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Tue May 31, 2011 12:50pm GMT
* To drill a new well and expand existing one
* Move to nearly double daily output
DAR ES SALAAM, May 31 (Reuters) - Canadian energy firm Orca Exploration (ORCb.V: Quote) plans to drill a new well in Tanzania this year and expand an existing facility at a cost of $35 million to boost natural gas production at the Songo Songo field.
The company said it expected the proposed investment to help it nearly double output to 172 million cubic feet per day (MMcfd) from 90 MMcfd.
"The company has determined that in 2011, subject to TPDC (regulatory) approval and rig availability a new onshore deviated well should be drilled followed by an enhancement of the (existing) SS-10 well," David Lyons, Orca's chairman and CEO said in a letter to shareholders dated May 27.
"It is anticipated that the capital cost of this programme will be in the region of $35 million and could increase deliverability from the field to 172 MMcfd."
There has been growing demand for natural gas from both thermal power plants and manufacturing industries.
"The company's cost pool in Tanzania may be recovered during Q2 2011 as a result of strong sales revenue and relatively low capital expenditure levels," said Lyons.
The company said it increased its working capital by 6 percent during the quarter to $55.8 million.
It said it negotiated a re-rating agreement with state-run power utility Tanzania Electric Supply Company (TANESCO) and Songas, to run the existing gas processing plant at levels of up to 110 MMcfd.
Songas owns the infrastructure that enables the gas to be delivered to Tanzania's commercial capital, Dar es Salaam, and also operates a power plant.
Tanzania, which is east Africa's second largest economy after Kenya has been plagued by frequent power outages since December last year, prompting the International Monetary Fund to revise its 2011 growth forecast for Tanzania down to 6 percent from 7.2 percent previously. (Editing by James Jukwey)
