Tag Archive for: TANZANIADEVELOPMENT CO

Petroleum Industry's Local Impact

/27 Comments/in /by

Tanzaniapetroleum’s  core objectives include the acquisition of latest information on  Tanzania’s exploration and production activities,gain exposure to     the latest trends and development in the East African market and  to keep abreast of geopolitical,industrial and technological developments.
Articles 10 and 109 of  2010  mining Act Stipulate that exploration firms must make provisions for local ownership in areas where they are active.
Therefore  as active players in the industry we are committed to act as a check and balance against other players as we move closer to commercial production.
Some of the prevalent concerns include,transparency in revenue management,sharing of royalties with local communities,access  to information,environmental degradation  and lack of consultation with communities  in oil-rich regions.
Lastly  is to highlight  the  secrecy in public sharing contracts that the government has with oil,gas and mining companies.
    The writer is an oil and gas analyst.Member of Tanzania Petroleum

Gas pipeline to be complete next month

/26 Comments/in /by

TRANSPORTATION of natural gas from
Madimba in Mtwara to Kinyerezi I Power Plant in Dar es Salaam will start
early next month after completion of the construction of the
542-kilometre natural gas pipeline project.
According to the Minister for Energy and
Minerals, Mr George Simbachawene, the transportation of natural gas
will save over 1 1.6tri/- per year currently spent on importation of
fuel for electricity generation.
The pipeline will have an installed
capacity of transporting 784 million standard cubic feet daily, a volume
which can generate over 2,000 megawatts (MW) of electricity, including
the 300MW plant at Mnazi Bay.
Mr Simbachawene noted that upon
completion of the infrastructures, the project would see the country
getting reliable electricity supply, expansion and increase of
industrial production, cleaner environment and employment creation.
The Minister made his remarks yesterday
in Dar es Salaam after he visited Kinyerezi 1 Power Plant to inspect the
progress of the implementation of the project carried out by
contractors, TANESCO as well as Tanzania Petroleum Development
Corporation (TPDC).
He urged Tanzanians to be patient as
TANESCO will cut off electricity where repairs will be done so as to
ensure the availability of gas electricity in most parts of the country.
He stressed that the availability of
natural gas will help reduce the use of water where in some of the
hydroelectric dams that have slowed down production due to climate
change and environmental degradation.
Kinyerezi I Power Plant, Eng John Mageni noted that two out of four machines are complete and will produce 220Kv of electricity.
“The machines are currently on a test
run and within two weeks will be complete,” said Eng Mageni adding that
by early September this year, natural gas from Mtwara will be available
at the plant ready to be distributed to various sub stations including
the national grid.
In a related development, TANESCO
Managing Director, Eng Felchesmi Mramba said when Kinyerezi 1 Power
Plant kicks off, the company would significantly reduce the cost of
power supply.

He added that 150MW are expected to be
produced after the completion of the construction of Kinyerezi 1
Electricity Power Plant, a step towards the execution of the
government’s aim of adding electricity capacity on the national grid.

See Where does Petroleum Come from

/in /by
We are going to talk Origin of petroleum
But First  I will talk
about the origin of the world itself, Rock outcrop at the surface of the earth
have been producing oil for century and this oil was known as rock oil, Because
at that period oil was seeping out the rock, But at the middle of 19 century
some body called the word Petroleum, Petro is greak word meaning rock and leum
is latin word meaning oil and they combine these two word called petroleum.
Then become popular word and eventually the word adopted by industry itself and
now is known as petroleum industry
 Where does petroleum come from?
 There are two theory about where petroleum come from
·        
Organic
theory :State that oil was developed over millions of years from organic
materials from remains of animals and plants that were once alive, the proteins
life floaded in the sea like plankton and algae then die and fed to the bottom
of the ocean.
·        
Inorganic theory In this teory the source of oil
is from chemical reactions between minerals, In the laboratory scientists have
been able to make methane gas by applying heat under high pressure to minerals
even though a very small percentage of oil today may have developed from in
organic chemical reactions between minerals the source of most our oil appear
to be the result of organic decomposition.
These decomposition is the decay of the
remains of animals and plants that died millions of years ago
                When
am talking about animals that was died and generate oil am talking about tiny
microscopic animals that live in the sea eg plankton and algae
    These animals die
under special circumstances, and what do I mean by that?
         As you know
when most animals die other animals and bacteria arrive to consumes the remains
living nothing. In the shallow water where these animal live, sweep current
come on and push these down to where there is no enough oxygen to live and so
they die. These animals went from an aerobic environment where there is plenty
of oxygen to an anaerobic environment where there is little oxygen where all
die at the same time.
In an anaerobic there also not enough oxgen for most animals
microbs or bacteria to come along and eat the remains of planktons and algae so
the just lie there until the get buried by particles of silt and sand.
Over period of millions of years these layers of remains in
sand and silt particles are buried and curved by more layer until first layer
become very deep. All the way of these layer to press down and squeezed caused
increased in pressure and temperature until the sedimentary layers are formed
into shale, sediment change into rock, and little dead microbs get cooked into
hydrocarbon.
These is the theory of how petroleum and coal is made.
Oil is made from animal like plankton
Coal is made from vegetation like plants

