Orca Energy Group provided an operational update on its current activities in Tanzania this week.

Map source: KeyFacts Energy

On August 3, 2020 Orca signed a contract with China Petroleum and Technology Development Company (“CPTDC”) for the design, supply, installation and commissioning of natural gas compressors within the Songas gas processing facility on Songo Songo Island. The compressors will work in harmony with the previously installed refrigeration to address declining reservoir pressure and ensure maximum production levels can be sustained, subject to demand, through to the end of the Production Sharing Agreement in 2026. The compressors are forecast to cost a total of $38 million of which circa $6 million was expended in 2019 and $19 million will be incurred over the remainder of 2020. The compressors are scheduled to be operational by the end of Q2 2022. 

Orca’s careful management of the operational team on Songo Songo Island has enabled it to maintain production throughout the COVID-19 pandemic. Orca’s Additional Gas sales averaged 50.6 million standard cubic feet a day (“MMcfd”) for Q2 2020 (Q2 2019: 56.6 MMcfd) and 53.5 MMcfd for the six months ended June 30, 2020 (six months ended June 30, 2019: 59.5 MMcfd).  Gas sales were impacted by sustained and significant rainfalls that enabled the Tanzania Electricity Supply Company (“TANESCO”) to operate its hydro facilities at high utilization rates. The country is now entering the dry season and gas demand is expected to increase for the remainder of the year.  Despite the lower demand for gas from the power sector, TANESCO has continued to pay back its arrears during the first six months of the year. Orca continues to benefit from a strong balance sheet, with cash and short-term bonds of $106.1 million as at June 30, 2020.

The Company is preparing for the workover of onshore well SS-10 in early 2021. A decision on whether to conduct remedial work on two of the older onshore wells, SS-3 and SS-4 will be taken on completion of a major subsurface review of the Songo Songo gas field that will be finalized during Q4 2020. This review, which includes a re-build of the static and dynamic reservoir models, will enable the Company to assess whether the workover of SS-3 and SS-4, or the drilling of new infill wells will be preferable over the remainder of the license period. The review will also incorporate the latest trends in pressure measurements to allow a full re-assessment on the contingent and prospective resource potential and associated economics of drilling and developing the natural gas in the areas known as Songo Songo North and Songo Songo West.

KeyFacts Energy: Orca Tanzania country profile