish and others beef," said Kasangaki Wilson the Camp Manager for MSL Logistics, a company which handles all the logistics related work for Heritage.

A couple of other hints here would seem to promise greater welfare for the locals long resigned to the melancholy of disease and privation. Two bore holes for instance have been dug at Mbegu and Bugoma providing clean water for people, the roads which have been constructed have also already had an instant economic impact.
Heritage's field doctors also step in when a life threatening case strikes in any of the surrounding villages. Talk of constructing a health centre is also circulating. The villagers in Kaiso-Tonya used to transport their fish all the way to Butiaba landing site on the upper part of Lake Albert for ferrying to Hoima, a meandering route that was costly in time and money. The new roads though have changed that, providing direct access from Mbegu to Hoima town.

The Uganda Wild Life Authority, UWA, station here has also been provided a generator, computers and other equipment.
"We are very aware of our social responsibilities and our projects are ongoing. We work very closely with the community and are fully aware of their needs," Westwood said. A survey is also being conducted by Hardman around the fishing villages to establish how they can be helped to start sustainable, income generating projects like honey production.

It appears somewhat extraordinarily charitable of these companies to start spending substantial amounts of their money on these communities even before the oil dollars start to flow. But the motivation is borne of a desire to generate as much local goodwill as possible early enough and to eschew the potential civil unrest that is common in communities where oil has been discovered in other Sub Saharan African countries.
Most typified by the Niger Delta region in Nigeria, these areas often remain neglected and are left to sink in crushing poverty even as the oil bounty flows in their midst. In fact a troubling pointer to the typical seething bitterness and indignation that often seemto grow lockstep with the oil industry itself showed up recently: with the Banyoro grumbling and accusing government of seeking to exclude them in planning for the burgeoning oil industry.

Such charges have been rendered more incendiary by claims that powerful politicians and army generals in Kampala are rushing to manipulate ignorant Banyoro villagers and buy their land cheaply. Underlining the Banyoro's right to share of the oil money, the Kingdom's Prime Minister Emmanuel Kiiza saw the oil bonanza as a means to the fulfilment of what he called the three Banyoro dreams. The first of those dreams, elusive for so long, is provision of a tarmac road from Masindi-Hoima-Kagadi to Mubende.
"We also dream of a strong university specialised in petroleum and petrol chemicals industry and totally financed by proceeds from this oil resource," Mr Kiiza said. He said it was also Banyoro's passionate prayer that a "meaningful hospital is established in Hoima," calling the existing Hoima Referral Hospital as being in a "sad situation".

With Uganda now about to confirm its new position-commercial production commences in 2009-in the world's petroleum powers: what is certain is that the government will have far more money to throw around.
The big uncertainty though, hanging all over here like an ominous cloud, is whether the Banyoro will see their dream of a hospital, a university and tarmac roads fulfilled. And what should perhaps worry us most is what will happen if those dreams turn out heartbreaking mirages as is wont to happen.

Source: The Monitor
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