Canada's Orca to drill new gas well in Tanzania


Jan 30, 2009
By Fumbuka Ng'wanakilala
DAR ES SALAAM (Reuters) - Toronto-listed Orca Exploration (ORCb.V) says it plans to drill a new well in 2011 to boost natural gas production at the Songo Songo field in Tanzania amid growing local energy demand.
The company's third quarter 2010 report, seen by Reuters on Tuesday, said there was an urgent need to expand the infrastructure that processes and transports natural gas from Songo Songo island to Tanzania's port city, Dar es Salaam.
"During Q3 2010, gas sales from the field averaged 81.3 million cubic feet per day (MMcfd) against an installed infrastructure capacity of 90 MMcfd," David Lyons, Orca's chairman and CEO said in a letter to shareholders on Monday.
Orca said in April it planned to raise daily natural gas production at the Songo Songo field -- with 490.2 billion cubic feet of proven and probable gas deposits -- by 60 percent by the end of 2012 to 144 million cubic feet.
"We are on track with plans to drill the low risk, high potential Songo Songo West prospect in 2011," said Lyons.
The company said it has working capital of $48 million following a fully-subscribed rights offering that raised 19.3 million Canadian dollars.
"The company intends to use the proceeds of the rights offering primarily to drill the Songo Songo West exploration prospect in Tanzania in the latter half of 2011," it said.
Orca said there was a possibility of boosting natural gas output by 40 million cubic feet per day through the expansion of existing wells.
Orca said in July it had created a new infrastructure unit called EastCoast Transmission and Marketing to help it build a natural gas pipeline network in East Africa.
The pipeline could ultimately be extended to the Kenyan port city of Mombasa and to the southern Tanzanian town of Mtwara.
Lyons said the state-run Tanzania Electric Supply Company (TANESCO) is expected to complete a $500 million project by 2014 to strengthen the transmission grid in the country.
"This will lead to increased construction of gas fired generation as TANESCO connects significant industries and consumers around Lake Victoria," he said.
He said TANESCO was negotiating with a private power company to re-commission a 112 MW plant in Dar es Salaam, which would create a 24 MMcfd maximum demand for additional gas by Orca.
Tanzania's electricity utility has signed an agreement with a Norwegian power turbine manufacturer, Jacobsen Elektro AS, for the supply of a 105 MW gas-fired power plant expected to become operational in 2012.
"Power demand continues to surge," Lyons said. "There is increasing exploration activity offshore East Africa with four gas discoveries by Anadarko in Mozambique and by British Gas 65 kilometers from Songo Songo island offshore Tanzania."
Tanzania has energy demand close to 900 MW capacity, but produces less than 800 MW. Only 14 percent of its 40 million people are hooked to the grid, while demand grows by 10 to 15 percent annually.

Canada's Orca to drill new gas well in Tanzania | Reuters
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