Gas is made from deeper formation where microbes are cooked
longer

CAG TO AUDIT OIL AND GAS COMPANIES

/53 Comments/in /by

Dar es Salaam: The Controller and Auditor (CAG) will carry a special audit on oil and gas industry.
CAG Mussa Assad said citizens from areas with gas and oil should benefit from companies operating in their locales.
“This sector [oil and gas] is very crucial,” he said, adding “we will make sure they are controlled accordingly to give to the society what it really deserves.”
Assad said his office might fail to compete auditing in some offices following budget deficit.
Despite receive less from treasury; the CAG remains adamant that his office will execute its duties.
“With the little we have we will make sure we implement fruitful projects which will benefit citizen but we will not be able to finish all of projects.”
For this fiscal year the CAG office were scheduled to receive TZS 86 billion but only received TZS 76 an amount which will not be enough for all projects set for this year.

Components of Production Sharing Contract in Kenya

/65 Comments/in /by
Licensing of petroleum exploration blocks, is governed by the
Petroleum (Exploration and Production) Act Chapter 308 of the Laws of
Kenya. All contracts are based on a Model Production Sharing Contract
(PSC) issued as a schedule to the Regulations issued under Section 6 of
the Act.
The signed Production Sharing Contracts have the following key component:
a) Signature Bonus: This is a one-off fee payable to
the Government by the Company upon signing of an oil exploration
contract. It depends on the area of the Block and previous data acquired
on the Block. Signature Bonus negotiation came into effect in 2009. In
block 12B for example the signature bonus paid was $300,000 according to
JV partner Australian Swala Energy. In block L27 operated by CAMAC
Energy the signature bonus paid was $310,000 according to the PSC available on this website.
A surface fee is also payable and is calculated on
the basis of the surface area of the Contract Area on the date those
payments are due. In Block L27 the amount set is $5 per square kilometre
per annum during the Initial Exploration Period, $10 per square
kilometre per annum during the first Exploration Period, $15 per square
kilometre per annum during the second Exploration Period and $100.00 per
square kilometre per annum during the Development and Production
Periods
b) Work programme and expenditure: The contractor
guarantees the agreed work programme and minimum expenditure. Initially
this was pegged at 15% bank guarantee and 85% parent company guarantee.
However, the Ministry has improved this and now the newly licensed
companies are required to provide a 50% bank guarantee and 50% parent
company guarantee.
This is to make sure that the companies proceed with their work
progamme expeditiously as agreed with the Government and that incase of
non-performance, the Government can liquidate the guarantees more
easily. For small companies (based on their annual turnover criteria),
they are required to post 100% bank guarantee. It is important to note
that upstream petroleum operations are capital intensive and the
Government entirely relies on the oil companies to invest their risk
capital in the operations.
In addition, this risk capital is raised through equity. This is
contrary to investment in mid stream and downstream petroleum segments
which can be funded by debt
c) Cost oil: This is usually the negotiated
percentage of total crude produced for recouping of investment costs
incurred by the contractor in exploration and production of oil in a
given field. It is normally up to 60% of all the oil produced in a field
for about five years.
d) Profit oil: This is the remaining oil after
deducting cost oil and is shared between the Government and the
contractor. For example, when a field is small the Government take is
50%. As the production increases, the Government take can increase up to
78% of the total profit oil.
e) Windfall profit: Where oil prices are higher than
the negotiated threshold, the Government creams off contractors take
above the threshold crude oil prices by 26%.
f) Exploration phases – there are three exploration
phases of two years each, the initial period, first additional period
and second additional period. For ultra deep offshore blocks, the
initial period is extended to three years due to extra logistical
challenges in the deep water acreage.
g) Relinquishment – is 25% of the area of the block for each period
The PSC also has the license rental fee and training fee included. In
Block 12B for example the license rental fee is set at $40,000 during
the first year (2012-2013) and $80,000 during the second year, training
fee is $100,000 per annum. During the first production phase the
training fee is set at a minimum of $200,000 in Block 1 PSC with Lion
Petroleum.
Check out PSC’s for the various East African countries namely Kenya, Uganda, Tanzania, Mozambique available on our website.
Additional Source: Ministry of Energy & Petroleum Website

