Kenya: New oil well lifts hopes of finding viable deposits

• Tullow Oil announced in March that it had found 100 metres of oil and in July it said that an additional 43 metres had been found brightening prospects of striking the commodity in amounts that can be extracted profitably.
• Kenya, Ethiopia and Somalia are exploration areas under Africa Oil’s exploration radar. The recent of drilling activity in recent weeks in addition of increasing hopes of Kenya becoming an oil producer and has catalysed talks of refineries, ports and pipelines to stretch into neighboring states.
• International rating agency Moody’s early last month said that additional discoveries will increase chances that Kenya could become an oil exporter, which will improve the country’s economic outlook.

Canadian company Africa Oil has began drilling a second exploratory well in Turkana, boosting the drive to assess commercial viability of deposits discovered in the county.

The company, which owns 50 per cent interest in the Twiga South-1 exploration well located in Block 13T, announced on Wednesday that its partner, Tullow Oil, was drilling and operating the well.

The London Stock Exchange-listed Tullow Oil is also operating the Ngamia-1 well, which was Kenya’s first oil well discovery.

Africa Oil said that it expects drilling of the second well will produce results similar to the neighbouring Ngamia 1.

“The well is planned to a total depth of 3,114 meters and targets the same structural trend and reservoirs as the recent Ngamia-1 oil discovery 23 kilometers to the south,” said the firm in a statement.

Tullow Oil announced in March that it had found 100 metres of oil and in July it said that an additional 43 metres had been found brightening prospects of striking the commodity in amounts that can be extracted profitably.

Africa Oil’s management said that clarity on how much oil the blocks in the region have will be known by early 2014, as it steps up drilling.

“We expect the next 18 months to be transformational for the company as we will continuously drill high impact exploration targets.” said Africa Oil chief executive Keith Hill.

Confirmation of commercial viability is still a far-off prospect but petroleum pundits said that should Twiga South-1 replicate the findings at Ngamia 1, it increases the chances of Kenya becoming a petroleum exporter.

Petroleum Focus Consultants director, George Wachira, said that positive results from the drilling of Twiga and Marsabit County’s Paipai well will be a good gauge for commercial viability.

“If results of the next three drills are as good as Ngamia 1 then the overall oil finds will be tending towards commercial confirmation,” said Mr Wachira.

Apache has begun drilling on the expansive Mbawa prospect, offshore Lamu on block L8 and Africa Oil said that the work on the Paipai-1 well in Block 10A, is on track to spud (drill) in early September.

Activity went a notch higher after the March announcement.

A report by Morgan Stanley titled Oil & Gas Kenyan exploration in focus, WG succession and 2Q Services preview says that there 23 companies operating in Kenya but only eight have rights to drill onshore and Afren, Africa Oil and Tullow have significant acreage and are exploring or plan to do so in the near future.

Kenya, Ethiopia and Somalia are exploration areas under Africa Oil’s exploration radar. The recent of drilling activity in recent weeks in addition of increasing hopes of Kenya becoming an oil producer and has catalysed talks of refineries, ports and pipelines to stretch into neighboring states.