Tower Resources Seeks Partner for Uganda Block

UK listed Tower Resources Plc has retained Envoi to assist in finding a partner for progressing and accelerating exploration of the highly prospective but under-explored Block EA5 in northern Uganda. The block is 100% owned and operated by Tower, through its subsidiary Neptune Petroleum (Uganda) Ltd. Continue reading here..

Uganda Oil and Gas Exploration in 2011 & 2012

Although the hunt for oil in Uganda dates back to the 1920’s, commercial discoveries have only been made in the last 5 years. The dominant player by far has been Tullow Oil which has had proven discoveries of a billion barrels with yet to be drilled (P50) estimates of another 1.5 billion barrels. The discovery of these significant reserves has ushered in a new chapter in Uganda’s development, and generated renewed interest in the petroleum potential in the country. Uganda has 10 exploration blocks that run from the Sudan border in the north through Lake Albert on the western border with Democratic Republic of Congo and south to Lake George.  However, only 5 blocks have been licensed. The other blocks are due to be licensed after the government completes a new regulatory framework over oil exploration. These blocks are Blocks 3B, 3C, 3D and 4A. The government has said it is planning a new licensing round later this year and is offering 5 blocks. 

Tullow initially planned to have first oil production by 2011, but tax disputes between the newly acquired Heritage Oil and the Ugandan government have led to a delay with first oil now expected to flow in 2012. The other 2 players who have been active are Tower Resources and Dominion Petroleum. However, these companies have so far been unsuccessful with limited drilling attempts.

The status of exploration activity in Uganda and exploration plans for 2011 and 2012 is looked at below. 

The following table is an extract from Derrick Petroleum Services “Exploration Database” which here shows limited information about exploration drilling in Uganda in 2011 and 2012. Further information on ownership and recent activity is provided below the table and map that follows. 

Block/ License Name	Operator	Status	Wells planned in 2011	Wells planned in 2012+	Date of last update
Block 3A	Tullow Oil	Announced		2	7/8/2011
Block 1	Tullow Oil	Announced	1		6/7/2011
Block 2	Tullow Oil	Ongoing	1		4/6/2011
Exploration Area 4B or EA4B	Dominion Petroleum Ltd	Ongoing		2	7/13/2011
Block EA5	Tower Resources Plc	Ongoing	1		5/18/2011

Source: Derrick Petroleum Services ‘Exploration Database’

Figure 1: Map of blocks and hydrocarbon fields in Uganda. Source: Heritage Oil & Gas. Note: All Heritage blocks in map have been acquired by Tullow Oil.

Block 3A
 Tullow Oil operates this block with 33.33% interest with partners CNOOC and Total also having 33.33% interest each. The Kingfisher-1 well was drilled in 2006 and subsequent appraisal has shown this to be a major field with the Kingfisher-3 well establishing 200 million barrels of recoverable reserves. 2 other prospects, the structurally attractive Pelican prospect and the large Crane prospect have been mapped on seismic and were announced to be drilled in 1H 2010. However, at the time of writing they are yet to be drilled, and pending further announcement it is likely that this will occur only in 2012.

Block 1/ Exploration Area 1 (EA1)
Tullow Oil also operates this block with 33.33% interest and with partners CNOOC and Total also having 33.33% interest each. Block 1 or Exploration Area 1 (EA1) is located at the northern end of Lake Albert, onshore Uganda and covers an area of 3659 sq kms. A successful 3 well drilling program (Warthog-1/Ngiri, Buffalo-1/Jobi-1 & Giraffe-1/Rii) was completed in 2008 unlocking a billion barrel potential in the Block. This was said to be the largest onshore oil discovery in Sub-Saharan Africa in over 20 years. This was followed by the drilling of the Ngiri-2 well in 2010. 2 wells were drilled in 2011, the Jobi-East-1 (to test the Jobi East prospect adjacent to the giant Jobi-Rii oil field )and Mpyo-3 appraisal well.

Jobi-East-1 discovered 20 metres of net hydrocarbon bearing reservoir.  Successful logging and sampling operations confirmed the presence of oil in two zones of high quality reservoir totalling 15 m of net pay. In addition, gas was also logged and sampled within sands totalling 5 m of net pay. The well was drilled by the OGEC RR600 and reached a total depth of 563 m. It has been suspended allowing for future re-entry to conduct production testing operations. An accelerated drilling campaign comprising up to four Jobi-East appraisal wells is planned for the second half of 2011 to assess the full extent of this important new oil accumulation.

The Mpyo-3 well intersected 21 m of oil bearing reservoir sands at a depth of 340 metres. The well was drilled 1.6 km southeast of Mpyo-1 in a down-dip location within a fault block adjacent to the Mpyo-1 discovery. Successful logging operations confirmed the sands to be of good quality and that they contained highly viscous oil similar to that encountered in Mpyo-1. The well was drilled by the OGEC IRI-750 to a total depth of 513 m and was suspended allowing for future re-entry to conduct production testing operations.

