US firm hopes to be second-time-lucky with Marsabit well

Marathon Oil, an American company, is hoping to be second-time lucky with its exploration well in northern Kenya which starts at the end of this month.

The New York Stock Exchange-listed, Houston-based firm said in a statement Tuesday it will drill another oil well on its block located in Marsabit County.

In late 2013, Marathon Oil sank an exploration well that only yielded traces of gas.

“The Bahasi-1 exploration well reached total depth of 9,500 feet in November. The well had minor gas shows and was subsequently plugged and abandoned. The well is located on Block 9, in which Marathon Oil has a 50 per cent, non-operated working interest.

“This second site is christened the Sala-1 well, located on the eastern side of Block 9, where previous wells drilled in the sub-basin confirmed a working petroleum system,” said the statement.

Africa Oil, a Canadian explorer, owns the remaining 50 per cent interest in Block 9.

Marathon Oil did not say how much it is planning to invest in drilling on the block but a presentation by its partner (Africa Oil) says that Sala-1 one will use part of Sh3.7 billion that has been set aside for drilling wells which include those in Block 12 in the Rift Valley.

READ: US company Marathon Oil joins Kenya exploration

Oil and gas explorers have stepped up seismic studies and drilling of wells buoyed by positive results from Tullow Oil whose wells have shown a potential one billion barrels of oil.

Confirmation will, however, have to wait until well appraisal and further tests are carried out. Tullow has also lead to firms selling stakes to larger firms in order to raise capital for exploration.

Camac Energy, EHRC and FAR are firms that have raised capital and announced seismic surveys and drilling of wells all planned for this financial year. Analysts also say that the firms may be accelerating exploration to meet the government’s exploration licensing requirements.

“There also those who have blocks and with no money to develop, and these are selling off to more capitalised investors as the Energy secretary has threatened them with repossession  of idle  blocks,” Petroleum Focus director George Wachira told the Business Daily.

Energy secretary Davies Chirchir cancelled Vanoil Energy Limited’s exploratory licence for failing to meet work commitments on its Blocks 3A and 3B in Garissa.

Africa Oil has hinted that it needs to carry out the work as per the Production Sharing Contract (PSC) with the government.

“Discussions are ongoing with the Government of Kenya to enter the final exploration period under the PSC which will expire in December 2015. The Sala-1 well would fulfill the minimum work obligation under the final exploration period,” says African Oil’s in results for the period ended September 2013.