Energy giants Statoil and Exxon target East African gas

The balmy waters of the Indian Ocean, close to East Africa, are a long way from the cold and notoriously stormy North Sea, but Tanzania could soon be profitable territory for Statoil of Norway.

Statoil and its American partner Exxon Mobil have made the biggest offshore discovery yet of gas reserves off the coast of Tanzania.

The Zafarani field, which both companies hope will be bigger than first estimates suggest, is close to the region off the coast of Mozambique, where even bigger deposits of gas are being developed by Anadarko and ENI.

"This is the biggest discovery made outside Norway by Statoil ever," a delighted Statoil vice president, Tim Dodson, tells the BBC.

But beyond the impact on Statoil itself, Mr Dodson recognises how the discovery could transform the fortunes of an East African country that has in the past focused more on safari tourism than oil and gas.

"This is [also] the biggest discovery that has been made offshore Tanzania and in that respect it's extremely important for [both] Statoil and Tanzania," he says.

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At long last east Africa is beginning to realise its energy potential

IN ENERGY terms, east Africa has long been the continent's poor cousin. Until last year it was thought to have no more than 6 billion barrels of proven oil reserves, compared with 60 billion in west Africa and even more in the north. Since a third of the region's imports are oil-related, it has been especially vulnerable to oil shocks. The World Bank says that, after poor governance, high energy costs are the biggest drag on east Africa's economy.

All that may be about to change. Kenya, the region's biggest economy, was sent into delirium on March 26th by the announcement of a big oil strike in its wild north. A British oil firm, Tullow, now compares prospects in the Turkana region and across the border in Ethiopia to Britain's bonanza from the North Sea. More wells will now be drilled across Kenya, which also holds out hopes for offshore exploration blocs.

Olkaria II Geothermal Energy Project, Kenya

 

Sinclair Knight Merz was awarded an overall consultancy contract in 1998 as owner’s engineer and project manager for the Olkaria II Geothermal Power Project in Kenya. This involved engineering design and supervision support on five major contracts - power plant, steam field engineering, site civil works, switchyards and transmission lines. 

The Olkaria geothermal field is located in Kenya’s Rift Valley about 120 kilometres from Nairobi.  The first power plant, Olkaria I, was commissioned between 1981 and 1985, with3 x 15MW machines.  Planning for Olkaria II’s 2 x 35MW generators commenced about the same time, with most of the concept design carried out by the early 1990's, and all the wells drilled by 1993.

In the initial phase of the Project, design reviews recommended several important technical changes, with the cost being justified by use of through-life value analysis techniques. These included changing the turbine hall structure from concrete to steel, and the incorporation of more modern building materials.  Plant changes included the use of modern canned pumps in lieu of barometric sealing pits, and a change to the type of cooling tower, with this particular item resulting in a significant cost saving to the Client in terms of both the capital cost of the cooling tower and the civil works associated with a smaller footprint.

During the Review of the Steamfield, SKM identified a number of other design changes that added value to the Project.  These included:

• Revisions to the steamfield pressure control system and the addition of brine loop seals to avoid brine flashing and carry-over of solids to the turbine 
• Revision of the well-pad layout to provide adequate access for separation plant operation, along with space for maintenance and well work-overs.

For further information, contact: Sinclair Knight Merz

Kenya to concession geothermal power generation

A geothermal Plant at Ol Karia in kenya

KENYA, AFRICA'S geothermal power giant, has changed its business plan in order to speed up geothermal power generation. The new plan involved separating the drilling function from the generation function. Drilling will remain in the hands of the government, while the private sector will be invited to generating power from the steam wells, through the concession mode of PPP.

 The new plan is working well and is expected to add an additional 400MW into the national grid come July 2016.  The company that was created to take over the drilling function, the Geothermal Development Corporation, GDC, a wholly government owned enterprise, plans to develop some 3000MW by 2020 and then on 5500MW in 2031, an appraisal report seen by this publication.

GDC’s role is to develop the steam wells and install the wellheads and then concession the developed wells to power producers who shall build generating stations. Previously both the drilling and the power generating functions were rolled into one. This made it impossible to attract the private sector into the geothermal power sub-sector.

The model will start at the Menengai Geothermal development Project whose first phase is currently under development. It will produce some 400MW-an estimated 26 per cent of the current national supply, by 2016 at a cost of US$502 million. The Kenya government will pick the Lion’s share of this tab at US$245 million. African Development Bank is second with a significant US$147 million while the rest will be funded by other donors including AFD, the French international co-operation agency and the European investment bank.