Pending further announcement, it is unlikely that any new exploration wells will be drilled on this block in 2H 2011. However upto 4 Jobi East appraisal wells are planned to be drilled in 2011.

Block 2/ Exploration Area 2 (EA2)
Tullow Oil also operates this block with 33.33% interest and with partners CNOOC and Total also having 33.33% interest each. Block 2 or Exploration Area 2 (EA 2) covers an area of about 3,900 sq km and is located on the eastern edge of Lake Albert of Butaiba region in Uganda. Tullow Oil has planned an eight-well program in Block 2 which commenced in March 2008. Out of the eight wells, two were drilled in 2008 and five were drilled from Q1-Q3 2009 with the last well expected to be drilled in late July 2009. Karuka-2 and Nsoga-1 exploration wells were drilled in Mar & May 2009 respectively. Nsoga-1 was a commercial discovery. Elsewhere in Block 2, Ngassa-2 was also drilled around the same time and in September 2009 it discovered oil. The well has been suspended as an oil producer. Kigogole-3 well was drilled in June 2009 and was suspended as a future producer. Wahrindi-1 was drilled in July 2009 and it encountered four meters of net oil pay. The last well, Ngara-1 was completed in August 2009 and was suspended as a future oil producer. According to Tullow, the Butiaba E&A prospect is scheduled to be drilled in 2011 on Blocks 1 and 2.

Block 5/ Exploration Area 5 (EA5)
Block EA5 is a 6,040 sq km license area situated at the northern end of the Albertine Graben in northern Uganda. The first exploration well, Iti-1 was completed in June 2009 and was found to be dry. The second well, Avivi-1 was spudded on February 13, 2010 and also failed to encounter hydrocarbons. Tower Resources operates the block with 100% interest although Global Petroleum, which funded most of the cost of Iti-1 and 25% of the cost of Avivi-1, has earned the option to take a 25% interest in the license. In May 2011, Tower Resources announced that a seismic survey is ready to begin so that a well can be drilled before the end of 2011.

Block 4B/ Exploration Area 4B (EA4B)
Exploration Area 4B or EA4B covers an area of 2,021 sq km in the Lake Edward and Lake George segment of the Albertine Graben. The adjacent basins, Southern and Northern Lake Albert and the Pakwach, have been the sites of several major oil discoveries, including those of the Kingfisher, Warthog and Buffalo-Giraffe (Jobi-Rii) fields. In November 2008, Dominion completed the acquisition of 371 kms of 2D seismic data onshore and 130 kms on Lake Edward. According to their July 2009 update, Dominion had identified four ready-to-drill prospects in this block which had an unrisked gross recoverable resource potential of 378 mmboe. The first exploration well Ngaji-1 was spudded on the block on June 21, 2010. However the well did not encounter any significant hydrocarbons in it. Dominion Petroleum operates the block with a 100% interest. As of July 2011, Dominion's current exploration efforts in this area are focused on two prospects: Prospect B, with 49.4 mmboe net prospective P50 resources; and the Izzy Prospect, with 83.7 mmboe net prospective P50 resources (management estimates). In 2011, Dominion intends to acquire 300-500 km of new 2D seismic in the Lake Edward Basin as well as carry out a surface geochemistry survey. It is assumed that the 2 prospects mentioned above will be drilled in 2012 after processing and interpretation of seismic and analysis of geochemistry data.

For more presentations on "Uganda", use our oil and gas document library:

Powered by Derrick Petroleum Services

Tullow to increase its interest in Jubilee field

Tullow Oil plans to raise its stake in Ghana's Jubilee field by purchasing a 1.75% share held by Ghanaian firm EO. Tullow is in preliminary discussions with EO Group to acquire its interest in the Jubilee field.  There are reports that it had bid $300 million for the EO stake.

To try our free document search tool click here

Jubilee Development

Jubilee field came on line in December. The Jubilee Field was discovered by Tullow in 2007 and is estimated to contain between 1.2 billion and 1.8 billion barrels of oil. It will initially deliver 55,000 barrels a day, with production increasing to 120,000 barrels per day, within six months.

Tullow has a 34.7% share in the project and output from Jubilee should almost double the company's daily production in the next twelve months. Tullow's partners on the field include Anadarko Petroleum, Kosmos Energy, Ghana National Petroleum Corporation, Sabre Oil and Gas and EO Group.

Other key developments

The company is also looking at the recently discovered Owo and Tweneboa fields, with a 'major' appraisal programme due to begin. Development is expected to begin in 2012.

A major exploration campaign across five countries in both Africa and South America is already under way.

To try our free document search tool click here

Strategic breakthrough for Total and CNOOC - acquire one-third of Tullow Oil's Ugandan assets for $2.9 billion!!!!