Oil prices ‘could fall further’

/28 Comments/in /by

Oil prices may have further to fall despite stabilising in
recent months – and even beginning to rise modestly – because of a
massive oversupply the International Energy Agency (IEA) has said.
The IEA said lower oil prices were likely to last well into 2016.
The agency added the world oil market was unable to absorb the huge volumes of oil now being produced.
It follows the massive drop in prices which started last summer.
The price of Brent crude fell sharply last year from $115 a barrel in June to $45 a barrel in January.
The current price of Brent crude is $59 a barrel.
The fall in prices has led oil firms to cut back investment in
exploration, while North Sea oil has come under significant pressure.
All seven major global oil firms have also reported a year-on-year declines as a result of lower oil prices.
‘Oversupply’
Only last month the Office for Budget Responsibility
(OBR) forecast North Sea oil and gas revenues would fall to below 0.1%
of GDP over the coming decades.
It said the tax take from North Sea oil and gas had already fallen by 80% in the last three years.
“The oil market was massively oversupplied in the second quarter of
2015, and remains so today,” the IEA said in its monthly report.
“It
is equally clear that the market’s ability to absorb that oversupply is
unlikely to last. Onshore storage space is limited,” it said, adding:
“Something has to give.”
“The bottom of the market may still be ahead.”
Core members of the Organisation of Petroleum Exporting Countries
(Opec) have continued to produce the same level of oil in the past year
despite falling oil prices in an attempt to regain market share.
US
oil production has also soared in recent years, as fracking – or the
process of extracting oil from shale rock by injecting fluids into the
ground – has revolutionised oil production in the country.
Opec’s response to the fall in prices was to refuse to cut
production. Many Opec nations are able to tolerate a lower oil price
despite losing money.
Record
For other nations such as Russia the lower oil price is doing substantial harm to economic growth
Last
month, official figures showed the impact of international sanctions
over Russia’s continued involvement in east Ukraine and the lower oil
prices had led to a 4.9% contraction in the Russian economy in the 12
months to May.
The IEA said Opec crude oil production rose 340,000 barrels per day
(BPD) in June to 31.7 million barrel as day, a three-year high, led by
record output from Iraq, Saudi Arabia and the United Arab Emirates.
It said Saudi Arabian crude oil supply rose 50,000 barrels per day to
a record high of 10.35 million BPD in June, while Iraq crude oil output
surged 270,000 BPD in June to its highest-ever rate of 4.12 million
BPD.
However, increases in production have come just as demand for
oil in economies across the world from Europe to China – the world’s
second-largest consumer of oil – has slowed.
The IEA trimmed its forecast for global oil demand growth this year
slightly to 1.39 million BPD and said it expected global demand growth
to slow to 1.2 million BPD in 2016.
The agency added non-Opec supply growth was expected to grind to a
halt in 2016 as lower oil prices and spending cuts take their toll. It
forecast zero growth in non-Opec oil supply in 2016 after an increase of
1 million bpd in 2015.
/25 Comments/in /by

The Ministry of Energy & Mineral Development has announced that
the “Uganda International Oil & Gas Summit” (UIOGS) will be held in
Kampala on 16-17 September 2015.

With a first-class conference programme led by Government, Public
Sector and Private Sector industry leaders; the Summit marks an
important point on the global calendar.

UIOGS is held under the Patronage of Eng. Irene Muloni,Minister of
Energy and Mineral Development; and will be used by the Ministry as its
official platform for meeting international companies and presentation
of the multitude of energy projects presently ongoing or planned for in
Uganda.

Uganda has much to offer the global oil and gas community and 2015 is
an exciting year as the country moves towards commercial production.
Uganda is blessed with its natural resources and now has an estimated
6.5 billion barrels of oil in place, a high drilling success rate of
85%, advanced refinery plans, vast acreage of underexplored areas rich
in hydrocarbons and much to look forward to with the new licensing
rounds.