Kenya to host Konza technocity's investors conference

The technology Park will be a prominent feature in the city

 THE KENYA GOVERNMENT  will host the first Konza city investors conference in August. The event will bring together 500 local and international investors in a three- day conference to discuss among others, the financing models of the city. Also to be discussed will be best practice cases.

Konza Techno City aims to catapult Kenya into an ICT giant by 2030. It will place Kenya firmly on the competition seat with such global BPO, KPO and ITO giants as India and China. Dubbed the  silicon Savannah of Africa, Konza ICT City is a green field project that will be home of Africa's Computerisation drive–something similar to Silicon Valley in the US.

The CBD: an impressive Skyline in the Middle of Savannah

 The 20-year project will be developed in four five-year phases for a total estimated cost of US$7 billion. The first phase will cost an estimated US$2.3 billion of which infrastructure will cost US$1 billion. The rest will be spent on the development broken under: the ICT Park US$200 million, Residential US$975 million and the Central Business District will cost US$125 million. Each phase will last five years.

The second phase will cost an estimated US$1.7 billion of which infrastructure will cost $400million; the residential area will cost US$850 million while the CBD will cost another $100 million while the BPO will take another $300 million. The university, which shall be built at this stage, will cost some $50 million.

The third phase will cost an estimated $2.1 billion of which infrastructure will consume $600 million. The BPO will cost another $400million, CBD $300 million, Science Park $100Million and Residential $700 million.

In the final phase, BPO will cost $450 million, residential $250 million, Science park $100million while infrastructure will cost $150 million, says an analysis posted on their website, www.konzacity.co.ke. At the end of it all, infrastructure will swallow an estimated $2.1 billion while other developed will cost some $4.8 billion.

Africa’s largest wind project still steaming on

A wind power farm: LWTP steamingon

THE LAKE TURKANA Wind power project, Africa’s largest wind power farm is on course. However, it is running behind schedule because guarantee from the World Bank are yet to be granted, investigations by this publication have established.

This puts paid to  rumours that the government has poured cold water on the project. The World Bank, which is to co-guarantee the €582 million debt, has slowed down the progress on the project. This is because it came on the scene only this year and has to do some due diligence of its own before giving the nod. The other co-guarantor, the Kenya government, has already issued its letters of support.

Due to the comfort from the government’s commitment, all contracts necessary have been signed and loan documentations are in place. Among the development contracts in place include; Aldwych international will oversee construction and operations of the plant.  Vestas BV will provide the maintenance of the plant in contract with LTWP.  

The debt financing is being provided by a consortium led by the African Development Bank. Standard Bank of South Africa and Nedbank Capital of South Africa are co-arrangers.

 The power produced will be bought at a fixed price by Kenya Power (KPLC) over a 20-year period in accordance with the signed Power Purchase Agreement (PPA).  Among the contracts that are in place is a 20-year fixed price Power purchase Agreement (PPA) with Kenya Power and lighting Company, KPLC.  KPLC is the sole distributor of electric power in Kenya.

The World Bank’s commitment is expected later this year the way for the project’s roll-out.  The project is expected to roll later this year. Both the financiers and contractors are confident that the World Bank approval will be granted soon.

Lake Turkana wind Power farm, at full capacity will generate 300MW of wind power, the cheapest power in Kenya. This will be 20 power cent of the total power generated in Kenya for now.  Based in Loiyangalani in Samburu County, the Lake Turkana wind power project includes installation of 385 wind Turbines on a 40,000 hectare piece of land, the associated overhead electric grid collection system and a high voltage substation.  See related story at http://eaers.blogspot.com/2012/01/africas-largest-wind-power-farm-set-to.html

Fueling a fossil fuels glut?

NEWS ABOUT NEW FINDS OF natural gas and crude oil fields has become regular in this region this year.  Every week, we are bombarded with the good news of a new oil find inn Kenya of LNG find in Tanzania.

Our neighbours such as Uganda and South Sudan have been there before. Uganda is expected to start producing  20,000 barrels per day(bpd) soon; South Sudan has just shut down its 355,000 barrels per day wells.

News in Kenya is that the crude oil potential  exceeds expectations. In Tanzania reports of new finds of natural gas  wells are almost a weekly thing. 