Tullow Oil plc (Tullow) announced that it has signed a Sale and Purchase Agreements (SPAs) with CNOOC and Total in respect of the sale of a one third interest to each party of the interests Tullow holds in Exploration Areas 1, 2 and 3A in Uganda. Tullow will retain a one third interest. The terms of the transactions include a total cash consideration payable to Tullow of US$2.9 billion.

With the signing of these SPAs, a key condition of the Memorandum of Understanding (MoU) agreed between Tullow, the Government of Uganda (GoU) and the Uganda Revenue Authority (URA) on 15 March 2011, has been satisfied. The next step is for Tullow to make certain tax related payments to the GoU, on receipt of which all relevant consents become final and the other provisions of the MoU become effective.

Under the MoU, Tullow and its new Partners, CNOOC and Total, have been granted new licences over EA-1 and an onshore area of EA-3A and the partnership's rights to develop the Kingfisher discovery have been confirmed. A clear plan for the resolution of tax disputes on the various asset sales has been agreed by the GoU, the URA and Tullow.

Tullow and its Partners will now reactivate the significant programme of exploration and appraisal drilling and progress their development plans for the basin which they will jointly present to the Government of Uganda for approval

For more information on East Africa oil & gas operations

East Africa - continent's new hotbed for oil & gas exploration!!

Traditionally, west and north Africa have been the continent’s hotspots of oil & gas E&P, but recent success in east Africa may change that.  North Africa has seen 20,000 wells sunk over the past few decades, while drillers have sunk 14,000 wells in and off West Africa. In East Africa, the total is about 500 wells.

Significant discoveries in the region, combined with a range of new opportunities through licensing rounds, are attracting new players to relatively underexplored countries on the eastern part of the African continent.

Please try our new free document search tool: www.derrickpetroleum.com

The East African Region has a total of 28 prospective sedimentary basins with resource potential of about 2 billion barrels of oil in place and 3 tcf of natural gas.

Datamonitor forecasts total oil production in the region (excluding Sudan and South Africa) to reach approximately 210,000 barrels per day (bpd) in 2015, and nearly 389,000 bpd by 2020.

…. oil & gas hunters!

• Tullow Oil has already made significant discoveries in Uganda, and is targeting other exploration fields in the East African rift basins, mainly in Kenya and Ethiopia.
• Wildcatters and majors such as Italy's Eni, Petronas of Malaysia and China National Offshore Oil Corporation (CNOOC) have all moved on East Africa in the past few years, hoping to mimic Tullow Oil’s success in the region.
• Africa Oil Corp with its assets in Ethiopia and Somalia is yet to explore the region.
• In addition, Dominion Petroleum has invested nearly $40m in drilling activities in Tanzania and Uganda in recent years and will continue its efforts in the region, including some farm-out initiatives.
• Anadarko and Cove Energy also have plans to move into south-east Africa, and together intend to invest around $150m in drilling activities over the next two years.

Source: Derrick Petroleum Planned Exploration Wells Database

Datamonitor forecasts a total offshore capital expenditure (CAPEX) in the region (excluding Sudan and South Africa) of nearly $400m in 2010 ($312m on drilling and $77m on seismic activities). The total offshore CAPEX is forecast to grow by a compound annual growth rate of 20%, totaling nearly $994m in 2015.

Future holds bright for East Africa!

• Uganda Prime Minister Apollo Nsibambi said, “East African countries will jointly explore their “vast” oil and gas fields to foster development of their economies”. The cooperation will attract more investment capital and spur economic growth, Nsibambi told a petroleum conference in Kampala, the Ugandan capital, with giving details on how this will work.
• Uganda will issue more oil-exploration licenses later this year after a new industry law is formulated, Nsibambi said. It has five remaining oil blocks after suspending the awarding of concessions in 2006 pending the new law, he said.

Source: Derrick Petroleum E&P Transactions Database

• Kenya issued six exploration licenses between 2000 and 2002 and two more to CNOOC in the next four years. "Despite a long history of unsuccessful exploration, the oil companies are investing in Kenya," says Mwendia Nyaga, managing director of the National Oil Corporation of Kenya. "The question is not if any hydrocarbon deposits exist, but where they are."
• Other East African countries which are likely to hold significant resource potential are Somalia, Ethiopia and Mozambique. However, Somalia remains a no-go zone for investors due to its political unrest while Ethiopia’s eastern Ogaden region is beset by a violent rebel insurgency. Mozambique is still recovering from its civil war which broke out in 1992.

Every new frontier area for oil and gas exploration & production faces its difficulties and East Africa is no exception to that. The political hurdles in the region if addressed properly, this region will prove to be a boon not only to exploration and production companies, but also to other market participants in the oil and gas value chain, such as drilling companies, service providers, and equipment manufacturers.

Related :

Strategic breakthrough for Total and CNOOC - acquire one-third of Tullow Oil's Ugandan assets for $2.9 billion!!!!