The UOGS programme will provide an invaluable insight into all the major issues, challenges and opportunities including:

  • Focus on the licensing rounds and new opportunities
  • Update on existing fields and exploration success
  • Financial and regulatory frameworks
  • Uganda’s Refinery Project – 60,000 bpd by 2020
  • Move to commercial production
  • Supporting the oil and gas industry through a skilled workforce and local content
  • Infrastructure developments to support oil & gas
  • How can a successful oil industry support our drive towards rural electrification

The Ministry of Energy & Mineral Development will be using the
UIOGS platform to actively engage with allits partners and suppliers
from around the world. The services of the renowned market leaders for
oil & gas conferences; Global Event Partners have been engaged to
work alongside domestic experts Image Care to ensure that UIOGS is a
first-class event that puts Uganda firmly on the global map.

UIOGS is a two day conference that will be held at the Kampala Serena
Hotel on 16-17 September 2015. The programme will be opened by Hon. Eng
Irene Muloni and will feature more than 30 Government officials,
Company leaders and Industry experts gathered from Uganda, the region
and throughout the world to give Uganda a truly global platform.

This is How To Drill Oil and Gas Well

/in /by

          Now, during this lesson, we will see how to drill them.
1. First of all, let’s see how to describe the subsurface characteristics, in order to plan the design of the future well and to define the phases of the drilling job.
2. Then, we’ll describe the drilling system, and how the driller can manage the drilling process safely.
During the exploration phase a well is needed to confirm the presence of oil or gas in the reservoir.
Some appraisal wells are needed for the delineation process.
Moreover, at the end of the reservoir strategy study, a reservoir model defines how to develop the field, and, more particularly, where to drill the wells and the contribution of each of them to the production plateau.
The role of the driller is to build these wells required for the field development.
A well is an expensive item. It must be carefully studied and planned before being drilled. The well preparation phase involves coordinated work between geoscience engineers and drilling/completion engineers.
How to design a well?
In order to set up the drilling program, the driller needs to know the location of the rig, where the well has to enter the reservoir, the trajectory of the well in the reservoir for a good connection between the well and the reservoir, and the formations to be drilled. Let’s detail the description of the subsurface.
For each formation to be drilled, there are 2 characteristics that need to be known accurately:
1. the pore pressure
2. and the fracture pressure.
The pore pressure is the pressure of the fluid within the grains of the rock. It depends on the depth of the formation and on its nature (sandstone, shale, …).
The fracture pressure corresponds to the minimum pressure to be applied on the rock to generate a fracture.
When the formation is drilled, the well is full of a fluid: the drilling mud, which is directly in contact with the rock, and applies a pressure on it: Pmud.
The mud pressure depends on the depth. One of the roles of the mud is to maintain the interstitial fluid within the rock, in order to avoid a kick.

During the drilling process, the mud is in contact with the rock, which contains a fluid within the grains.
A fluid always flows from high pressure to a lower pressure. If the mud pressure is higher than the pore pressure, the formation fluid cannot enter the well. It remains in the formation and there is no risk of blowout.
During the drilling process, the mud is in contact with the rock, which contains a fluid within the grains.
The mud pressure has to be lower than the frac pressure, in order to avoid the rock being fractured. To conclude, keep in mind that the mud has to be designed so that the mud pressure belongs to the interval between the pore pressure and the frac pressure. This interval is called the mud window.
Both Ppore, in red, and Pfrac, in blue, can be plotted on a (pressure/depth) graph.
The mud pressure has to be in the yellow zone, which is called the mud window. For each lithology to be drilled, the mud has to be well adapted to its characteristics. The well is therefore drilled in different phases, each phase corresponding to a new mud to be used.
At the end of a phase, a casing is installed and cemented to protect the well from the formation already drilled and to finalize the well walls.

The definition of each of these phases is called the well design.
A typical well design is as follows:
1. The first tubular is the conductor pipe installed by the civil engineer before the rig
arrives on site.
2. The next phases are drilled using the rotary drilling technique.
3. The surface casing maintains the unconsolidated surface formations and protects the groundwater.
4. The intermediate casing protects the well from the formations or fluid which could prevent the drilling process from continuing.
5. The last casing is the production casing which allows the reservoir to be isolated.
6. During the last phase the well enters the reservoir.
When a well is an exploration well, designing is much more difficult , due to a lack of measurements and information to describe the subsurface. The mud window is not accurately known. Such uncertainties have to be taken into consideration in the drilling process.
When a well has to be drilled in a new region, there are many uncertainties about the data, including that related to the pore and frac pressure profiles. On the contrary, when a development well is planned, it benefits from data from the surrounding wells already drilled. In this case, the pressure profiles are well known, and the uncertainties are lower.
Let’s mention that the trajectory of a well can be vertical, deviated, or horizontal. The choice of the trajectory depends on the location of the rig, the location of the target of the well when it enters the reservoir, and the trajectory of the drain in the reservoir itself. These two last data are defined and given by the reservoir engineer to the driller.

