Kenya has extended the exploration contracts of Zarara Oil & Gas Ltd for blocks L4 and L13 in the Lamu Basin by 18 months to December 2018.
Zarara is a subsidiary of Midway Resources International (MRI).
Mark Bristow, the MRI chairman, said the extensions will enable Zarara to drill to the Pate-2 and Pate-3 wells in their search for natural gas deposits in Lamu County, at the area where the Pate-1 well drilled in 1971 by Shell and BP encountered fossil fuel.
“Spudding (starting drilling) of the first well will be done before end of 2017,” Mr Bristow said.
Zarara owns 75 per cent equity in block L4 and L13. Swiss Oil Holdings International Ltd has 15 per cent stake and the National Oil Corporation of Kenya’s 10 per cent carries the government’s interest.
Plans to build a 1,000MW coal-fired plant in Lamu has been opposed by residents who fear the amount of pollution it could emit. Natural gas, being a clean source of energy is globally used for power generation and fuelling vehicles.
Pate-2’s success will lead to sinking of a second well from the well-pad on Pate Island.
Zarara plans to spend $30 million on the wells and use the gas to generate power 70km southwest of the Kenya-Somali border.
Pate 1 was abandoned in 1971 after Shell and BP failed to find crude oil.
Pate 2 to take 120 days to drill, test and complete. Pate 3 well to be sunk from the Pate 2 pad to a depth of 4,500 metres.
Peter Worthington, the MRI chief executive officer said Zarara’s strategy is to bring the wells to production to supply phase 1 of the Lamu Integrated Gas-to-Power Project (LIGPP) and determine how much natural gas the Pate field holds.
Gas and electricity production will depend on well flow-rates expected to range from 10 to 20 million standard cubic feet per day based on Pate-1 data.
“The wellheads and phase 1 of the LIGPP will be located on Pate Island, less than 20 kilometres from the proposed Lamu port and Lamu Port-South Sudan-Ethiopia- Transport corridor terminus,” said Mr Worthington.
He said building phase 1 of the LIGPP from the second half of 2018 will most likely be undertaken by an MRI-affiliated company.
A feasibility study for phase 1 in progress will be completed by end of 2017 and targets 50 to 200 megawatts.
Subsequent phases are likely to be completed with a leading electrical power generation development and operating partner.
The MRI said power generation will expand in phases of up to 1,000MW depending on successful drilling and proved potential deposits in the gas field.