Despite complex challenges and a remote operating environment, Maersk Oil is committed to getting things right first time round in Kenya’s first ever foray into oil production – leading to huge potential opportunities.
In 2015 Maersk Oil acquired 25% of the northern Kenya exploration licenses from Africa Oil Corporation. Since then we have been hard at work both developing the exploration areas and pushing forward the wider development project, with our partners, Africa Oil and Tullow Oil, the operator of the Kenya Joint Venture (KJV).
Today the things that attracted Maersk Oil to East Africa remain as true as they were on the day of contract signing.
Emily Ferguson, Maersk Oil’s Head of Kenya Exploration, is excited by the prospective opportunity. “Venturing into a partnership in Kenya allowed us to work with and learn from our two partners, both experienced in the region,”
“There also exists significant exploration potential and the strategic benefit of adding low-cost, on-shore assets to our portfolio.”
She outlined these benefits to stakeholders and partners at the East Africa Oil and Gas Summit in Nairobi in November 2016.
The operator of the South Lokichar basin – a London-based independent oil and gas company focused on finding and monetising oil in Africa and the Atlantic Margins.
Africa Oil Corporation
A Canadian oil and gas company with assets in Kenya and Ethiopia. It holds extensive exploration acreage in the East Africa Rift Basin system.
LATEST EXPLORATION AND PRODUCTION ACTIVITIES
Clearly, there is a great deal of work to be done, not least taking the time to develop a thorough understanding of the full range of resources Kenya has in the licence areas.
Four firm wells have been approved for completing in the first half of 2017 and further wells may be drilled, depending on the results and impact of the firm wells. The first well, Erut-1, was spudded on 19 December 2016 and has discovered a gross oil interval of 55 metres, with 25 meters of net oil pay at a depth of 700 meters. The overall oil column for the field is about 100 to 125 metres.
The Erut well is the most northerly penetration in the South Lokichar basin, and the fact that the reservoir and hydrocarbons are still present here bodes well for further exploration in this part of the basin. The rock and fluid samples will now be analysed to understand the discovery more fully, and the results will be integrated into Maersk Oil’s subsurface model. This will help build a more complete picture and tell us more about the additional leads which were identified on seismic.
The second well in the firm programme, an appraisal in the Amosing Updip, spudded on 28 January 2017, with the full programme schedule to complete in March. In the two main fields, Amosing and Ngamia, water injection is being tested as part of the pre-development work programme. The tests are a small but important first step towards evaluating the recovery efficiency of water flooding, although the tests in themselves will not provide the full answer. Even though the focus is on the primary Auwerwer reservoir, the programme also includes testing the secondary Lokone reservoir.
TOWARDS FULL FIELD DEVELOPMENT
Lars Gommesen, South Lokichar Project Manager from Project Excellence, believes there is a significant amount of work to be done before the Partnership is ready for full field development, both within technical and commercial, upstream and downstream.
“The work and experience gained from the planned Early Oil Pilot Scheme will be part of the KJV getting this right for the long-term,” he says. “A lot of good work has already been done in the Partnership, but we have a lot of hard work in front of us. The project goes into a critical phase prior to selecting the optimal development concept for a de-risked resource range. Maturing an integrated development concept and establishing key commercial agreements are two vital elements for setting Kenya and the block 13T and 10BB Partners for success.”
But despite the challenges, Niels Hyldgaard Petersen, newly appointed Managing Director for Maersk Oil’s Kenya activities, is optimistic about the scale of opportunities in Kenya. “This is both technically, but certainly also commercially and culturally, very complex. However if, together with the operator, we can crack the project complexity nut and understand how we can navigate this project path successfully, then there is a huge potential to be unlocked – for the benefit of Kenya, the KJV partnership and Maersk Oil’s portfolio for many years
However, the development project – the basis for Maersk Oil’s presence in Kenya – will only mature with a focused effort. Current measures include reducing risk in subsurface work, working more efficiently to reduce overall capital expenditure, and integrating the process of selecting upstream and midstream concepts. At the same time a range of commercial agreements are coming to maturity, financial arrangements are being put in place, and discussions are taking place over pipeline ownership.