How a well is drilled in practice? Mechanically, a vertical force applied on the drilling bit (the weight on bit), together with a movement of rotation, generates down to the bit the power necessary to destroy the rock. A hook hangs up the drill string, which is composed of several tubulars screwed together, and, at the bottom, there is a drilling bit.
Both the weight on bit and the rotation per minute, which is given by the rotary table located at the rig floor, are controlled by the driller to maximize the rate of penetration of the bit.
Their optimization depends on several parameters, including the kind of rock to be drilled: the regulation of the hook height controls the part of the total weight of the drillstring applied on the bit, the rotation is often given by a rotary table located at the rig floor.
The mud circuit is combined to the mechanical part of the system.
Firstly, the pump sends the mud at high pressure through the discharge line, the stand pipe, the rotary hose and the top drive, into the pipes.
The mud flows in the drill string down to the bit and catches the small pieces of broken rock, the cuttings, to transport them up to the surface in the space between the drill string and the well walls.

At the surface, the cuttings, the sand and the silt are removed from the mud through shale shakers and other systems.
The mud can be sent to the tanks in order to be re-injected.
In order to control the well in case of blowout, a Blow Out Preventer is installed between the top of the well and the rig floor. This BOP stack is composed of an annular BOP and different rams able to close the well in case of emergency. The size of the BOP is adapted to the maximum pressure that can be encountered during the drilling process.

Wentworth Resources Raises $7.6 Million To Finance Tanzania�s Mnazi Bay Developments

/29 Comments/in /by

Wentworth Resources has announced that it has successfully raised
gross proceeds of USD 7.6 million (GBP 4.9 million, NOK 59.7 million)
with institutional investors and certain Directors and members of the
Executive Management through a private placement of 15,412,269 new
shares.
The private placement saw no discount to market price with the new
funds set to provide the Company with sufficient working capital beyond
its projected receipt of first cash flow for gas sales from its Mnazi
Bay concession.
This comes at a time when construction of the Government owned and
operated Mtwara to Dar es Salaam pipeline is complete and the
accompanying processing facilities are nearing completion with
pre-commissioning activities ongoing with delivery of first gas into the
new pipeline continues to be on track to commence in Q3 2015.
According to Wentworth Resources significant progress has been made
in recent weeks on advancing payment guarantee arrangements and the
Company is confident these will be completed prior to the delivery of
first gas to the pipeline.
The company said it had preferred the Private Placement as it
represented a quick and cost-effective method of raising funds necessary
to give the Company sufficient working capital until projected cash
flow from gas sales at Mnazi Bay commences.
FirstEnergy Capital and Stifel have been appointed as Joint Bookrunners in respect of the Placement.
According to Wentworth executive Chairman Bob McBean the Company
expects to start receiving cash flow from gas sales to the new pipeline
in Q4 2015.
“We are very pleased with the successful outcome of this raise which
provides the working capital we need prior to delivery of first gas. We
are confident that, with the support of our Partners and the commitment
shown by the Government, gas will be on stream in the coming months and
will be fully supported by an agreed payment guarantee arrangement. I
and the Board would like to thank our existing shareholders for their
continued support and welcome our new shareholders at an exciting period
ahead for Wentworth,” says McBean.
In March
Wentworth Resources announced that the Company has subsequently drawn
an amount of $5.6 million on an existing $20 million credit facility
with a Tanzania-based bank, TIB Development Bank Limited to finance
Mnazi bay concession developments including drilling of the MB-4 development well.
As per the last evaluation gas reserves within the Mnazi Bay
Concession in Tanzania, carried out by RPS Energy Canada Ltd put the value at $152.9 million after tax.
Marel et Prom is the operator at the Concession with 60.075 percent
interest through exploration and 48.06 percent through production while
the Tanzania Petroleum Development Corporation holds the remaining 20
percent.