We should cheer the new finds. After oil are causes for abundance elsewhere. But these news began to worry me. No I am not worried about  civil strive. I am worried about Economics of fuels: Could we be fueling a fuel glut in future? But I thought I was just letting my mind run wild until I stumbled  on a review of a paper  by a senior fellow at Harvard University, who thinks in the same lines.

He argues that new oil finds coupled with advances in extraction technologies could pump 110 million barrels per day by 2020 just when the oilfields in East Africa are expected to come on stream. At that time production could exceed demand leading low crude prices. 

Could our investment go to waste?  or are our imaginations running wild?
 Read  the review at http://www.thenewamerican.com/economy/markets/item/11942-harvard-senior-fellow-peak-oil-is-history

Twenty sixteen

Geothermal steam wells. Coming to the rescue

TWENTY SIXTEEN. No twenty Fourteen. Twenty sixteen is the year by when Kenya's electricity supply will be boosted by an estimated 1432MW from clean energy sources, including wind power and geothermal. And the cost of energy will decline by nearly 10 US cents.

But twenty fourteen is also significant. That is when these sources will begin coming on stream. The players in this sector are going full steam to beat the target time.

AWind Turbine: A clean energy generator

The players include; Geothermal Development Corporation (GDC); Kenya Electricity generating Company (KenGen) and Lake Turkana wind power project.  Both KenGen and GDC are wholly government owned. Lake Turkana wind power ltd is a privately owned company whose goal is to generate some 300MW into the national grid from wind power.

GDC was set to spearhead the development of geothermal power. Kenya is said to have a capacity to generate 10,000MW of electricity from geothermal sources. GDC expects to have developed some 5500MW by 2030. Its initial output will be 400MW to come on stream in 2016. GDC develops the steam wells for concessioning to private power producers.

KenGen on the other hand, the only power generator in the country expects to add some 1832 MW into the national grid by 2016 from various sources including Hydro, Thermal Geothermal and even coal.

Hydro electric Dam; Taking a back seat

 In short, by 2016 Kengen will double its current capacity to 3000MW of which geothermal will the dominant source generating 882MW; Hydro at 820 MW; coal 600MW; wind 62 MW. The viability of a 150MW windfarm is being studied at Marsabit Country. There is also potential for a 400MW import from Ethiopia and another 300MW LNG import from Tanzania.

Could Fossil Fuels pose a security risk in eastern Africa?

Guarding Crude oil Refinery in South Sudan.

SOUTH SUDAN vs.SUDAN,TANZANIA vs.MALAWI, KENYA vs SOMALIA.. There is a worrying growth of boundary disputes in eastern Africa. The quarrels, given what is at stake, pose a risk of violence in the region. The region has become significant producer fossil fuels. News of discovery of oil or LNG dominated the Pages in the first half- of this year. Visit http://eaers.blogspot.com/2012/03/eastern-africa-coast-emerging-fossil_28.html

To date, an estimated 100 trillion cubic Feet (tcf), of recoverable LNG had been discovered in Tanzania and Mozambique. Kenya for the first time joined Uganda and South Sudan in the crude oil producing class. Kenya is also seeking for LNG for it is estimated that some 286 trillion cubic feet lie off the eastern Africa coast, Kenya included.

 Sadly, the frequent discoveries are rekindling long ignored boundary disputes in the region. Previously silent disputes , such as the Tanzania- Malawi and the Kenya-Somali maritime border are becoming loud and public. Few in these countries knew of the 50 year- old disputes. To many observers in the region, the only border dispute existed between the Sudans.

This dispute was, and still is, an attempt by Sudan to sabotage the independence of the South which impoverished Sudan. At her independence last year, South Sudan took with her 75 per of Sudan's oil output, leaving with a paltry 25 per cent or 125,000 barrels per day. Khartoum then sought to sabotage Juba by raising the cost-transporting crude from the South.

Basically the dispute is about how Khartoum can plug the financial hole left by the departure of the South which turned off the taps for some 350,000 barrels of crude a day. Before the South's independence, Sudan generated some US$15-US$20 billion a year in oil revenue. The cessation of the South reduced that to just about $3.5 billion to $5.0 billion a year depending on the world market prices. Khartoum had been reduced to a pauper by just a stroke of a pen. See http://eaers.blogspot.com/2011/12/revealed-why-frequent-spats-among.html